Should lower interest rates equal higher equity prices?

Based on financial theory, lower interest rates should equal higher share prices. Matthew Wu gives a simple explanation why this is so and what we as investors should be wary of.

Being fresh out of university and still indoctrinated by theoretical finance, I was intrigued by a recent discussion in the office about the current low yield environment.

From the theoretical perspective low yields equates higher equity prices and here is a short explanation why.

What is $100 in a year worth today?

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