Low interest rates can increase demand for stocks and therefore have a direct impact on stock prices.

Question

Quizplus · Accepted Answer

When interest rates are low, it becomes cheaper for companies to borrow money for investments, which can increase their profitability and lead to higher stock prices. Additionally, investors may be more likely to turn to stocks as a way to generate income since bond yields are typically lower in a low-interest-rate environment. This increased demand for stocks can also drive up their prices.

Low Interest Rates Can Increase Demand for Stocks and Therefore