Stock Prices May Rise from a Reduction in Interest Rates

question 81

Multiple Choice

Stock prices may rise from a reduction in interest rates because:

• A) the present value of future earnings will increase.
• B) stockholders will expect lower future earnings.
• C) financial market participants are less optimistic about future earnings.
• D) the present value of future earnings will decrease.

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Definitions:

Indefinite Time

Indefinite Time indicates a period without a specified end date.

Research Costs

Expenditures related to activities undertaken to gain new knowledge or understanding to develop new products, processes, or services; often a significant part of a company's innovation efforts.

Capitalized

In accounting, this term refers to recording an expense or cost as a capital asset on a balance sheet, rather than as an expense on the income statement.