interest-sensitive stock

interest-sensitive stock definition - finance
A stock that is particularly sensitive to changes in interest rates. Often interest-sensitive stocks are bank stocks. When interest rates rise, shares of banks may move lower. That occurs because banks are locked into long-term loan contracts with borrowers and canÂ’t raise their interest rates up to the market rate, which can pressure earnings. The interest rate they have to pay to deposit holders increases also.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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