If you believe that Fed is going to tighten monetary policy, what would be your recommendations...
If you believe that Fed is going to tighten monetary policy, what would be your recommendations about investments in the food and transportation industries? Explain.
Homework Answers
The recommendation for food industry would be to buy stocks.
Food industry will rise because tightening of monetary policy would
would reduce money supply and it would reduce inflation. Since food
is an essential item their performance will not go down.
If Fed tightens monetary policy one should sell transportation
stock because interest rates would be high so cost of capital for
these stocks would be high. The demand for transportation would
decrease due to reduced liquidity in the economy.
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If you believe that Fed is going to tighten monetary policy,
what would be your recommendations...
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