Abstract
What then is the suitability of common stocks as an additional outlet for policy reserve funds? With current yields on common stocks now running over 5 per cent, backed up by earnings-priPe ratios of almost 12 per cent, compared to yields in debt securities running 3-4 per cent, investments now in this field, on a yield basis, look very attractive. The underlying issue is: are common stocks undervalued compared with other investment outlets? And two other questions are involved: Will common stocks subject the investor to as large capital loss hazards as they have in the past? And what will be the impact on common stock values if long-term interest rates do rise?
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