Yield Sensitivity

Yield sensitivity, or which is also known as interest rate sensitivity, is a calculation of how much the price of a fixed-income asset will fluctuate as a result of alteration in the interest rate. Generally, securities and other asset types that are more yield-sensitive have high price fluctuations than those with less yield sensitivity. Yield sensitivity should be taken into account when selecting a fixed-income asset that an investor may wish to sell on the secondary market. Yield sensitivity always affects both the purchasing and selling of an asset, and interest rates and fixed-income asset prices are inversely correlated.