1. Well explained..another way to look at this phenomenon is..
    Interest rate in the savings bank account is viewed as the risk-free or ‘certain’ return. This becomes the minimum expectations of the investor. Accordingly, the expectations from the other assets are formed based on the risk involved in the asset. Higher the risk exposure in the asset, higher the expectations (e,y. here)

    Now, if there is an increase in the interest rate, the other asset start looking LESS attractive and the GAP between the e,y. of Bank SB and e,y. of other assets gets adjusted to increase the e,y. of other assets. In other words, the reward for taking risk in other assets becomes LESS attractive, thus, the expectations increase corresponding to the risk perception of the investors.

    Finally, this e,y. is used to discount future cash flows from the assets. And if discounting rate increases the PV (present value) decreases.

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