Interest rate instruments are financial tools that help investors manage the cost of borrowing or the return on savings. Common examples include bonds, loans, and mortgages. These instruments typically have fixed or variable interest rates, which determine how much interest is paid over time. Investors use interest rate instruments to hedge against changes in interest rates or to earn income. For instance, when interest rates rise, the value of existing bonds may fall, while new bonds offer higher returns. Understanding these instruments is essential for effective financial planning and investment strategies.