Google 2011 Annual Report Download - page 76

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Investments in both fixed rate and floating rate interest earning securities carry a degree of interest rate risk.
Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while
floating rate securities may produce less income than predicted if interest rates fall. Due in part to these factors,
our income from investments may decrease in the future. However, we use certain interest rate derivative
contracts to hedge interest rate risk of our fixed income securities.
We considered the historical volatility of short-term interest rates and determined that it was reasonably
possible that an adverse change of 100 basis points could be experienced in the near term. A hypothetical 1.00%
(100 basis points) increase in interest rates would have resulted in a decrease in the fair values of our marketable
securities of approximately $895 million and $934 million at December 31, 2010 and 2011, after taking into
consideration the offsetting effect from interest rate derivative contracts outstanding as of December 31, 2011.
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