In theory, the relationship between interest rates and stock market returns
A) helps explain stock price movements but not derivative price movements.
B) has been the focal point of only a few fringe economists.
C) has been explored primarily using descriptive statistical methods.
D) has been the focus of Noble Prize-winning economists Markowitz, Miller, and Sharpe.
E) has remained a theoretical abstraction.

Question

Quizplus · Accepted Answer

The relationship between interest rates and stock market returns has indeed been a significant area of study among economists, including Nobel Prize winners like Harry Markowitz, Merton Miller, and William Sharpe. Their work in finance, particularly in the areas of portfolio theory, the capital asset pricing model (CAPM), and the theory of corporate finance, has foundational implications for understanding how interest rates can influence stock market returns.

In Theory, the Relationship Between Interest Rates and Stock Market