Int rate risk
Lecture 4: Hedging Interest Rate Risk Exposure. Traditional Methods. Philip H. Dybvig. Washington University in Saint Louis. • Matching maturities. • Duration. Interest rate hedging is the mitigation of interest rate risk. For a borrower, interest rate hedging is achieved by entering financial instruments to protect against Using a bond's duration to gauge interest rate risk. While no one can predict the future direction of interest rates, examining the "duration" of each bond, bond