Become volatile
Decrease
Increase
Stagnate
Answer is Right!
Answer is Wrong!
The correct answer is: B. Decrease
When the Reserve Bank of India announces a series of significant interest rate increases, the prices of shares are most likely to decrease. This is because higher interest rates make it more expensive for businesses to borrow money, which can lead to lower profits and stock prices. Additionally, higher interest rates can make it more attractive for investors to put their money in other assets, such as bonds, which can also lead to lower stock prices.
Here is a brief explanation of each option:
- A. Become volatile: This is possible, but it is not the most likely outcome. When interest rates are rising, stock prices are more likely to move in a downward direction. However, there is always the possibility that stock prices could become more volatile, as investors become more uncertain about the future.
- C. Increase: This is not the most likely outcome. When interest rates are rising, stock prices are more likely to move in a downward direction.
- D. Stagnate: This is also not the most likely outcome. When interest rates are rising, stock prices are more likely to move in a downward direction.