Which of the following is considered by economists as a fundamental determinant of stock prices?

Question

Quizplus · Accepted Answer

Interest rates are considered by economists as a fundamental determinant of stock prices. When interest rates are low, investors are more likely to invest in stocks because the potential returns are higher than what they can get by investing in bonds or other fixed-income securities. On the other hand, when interest rates are high, investors may be more likely to invest in bonds because the potential returns are higher than what they can get in stocks. This can lead to a decrease in demand for stocks and a decrease in stock prices.

Which of the Following Is Considered by Economists as a Fundamental