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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: AurumRabosa who wrote (67983)	9/21/1999 4:47:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

Ron, I'm going to try to make this as simple as I can. Otherwise we will both have to open up a finance book. (g) The primary ways companies raise new capital are either through new debt issuance or new equity issuance (shares). As stocks move higher in relation to their earnings, companies will receive more capital per dollar of earnings if they issue NEW shares. So the cost is cheaper. His point was that the cost of capital via debt is getting more expensive because interest rates on corporate debt have been rising. Yet simultaneously, stock prices keep going up faster than earnings so the cost of equity is falling. There should be a relationship between these two. Wayne