Stock Analysts Often Argue That Lower Interest Rates Are Good
Stock analysts often argue that lower interest rates are good for the stock market.Does this argument make sense?
A)No;lower interest rates will tend to slow down the economy and this will be bad for the stock market.
B)Yes;the lower rates of interest will increase the value of future income (and capital gains)and stock prices will rise to reflect this factor.
C)No;the lower rates of interest will reduce the value of future income (and capital gains)and this will cause stock prices to fall.
D)Yes;the lower interest rates will cause inflation and inflation is generally good for the stock market.
If the interest rate were 12.5 percent,how much would people be willing to pay for a stock that was certain to yield a $20 per share stream of net earnings continuously in the future?
"My broker studies the stock market and the management of specific firms.When he advises me to buy,I listen because he is an expert." Analyze this view.
Jane is a 22-year-old college graduate.She has just started working at a job that pays her $75,000 per year.Since you have had an economics course,Jane asks you for advice on where to invest the money she is saving for her retirement.What do you recommend?