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
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
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.
The Federal Reserve and Macroeconomic Factors Introduction The Federal Reserve controls the economy of the United States through a variety of tools. They use these tools to shape the monetary policy of the United States in order to promote economic growth and reduce the rate of inflation and the unemployment rate. By adjusting these tools, the Fed is able to control the amount of money in the supply. By controlling the amount of money, the Fed can affect the macro-economic indicators and steer the economy away from runaway inflation or a recession.
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.
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...
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).
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 idea of the money growth rule is contingent upon the relationship between the money supply and inflation. Therefore, the question arises whether there even is a relationship between money supply and inflation. As stated earlier, one can see a relation between money and inflation. Presented above is series data that displays this relationship between money supply and the inflation rate over the previous decades. The problem is that there are fluctuations within the data and therefore a broader definition of the money supply must be utilized. Based on the research of Dr. Terry J. Fitzgerald, an economist at the Cleveland Federal Reserve Bank, if one defines money supply as M2, when examining the data over a multiple year progression, a pattern begins to present itself. Further, by graphing the difference between adjusted money growth and inflation, the link becomes evident. These graphs show the weight that changes to the money supply can have upon an economy’s inflation rate.
When discussing the cost of equity capital, or the rate of return required by investors for their share expenses, there are three main models widely used for analyzation. These models are the dividend growth model, which operates on the variable of growth and future trends, the capital asset pricing model (CAPM), which operates on the premise that higher returns are a result of higher risk, and the arbitrage pricing theory (APT), which has a more flexible set of criteria than CAPM and takes advantage of mispriced securities
William Sharpe, Gordon J. Alexander, Jeffrey W Bailey. Investments. Prentice Hall; 6 edition, October 20, 1998
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...
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
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.
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.