The high mobility of international capital results in considerable fluctuations in the short and long-term interest rates.
Interest risk management is therefore a central element of entrepreneurial activity and offers a host of possibilities through the rapid development of the derivative markets (derivative = transaction derived from underlying transactions such as a loan or investment). The goal of every company should therefore be to actively configure the interest positions within the framework of the interest risk management in order to maximise the value of these positions and thus the value of the company.
The interest risk management not only includes a financing or investment decision but also means:
- Managing interest risks independently of liquidity risks
- Implementing interest opinions or expectations accordingly or adapting them to amended market situations