I have a question on interest rates and this stock
I am taking an introduction to business class and have a question on an assignment that asks... Identify specific changes in the business environment (interest rates, industry competition, etc...) that may have caused the stock price to change. And... Did your stock's price increase or decrease in response to changes in the business environment? Explain... I am really confused on how to go about answering this. Thanks in advance
Answers
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MNSL answered one month ago …
Stock market is not 100% efficient. Generally, lower interest rate is good for the stock market.
Lower interest rate is one of the reasons for the current global rally. Interest rates control the flow of money through the economy. When rates are low, consumer spending increases and businesses can borrow money for expansion.
These interest tips are not always reliable over the long term
Industrial competition is very important. Strong banks and financial companies will have edge over weak banks in the current environment. However, some strong banks will become weak banks in the future due to industrial competition.
Globally some companies with less debt in their book, protected market for their products
have edge over their weak competitors now. Their competitors have become weak due to higher debt in their books, falling demand for their products and higher operation cost.
Companies with innovative ideas, better cost control systems, protective market share plus better business plan with market expansion will compete with their competitors successfully.
Some global stock prices will go up rapidly in the near future due to lower cost, lower interest rate, strong competitors in their industry and increased demand for their products in the future.
These companies will become growth companies not only during next 12 months but also during next five years.
