he first year; as the amounts grow larger (which is typical for such capital-intensive industries as aerospace and oil exploration), the liability grows even larger. Thus companies which might have been considering long-term capital improvement programs might put them off given the rise in interest rates. Other companies might accelerate such programs if they believe that interest rates will continue to rise and thus drive the cost of capital up even higher (Aubin, 2000, p. C17).
The 1990s saw the introduction of what some called the "new economy" in which high-technology stocks, particularly those which centered on the Internet, generated enormous returns for their stockholders even when there were no profits accruing to the companies in question. Some analysts questioned the long-term viability of such a market, and during 1999 and 2000, the high technology stocks have indeed lost considerable value in the stock market, with much of that drop occurring in the last two months
...