interest-sensitive stock

Interest-sensitive stock

Stocks whose earnings are dependent upon and change with the interest rate, e.g., bank stocks.

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interest-sensitive stock

A stock whose price tends to move in the opposite direction from that of interest rates. Interest-sensitive stocks include nearly all preferred stocks and the common stocks of industries such as electric utilities and savings and loans. A common stock may be interest-sensitive either because its dividend is relatively fixed (as with an electric utility) or because the firm raises a large portion of its funds through borrowing (as with a savings and loan or a commercial bank).