The Corona crisis has lead to plummeting stock markets all over the world. Use the

following valuation models to explain WHY the stock prices have decreased (NB: No

calculation required - use words to describe possible changes in the input variables that

cause stock prices to drop)

i. Central banks all over the world have decreased interest rates this spring. Explain the

partial effect for the stock prices of such interest rate reductions.

ii.The Corona crisis has caused dramatic increases in stock price volatility (that is, large

and frequent stock price changes). Discuss possible reasons for this increase in

volatility