Business and Personal Finance Dictionary

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• INTEREST-RATE RISK
  
  Interest-rate risk describes the impact that a change in current interest rates is likely to have on the value of your investment portfolio. You face interest-rate risk when you buy long-term bonds or bond mutual funds whose market value will drop if interest rates increase. That happens because other investors will be able to buy bonds paying the new, higher rate, so they'll be unwilling to pay full price for a bond paying a lower rate of interest.
  
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