What are interest rate derivatives?

Interest rate derivatives are most often used to hedge against interest rate risk, or else to speculate on the direction of future interest rate moves. Interest rate risk exists in an interest-bearing asset, such as a loan or a bond, due to the possibility of a change in the asset's value resulting from the variability of interest rates.

What are interest rate derivatives (IRDs)?

IRDs are popular with all financial market participants given the need for almost any area of finance to either hedge or speculate on the movement of interest rates. Modeling of interest rate derivatives is usually done on a time-dependent multi-dimensional lattice ("tree") or using specialized simulation models.

What is an interest rate derivatives risk manager?

An Interest Rate Derivatives Risk Manager mitigates the potential risks associated with trading in interest rate derivatives. Leveraging a solid understanding of financial markets, these professionals analyze the potential impact of fluctuating interest rates on their organization's financial positions.