What effect might a fall in stock prices have on business investment?
- What effect might a fall in stock prices have on business investment?
Homework Answers
A fall in stock prices would make it more expensive for the firm to raise equity in the markets as they would now need to issue much more equity shares than average. This would prompt the management to issue at a later point of time when the share price rebounds. As a result, the investment can take a hit due to non availability of equity capital.
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What effect might a fall in stock prices have on business
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Suppose expected future prices fall. What effect would this have in the graph?
Consider the demand for a good illustrated in the figure below. Suppose expected future prices fall. What effect would this have in the graph? This would result in a slide down the demand curve. This would result in a slide up the demand curve This would result the demand curve shifting to the let This would result the demand curve shifting to the right 09 0
1. When the central bank decreases the money supply, we expect interest rates a. and stock prices to rise. b. and stock prices to fall. c. to rise and stock prices to fall. d. to fall and stock prices to rise.
1. When the central bank decreases the money supply, we expect interest rates a. and stock prices to rise.b. and stock prices to fall.c. to rise and stock prices to fall.d. to fall and stock prices to rise.
international business environment Consider the appreciation of a currency. What effects might this have on international...
international business environment Consider the appreciation of a currency. What effects might this have on international companies exporting overseas? What actions could companies take to minimize these effect
Chapter 13 1. Why might rising prices stimulate short-run production but have no effect on long-run...
Chapter 13 1. Why might rising prices stimulate short-run production but have no effect on long-run production? Chapter 17 1 I. Suppose the consumption function is C-S400 billion + 0.8Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices increase with each of the following options? (a) A S50 billion increase in government purchases (b) A S50 billion increase in income transfers
What is the impact on prices of expansionary monetary policy? 1)Prices rise unevenly. 2)Prices fall unevenly....
What is the impact on prices of expansionary monetary policy? 1)Prices rise unevenly. 2)Prices fall unevenly. 3)Prices fall uniformly. 4)Prices are kept constant. 5)Prices rise uniformly.
For each of the following events, what is its effect on prices and output in the short run? &nb...
For each of the following events, what is its effect on prices and output in the short run? a. Prices of houses fall b. Businesses become more optimistic c. The government undertakes expansionary fiscal policy d. Energy prices rise e. The labour force increases f. Taxes are increased
4. Interest rates and their effect on corporate profits and investment prices Interest rates affect corporate...
4. Interest rates and their effect on corporate profits and investment prices Interest rates affect corporate profits and security prices. Based on your understanding of the relationship between interest rates and corporate profits and security prices, identify which of the following statements is true and which are false. True False Ststements The higher the interest rate on a firm's debt, the lower will be the firm's profits, all other considerations remaining constant. An increase in the interest rate paid by...
Which of the following derivative contracts is likely to be profitable if Australian stock prices fall...
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What options does a group of people have when forming a business? Why might a partnership...
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2. When aggregate demand increases, what happens to prices and employment? a. Prices will fall and...
2. When aggregate demand increases, what happens to prices and employment? a. Prices will fall and unemployment will rise. b. Prices and unemployment fall. Prices and unemployment rise. d. Prices will rise and unemployment will fall. c. Figure 16-1 a Price Level Inflation Rate c d e 3 Output Unemployment 3. Refer to the Figure 16-1. If the economy starts at c and 1, then in the short run, where does an increase in government expenditures move the economy? a....
Chapter 13 1. Why might rising prices stimulate short-run production but have no effect on long-run production? Chapter 17 1 I. Suppose the consumption function is C-S400 billion + 0.8Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices increase with each of the following options? (a) A S50 billion increase in government purchases (b) A S50 billion increase in income transfers
4. Interest rates and their effect on corporate profits and investment prices Interest rates affect corporate profits and security prices. Based on your understanding of the relationship between interest rates and corporate profits and security prices, identify which of the following statements is true and which are false. True False Ststements The higher the interest rate on a firm's debt, the lower will be the firm's profits, all other considerations remaining constant. An increase in the interest rate paid by...
2. When aggregate demand increases, what happens to prices and employment? a. Prices will fall and unemployment will rise. b. Prices and unemployment fall. Prices and unemployment rise. d. Prices will rise and unemployment will fall. c. Figure 16-1 a Price Level Inflation Rate c d e 3 Output Unemployment 3. Refer to the Figure 16-1. If the economy starts at c and 1, then in the short run, where does an increase in government expenditures move the economy? a....
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