The rise in bond yield leads to a significant impact on equity. Equity investments become less attractive as bond yields rise due to the increased opportunity cost. Equity investors anticipate being able to purchase the shares at cheaper P/E ratios if bond yields increase. The cost of capital rises when bond yields do. Therefore, future cash flows are discounted rapidly. The valuations of these equities are lowered as a result. An increase in bond yield indicates that interest rates on debt for corporations will increase. The danger of bankruptcy and default rise along with the cost of debt servicing, which often leaves mid-cap and heavily leveraged enterprises vulnerable.