If the Fed decides to raise interest rates next year, what effect woul

QUESTION

If the Fed decides to raise interest rates next year, what effect would rising rates have upon corporate earnings?
1. When the Fed decides to raise interest rates, bonds will be issued with a much higher interest rate. This will encourage investors to purchase bonds, and as investors sell their stocks, stock prices will fall. 2. Also, if the Fed decides to raise interest rates, a business will hold back on investing as it realizes that¦

esting is less profitable due to the increased cost to invest. As investors notice decreased business investment, they assume the economy is starting to decline and sell their stocks, which causes stock prices to fall.

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