Interest Sensitive Stock


Interest Sensitive Stock
Any stock with a price that is extremely sensitive to changes in interest rates. Interest sensitive stocks are shares that will see large price changes relative to small movements in the risk free rate. Stocks with large betas, which gauge a stock's price movement relative to the overall market, often will be quite rate sensitive, since, as the capital asset pricing model suggests, stocks with a large beta will see bigger swings when the risk free rate moves.

Although high beta stocks tend to be quite rate sensitive, other factors contribute to a stock`s sensitivity to interest rate changes, as well. The industry in which a company operates may play a large role; home builders will usually see their share prices fall when interest rates begin to reach a certain threshold. Companies with large debt levels will also be very rate sensitive, as their cost of borrowing is contingent on the risk free rate.


Investment dictionary. . 2012.

Look at other dictionaries:

  • interest-sensitive stock — stocks whose earnings are dependent upon and change with the interest rate, e.g., bank stocks. Bloomberg Financial Dictionary …   Financial and business terms

  • Stock — For capital stock in the sense of the fixed input of a production function, see Physical capital. For other uses, see Stock (disambiguation). Financial markets Public market Exchange Securities …   Wikipedia

  • Bombay Stock Exchange — मुंबई शेअर बाजार …   Wikipedia

  • Tel Aviv Stock Exchange — Tase redirects here. It can also mean to use a taser on someone . Infobox Exchange name = Tel Aviv Stock Exchange type = Stock Exchange city = Tel Aviv country = Israel coor = founded = 1953 (precursor 1935) owner = key people = currency =… …   Wikipedia

  • Cutting stock problem — The cutting stock problem is an optimization problem, or more specifically, an integer linear programming problem. It arises from many applications in industry. Imagine that you work in a paper mill and you have a number of rolls of paper of… …   Wikipedia

  • Black Monday (1987) — DJIA (19 July 1987 to 19 January 1988) …   Wikipedia

  • Economic Affairs — ▪ 2006 Introduction In 2005 rising U.S. deficits, tight monetary policies, and higher oil prices triggered by hurricane damage in the Gulf of Mexico were moderating influences on the world economy and on U.S. stock markets, but some other… …   Universalium

  • Great Depression — the economic crisis and period of low business activity in the U.S. and other countries, roughly beginning with the stock market crash in October, 1929, and continuing through most of the 1930s. * * * or Depression of 1929 Longest and most severe …   Universalium

  • Moonwalk One — 2007 release cover Directed by Theo Kamecke Produced by Francis Thompson Inc. Peretz W …   Wikipedia

  • Whole life insurance — Whole Life Insurance, or Whole of Life Assurance (in the Commonwealth), is a life insurance policy that remains in force for the insured s whole life and requires (in most cases) premiums to be paid every year into the policy. Contents 1 History… …   Wikipedia