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Glossary · PSX term

Interest-rate sensitivity.

Interest-rate sensitivity is how much an investment's value reacts to changes in interest rates.

Definition

Rate moves affect sectors differently, banks often gain from higher rates while leveraged or growth companies suffer. Bonds and high-payout stocks are also sensitive, as rates change the appeal of their income.

Worked example

When the SBP hikes rates, bank stocks may rise while heavily indebted companies often fall.

Related on PSX Clarity

Sector rotation

Interest-rate risk

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