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Technology Stocks : Stock Swap
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To: Patrick Slevin who wrote (15754)10/27/1998 3:32:00 PM
From: Will Lyons  Read Replies (1) of 17305
 
When the rate goes down the value of existing paper
goes up because the relative yield goes up. If you own a
bond that pays 6 per year and the new paper is issued
at par butonly pays 5, then the old bond will go up so that it yiels the same rate, i.e. 5

cant edit as time rujnuning out

During the depression of the thirties the rate was
very close to zero. Stocks went down not because
the rate went down but because the earnings went to
zero or even lowe so that even a very high p/e
times zer was still zero. Only those bonds and a
few stocks that were able to maintain income and
payments kept value. Those that fell by the wayside
did so because had no yield [or the threat of
having no yield] thus the deflation caused the losses of yield while raising the vaalue of anything that ws sound enough to continue to yield

hope this helps
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