Market interest rate vs. Equity price? discount, interest, equity, higher, market

dmar

Would higher market interest rate = lower equity price? As we have to discount the cash flows back at higher a rate?

HuskyGrad2010

It would lead to a lower justified equity price using the DDM, FCF, or RI models.

hassan

Also consider the asset allocation part of the story… When interest rates are higher, fixed income securities may attract higher investor attention and steal some share of investments made in equities.