Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Interest Rate Levels and Stock Prices
Interest rates contain two effects on corporate profits:a) Since interest rate is a cost, and like the higher the rate of interest the lower the firm's profit other things held constant.b) Interest rates affect the level of economic activities that affect the level of corporate profit.If interest rates increase sharply, investors can get higher returns in the bond like money market that induces them to sell shares as like stocks and transfer the funds from stock market to money market like Treasury bills.Interest rates affect stock prices obviously due to the effect on profit however even more significantly they have an effect because of the competition in the market between bonds and shares.Such transfers in response to increase in interest rates reduces demand for shares in the stock exchange and this obviously depresses the share prices as like in mid and late 1993 the CBK intervened in the short term market where it floated Treasury Bills whose interest rate was as high as 88% well above the returns that can be expected from high yield stocks.Accordingly, investors removed or misdirected their money or funds from the stock market into Treasury Bills. The conclusion was a stagnation of stock prices of quoted firms. Accordingly as CBK attained its objective of decreasing the money supply in the economy the interest rates declined well beneath 30% and the immediate effect was a re-build in demand for shares and the share prices shot up instantly about February 1994.
Why are financial institutions heavily regulated, with specific focus on their ability to increase or reduce the money supply?
Ask questioAustralian’s Speleological App Projectn #Minimum 100 words accepted#
what is the definition of going concern
Question: A non-zero coupon bond carries a coupon rate of 8 percent and has 9 years until maturity. It sells at a yield to maturity of 6 percent. The par value of the bond is
where can I get money and how can I manage it
Example of Capital Asset Pricing Model KK Ltd is an all equity firm whose Beta factor is 1.2, the interest rate on T. bills is currently at 8.5% and the market rate of return
The operating and cost data of ABC Ltd. are: Sales Rs. 20,00,000 Vari
Characteristics of Investment - Venture Capitalists Venture capitalists, will just invest in a company whether there is a reasonable chance such the company will be successful
How are earnings calculated for the Pe ratio?
Allocation of financial resources to the different department can be done based on the past experience of the expenses and other available relevant information. Looking at the requ
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd