Interest rate risk - Financial definition
Concise definition of the term interest rate risk
Interest rate risk is the risk of a financial loss caused by a change in market interest rates.
Comprehensive definition of the term interest rate risk
Any security or financial contract with fixed cash flows over a certain period of time - such as a bond, a loan or a deposit - is exposed to interest rate risk. Changes in market interest rates can make these cashflows more or less profitable. In the case of negotiable securities, the change of the relative value of the generated cash flows will also directly impact the securities' market price.