Credit quality of a bond is rated by independent rating agencies. Interest rate risk is the risk that the value of a bond will rise or fall as interest rates change. Bond prices move in the opposite direction of interest rates. Fluctuations in interest rates have a greater impact on bonds with longer maturities and durations. The maturity is the length of time until a bond is repaid fully.
Duration measures a bond's sensitivity to interest rate changes.
For each percent that interest rates rise or fall, a bond's value will decrease or increase a percentage equal to its duration. Types of Risk for Stocks Stocks face a variety of risks, specific and general. Business risk is the chance that a company's stock price could drop as a result of poor business conditions. This could be specific to the company or its industry. Market risk is the risk that the entire stock market could drop in value, perhaps because of economic conditions.