Life Cycles In order to accurately and successfully forecast, investors analyze the economy in coordination with industry life cycles. The economies effect on an investment depends greatly on the businesses industry and life cycle. In addition, the government influences economic activity by controlling the supply of money. This economic control is accomplished by altering the reserve requirements and discount rates, through the monetary policy. As a result, the government can either incorporate an expansionary or contractionary monetary policy into the economy. An expansionary or loose monetary policy is sought to boost the economy by increasing money supply through decreasing the Federal Reserve. The expansionary act has been shown to …show more content…
As business cycles reflect the short-term fluctuations in the economy, industry life cycles determine investments dividends, growth of earnings, capital expenditures and market demand. Moreover, industry life cycles are influenced by economic growth and availability of resources (Hirt et al., 2006). Through analyzing the industries life cycle, investors can determine the industries potential growth rate and dividend payout. If the construction industry is in the development or growth phase, the approximate growth rate of the investment would be high. However, the dividend payout would be low or non-existent and there would be a high amount of risk. On the contrary, if the gold mining industry is in the mature life cycle, the growth rate would be moderate and the dividend payout would be high. In addition the assumed risk would only be moderate. Therefore, the industry life cycle can greatly influence an investment …show more content…
If an investor had a longer time horizon an investment in construction would cost less initially, while the payout would not be immediate the investment would have the opportunity to grow increasing the amount of dividends received. However, if the time horizon were smaller, investing in the gold mining industry would give a faster dividend return. While a loose monetary policy will increase demand for both industries, their respective life cycles will determine the potential growth and dividend
Throughout the 19th century, industrialization was a turning point in the United States that led to huge changes in society, economics and politics. The incoming growth of factories had positives and negatives effects. Two specific changes were the new government regulations and the increasing immigration. These changes were extremely important because they settled the bases of the country.
We began by selecting an appropriate risk-free rate and a market risk premium. The risk-free rate we selected is 3.48%. In selecting the risk-free rate, we used the geometric average return of short-term treasury bills from 1926 to 1987 because this average accounts for time as opposed to the arithmetic average. We used the range from 1926 to 1987, because the returns in the shorter time period ranges were much more volatile and did not predict the upcoming years as well. We selected our market risk premium using the geometric average return from 1926 to 1987 as well. After analyzing the spread between the S&P 500 composite returns and returns on short-term treasury bills, we chose 6.42% as our market risk premium.
There are multiple ways to help reduce the polluting effects of factory farming. People can make a difference by simply avoiding factory farmed products, reducing their animal product intake, or by going either pescetarian, vegetarian, or vegan. Those concerned with the polluting effects of factory farming can also make a difference by encouraging others to eat less animal products, raising awareness towards animal and worker conditions in factory farms, supporting farm animal sanctuaries, and signing petitions to end factory farming. It is important for people to become involved in reducing the amount of pollution caused by factory farming.
Develop and describe a technology lifecycle model (including the time and cost of development, the amount of time to recover the cost, and return on investment (profit) based on the development costs and risks) and/or product lifecycle model (including timing, marketing measures, and costs associated with the life of a product) for the new technology or application
Peter Munk, the founder of American Barrick had after experience and past failures come to the belief that high liquidity and low leverage were key tenets in a successful business. The increased flexibility obtained by following these guidelines should provide the company with opportunities that less hedged companies did not have. If gold prices were to fall then the company would not be affected by the distress costs that other competing companies would experience, giving the company an edge during times of low prices. During this time they would have additional cash reserves available to invest while other companies might be struggling to gain expensive debt financing. This is one of the major competitive advantages a gold company can have because the major costs in this industry is exploration and acquisition costs. Because of their strong financials and stability the company was also more likely to enter into more favorable contracts. The risk management program was meant to provide in...
