What happens to interest rates when share prices go up or down?
If you’re speaking of dividend interest rates paid on stocks, bonds, preferred stocks, they are inversely proportional. If a $1000 bond is issued with a 5% coupon, it pays the owner $50 per year. If the price falls to $900, a new buyer of that bond now earns $50 on a $900 investment, for a current yield of 5.55%. If the bond rises in value to $1050, a new buyer earns a current yield of 4.76%. Note that the coupon rate (5%) is fixed. The current yield changes inversely with the price paid. The same thing occurs with stocks.
