Managing Interest Rate Risk

Economic conditions can change dramatically over time, requiring significant changes in interest rates. Loans that appeared desirable methods of expansion when taken out can, with a change in interest rates, become massive outgoings that leave the unprepared business exposed to potentially crippling debt.

Whether borrowing, investing, saving or trading, a company will always have to take into account the cost of capital and therefore interest rate risk. The efficient management of this risk is essential for the survival of a company and any business that is exposed to such a risk should ensure that it is fully prepared to manage it.

Aimed at senior managers within businesses, this book is a practical primer on how to reduce risk from changes in interest rates.

This book demonstrates how to manage risk with the use of financial derivatives. An in-depth knowledge of mathematics, interest rates, or derivatives is not required to understand or practice the techniques described here. After a general overview of definitions, processes, and procedures, chapters explain individual approaches in detail, dealing with interest spot and FRA markets, interest rate futures contracts, and interest rate swaps and options. Stephens runs a training company specializing in the futures and derivatives markets. Annotation c. Book News, Inc., Portland, OR (booknews.com)

JOHN J. STEPHENS has many years' international business and banking experience. Trained as a lawyer, he subsequently specialised in business related issues and for 10 years was CEO of a management consultancy firm with many large international clients. From 1992 onwards, he worked in the financial services sector for SANLAM and later ABSA Bank, before specialising in futures and options. He now runs a training company specialising in the futures and derivatives markets and is also a non-practicing advocate of the Supreme Court of South Africa.