# How do changes in interest rates affect equity prices?

In the example on the efficient market hypothesis wiki, we said that in a market where the "riskless rate" is 4%, the risk premium is 2%, the dividend yield is $2, and the expected growth rate is 2% then the stock, priced only as the present value of the expected value of the stream of future dividends, should be worth$50.00. This follows from the formula: $r= \frac{D}{P} + g$
What happens when the interest rate rises to 5%? How much should the stock price increase or decrease if nothing else changes?

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