Unlocking the Power of Interest Rates: Managing Financial Risks Efficiently
The article discusses interest rates and their role in financial markets. It explains the difference between real and nominal interest rates, as well as how interest rates vary with the maturity of investments. The concept of coupon bonds and the impact of taxes, prices, and returns on bond investments are also covered. The article introduces methods for measuring and managing interest-related risks, including the use of off-balance sheet contracts in financial engineering.