Why Do Rising Interest Rates Generally Depress Stock Prices

question 53

Multiple Choice

Why do rising interest rates generally depress stock prices?

• A)Businesses have to pay higher interest rates to borrow money, thus reducing their profits.
• B)Stock investors tend to take their money out of the stock market and invest in interest-paying investments.
• C)Future earnings will not be worth as much as today.
• D)All of these.

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Penumbra of Protection

A legal term referring to a group of rights derived, by implication, from other rights explicitly protected in the Constitution.

Bill of Rights

The first ten amendments to the United States Constitution, guaranteeing fundamental civil rights and liberties such as freedom of speech, assembly, and worship.

Free Exercise Clause

A provision in the First Amendment to the U.S. Constitution that prohibits the government from interfering with an individual's right to practice their religion.

Establishment Clause

A section of the First Amendment to the U.S. Constitution prohibiting the government from establishing an official religion.