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.
Correct Answer:
Verified
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