Nature of interest rate risk
　　Companies have exposure to interest rates risks：
　　Rising interest rates
　　Falling interest rates
　　Management of interest rate risk：
　　Smoothing-maintaining a balance between fixed rate and floating rate borrowing.
　　Matching-attempting to have a common interest rate for both assets and liabilities.This is more practical for financial institutions than for trading companies.
　　External hedging techniques：
　　Forward Rate Agreements(FRAs);
　　OTC options-caps，floors and collars;
　　Interest rate futures contracts;
　　Options on interest rate futures;
　　Interest rate swaps and swaptions.