Which of the following would be most likely to cause the price/earnings ratio of stocks to rise?
A) the expectation of a recession in the near future
B) the expectation of inflation in the near future
C) higher interest rates
D) lower interest rates

Question

Quizplus · Accepted Answer

Lower interest rates reduce the cost of borrowing, encouraging investment and spending, which can lead to higher corporate earnings and stock prices, thus increasing the price/earnings ratio.

Which of the Following Would Be Most Likely to Cause