Which of the Following Best Summarizes How Changes in Interest

question 71

Multiple Choice

Which of the following best summarizes how changes in interest rates influence stock prices?

• A)A fall in interest rates increases the quantity demanded of bonds and decreases stock prices.
• B)A fall in interest rates will be expected to increase the demand for goods and services, to increase the earnings of firms, and in turn to increase their stock prices.
• C)A fall in interest rates makes the expected return on stocks greater than the expected return on bonds.
• D)Both b and c

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