Business activity cycle, Finance Basics

Business Activity Cycle

The interest rates also depend on business cycles as above. Because the economy moves in the four (4) business cycles, such interest rates will shift like within economic recessions, short-term interest rates experience sharp decline than L.T interest rates. This is just because of the following reasons:

490_Business activity cycle.png

i. The CBK operates mainly in the S.T Sector (market) and its intervention has a major effect on S.T interest rates.

ii. L.T interest rates usually reflect the average supposed inflation rate over the next 10 - 20 years.

These expectations do not change usually because L.T interest rates are fixed because of debt covenants entered into throughout borrowing time.

Posted Date: 1/30/2013 3:10:48 AM | Location : United States







Related Discussions:- Business activity cycle, Assignment Help, Ask Question on Business activity cycle, Get Answer, Expert's Help, Business activity cycle Discussions

Write discussion on Business activity cycle
Your posts are moderated
Related Questions
What are the Features of Stock Exchange The key features of stock exchange are as below: (1) Organised Market: Stock Exchange is an organized market. Each stock exchang

Illustrate the role of credit unions in depository institutions. Credit unions: Credit unions are non-profit institutions equally organised and owned through their member

Financial Forecasting Financial forecasting refers to determination of the firm of financial requirements in advance. Financial forecasting is needs financial planning using b

Conditions for Lease Finance Lease finance is ideal within the following circumstances: a) Whenever the asset depreciates faster. b) Whenever the asset is matter to obso

Tests of Term Structure of Interest Rates Theories Various tests have been conducted mainly in USA and they show that all the three (3) theories have some validity and therefo

For any company that is quoted on the London Stock Market, you are required to write a report to existing shareholders on any TWO of the following issues. Each answer carries equal

Question: A deferred annuity policy is sold to a life aged 45 with the following benefits: • Basic payments start at $30,000 from age 65, increasing by $2,000 each year; •

Acceptance Rule of IRR IRR will accept a venture if its IRR is higher than or equivalent to the minimum required rate of return such is usually the cost of finance also recogn

Relationships and interactions among money, bond, stock and mortgage markets

Every time a listed company does a share buyback, investors and media alike would debate fiercely on the merits of such a scheme. There are investors who prefer buybacks to high