Saturday
October 25, 2014

Homework Help: finance (higher interest rate)

Posted by Jason on Friday, July 25, 2008 at 1:40pm.

A higher interest rate (discount rate) would?

A. reduce the price of corporate bonds
B. reduce the price of preferred stock
C. reduce the price of common stock
D. all of the above

I remember reading about the relationship between interest and bonds/stocks.

When the FR raises rates the price of bonds goes down.

When the rates go up stocks go up because the risk free rate increased, so stocks must cover the risk free rate + the premium rate.

I like A for the best answer....Is that correct???

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

accounting - a higher interest rate would: reduce the price of corprate bonds; ...
Finance - Suppose that five years ago Cisco Systems sold a 15-year bond issue ...
finance - One year ago, Auto Land issued 10-year bonds at par. The bonds have a ...
finance - 1. Yest Corporation's bonds have a 15-year maturity, a 7% semiannual ...
Marcoeconomics - According to the formula, Bond price= y/r so bond price has a ...
Finance - If our company's bank loan has a 12 interest rate, what is our ...
finance - If our company's bank loan has a 12 interest rate, what is our ...
fin 571 - (Interest-rate risk) Philadelphia Electric has many bonds trading on ...
Finance - Which of the following statements is CORRECT? a. Two bonds have the ...
Finance - Which of the following statements is CORRECT? a. Two bonds have the ...

Search
Members