Anybody and everybody can become an industrial machinery mechanic; especially, those who are passionate about getting their hands plastered in motor oil, grease, and other mechanical lubricants. These people will more than likely be ecstatic about getting into industrial machinery mechanics. They need to be able to put in one hundred ten percent of their effort into becoming an industrial machinery mechanic. An industrial machinery mechanic’s overall objective on the job is to stop a mechanical error before it happens. An industrial machinery mechanics are often caught repairing, maintaining, and fabricating machinery. They will be required to have certain education and training as well as some on the job training or complete an apprenticeship program. They will receive many benefits for working in this particular field.
The term Monetary policy refers to the method through which a country’s monetary authority, such as the Federal Reserve or the Bank of England control money supply for the aim of promoting economic stability and growth and is primarily achieved by the targeting of various interest rates. Monetary policy may be either contractionary or expansionary whereby a contractionary policy reduces the money supply, reduces the rate at which money is supplied or sets about an increase in interest rates. Expansionary policies on the other hand increase the supply of money or lower the interest rates. Interest rates may also be referred to as tight if their aim is to reduce inflation; neutral, if their aim is neither inflation reduction nor growth stimulation; or, accommodative, if aimed at stimulating growth. Monetary policies have a great impact on the economic stability of a country and if not well formulated, may lead to economic calamities (Reinhart & Rogoff, 2013). The current monetary policy of the United States Federal Reserve while being accommodative and expansionary so as to stimulate growth after the 2008 recession, will lead to an economic pitfall if maintained in its current state. This paper will examine this current policy, its strengths and weaknesses as well as recommendations that will ensure economic stability.
Miller, M.H. and Modigliani, F., 1961., Dividend Policy, Growth, and the Valuation of Shares. The Journal of Business, 34(4), pp. 411-433.
In the study of macroeconomics there are several sub factors that affect the economy either favorably or adversely. One dynamic of macroeconomics is monetary policy. Monetary policy consists of deliberate changes in the money supply to influence interest rates and thus the level of spending in the economy. “The goal of a monetary policy is to achieve and maintain price level stability, full employment and economic growth.” (McConnell & Brue, 2004).
William Sharpe, Gordon J. Alexander, Jeffrey W Bailey. Investments. Prentice Hall; 6 edition, October 20, 1998
This particular essay will focus on predictability of stock market returns and market efficiency with variety of financial and macroeconomics variables that includes dividend to price ratio, earnings to price ratio, book to market ratio, consumption to wealth ratio, short term interest rates and dividend yield.
The Federal Reserve use several tools like discount rate, federal funds rate, required reserve ratio and open market operations to control the money supply. In the simulation, the effect of controlling the money supply on the economy was presented. Typically, releasing money into the system results in higher Real GDP and lower unemployment. On the other hand, it also raises inflation.
Since 2004 the automotive manufacturing industry in Australia has seen a steady decrease in the production volumes and profitability for manufacturers (Industry, June 2014 Automotive Update, 2014). Many governmental schemes have been introduced over time to increase efficiency and facilitate international competitiveness with varying degrees of success, however despite these attempts by the Australian government to increase and sustain international exports of automotive products, local firms still struggle against rising imports and increasing international competition. As a result of this, the three major Australian automotive manufacturers Toyota, Ford and Holden have announced plans to cease production in Australia by the end of 2017 (Ford plans to withdraw production in 2016, with Holden and Toyota ceasing manufacturing in 2017). A major factor
In turn everything in the present and the future is judged through the stocks as they hold a high importance in industrialized economies showing the healthiness of said countries economy. As investing discourages consumer spending over all decreases, it lead...
Following the trend of economy, it is important to investors to understand that strong economy creates strong stock market. To elaborate further, as stock prices are increased by current and future expectations of earnings, thus without a strong economy it would be difficult for the companies to increase and sustain their earnings (Kong 2013). The economy development is usually calculated using the gross domestic product of a countries. On the other hand, a change is the stock price can also cause a major impact to the consumers and investors directly. Hence, a loss in confidence by investors can cause a downturn in consumer spending in the long term, which will also affect the economy’s output (Aysen 2011). The graph below shows the relationship of stock market price (KLCI) and the GDP of Malaysia in 2009. Thus, it can be concluded that the economy and the stock market has a positive relationship.