Interest Sensitive Stock

(redirected from Interest Rate Sensitivity)

Interest Sensitive Stock

A stock whose value is likely to increase or decrease substantially due to changes in interest rates. Most interest sensitive stocks represent publicly-traded companies with high rates of long-term debt. These companies' stocks decrease in value when interest rates rise because the higher cost of borrowing may result in lower profits and dividends. Conversely, their stocks rise on lower interest rates. For this reason, utility companies tend to have interest sensitive stocks.
References in periodicals archive ?
A short-duration fixed-income strategy for up to three years, WINC seeks to generate current income via a diversified portfolio with an emphasis on low interest rate sensitivity, higher credit quality and active credit selection.
At issuance, Fitch accounted for increased refinance risk in a higher interest rate environment by reviewing an interest rate sensitivity that assumed an interest rate floor of 4.5% for multifamily properties, in conjunction with Fitch's stressed refinance rates, which were 8.5% on a weighted average basis.
JP Morgan Asset Management has announced the launch of fixed-income EFT, JPMorgan Ultra-Short Municipal ETF (JMST), an actively managed fund that focuses on tax-exempt yield and invests in municipal securities with less interest rate sensitivity, the company said.
The expert group shall draft a report containing analyses and assessments of inter alia principles for composition of the fixed-income benchmark index, choice of currencies and segments to be included in the index as well as maturity and interest rate sensitivity (duration).
It also stands to benefit from interest rate sensitivity and tax reforms, Dai points out.
(3) When studying changes in the interest rate sensitivity to macroeconomic news at the ZLB, Swanson and Williams (2014a, 2014b) only considered central banks providing qualitative forward guidance (i.e., the Federal Reserve, the Bank of England, and the ECB), not quantitative forward guidance as we do in this article.
The Declining Interest Rate Sensitivity of Employment
In this case, DC plan sponsors should better understand "the central role that interest rates play in determining how much retirement income a given account balance will be worth in the future." The key lies in targeting interest rate sensitivity in the fixed-income portfolio, simply by matching the duration of the bond to that of the liability.
Given the less-than-ideal outlook, life companies will need to better manage interest rate sensitivity by redesigning their products.
These changes should be informative even though the model measures interest rate sensitivity very crudely.
Moreover, BMO S&P/TSX Laddered Preferred Share Index ETF (ZPR) was the top selling individual ETF in Canada, attracting investors who were seeking diversified yield sources and lower interest rate sensitivity relative to fixed income.
Chaney and Hoesli (2010) focus on the interest rate sensitivity of real estate and find that for a typical office property this stands 13.1 percent, with a standard deviation of 7.8 percent.

Full browser ?