Why should company managers or investors pay attention to macroeconomic indicators? Is it a good idea for company managers to do a formal review of key macroeconomic indicators every quarter (every 3 months) or is it a waste of time?

Why should company managers or investors pay attention to macroeconomic indicators? Is it a good idea for company managers to do a formal review of key macroeconomic indicators every quarter (every 3 months) or is it a waste of time?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 8MC

See similar textbooks

Related questions

Q: re are claims that the central bank caused the recession, and due to them, production has dropped…

A: Central bank are very important in the country and role of central banks have become major factor in…

Q: Suppose you believe that the economy is just entering a recession. Your firm must raise capital…

A: Interest Rate: A rate at which a borrower is ready to pay and depositor is ready to receive the…

Q: Which of the following represent diversifiable risks? the president of a company suddenly resigns…

A: The name suggest The concept of diversified risk is associated with possibility that there will be…

Q: amish plc expects to have an overdraft at the end of the next financial year. Whic ne of the…

A: Option A, increasing the credit period allowed to customers, would increase the accounts receivable…

Q: Suppose that as the economy moves through a business cycle, risk premiums also change. For example,…

A: Efficient market hypothesis explains that the prices of the securities reflect all the information…

Q: Companies often are under pressure to meet or beat Wall Street earnings projections in order to…

A: State how company manage earnings by changing depreciation method as shown below: Companies can…

Q: Why is the study of financial management important? Offer examples of how poor financial management…

A: In case of multiple questions it is possible to solve only one question. So solving the first one.

Q: UANG Financials is quite certain that interest rates are going to decrease next month. How should…

A: To increase its equity value when interest rates are expected to decrease, a bank manager should…

Q: Provide an explanation of the impact of external factors on the financial position of your selected…

A: The Impact of External Factors on PepsiCo's Financial PositionThis analysis will explore how…

Q: How does a deterioration in balance sheets of financialinstitutions and the simultaneous failures of…

Q: Which of the following is an example of unsystematic risk? XYZ corp stock price fell when the news…

A: Unsystematic risk are associated to a specific business or industry. It is also knows as…

Q: Too big to fail” was a common buzz phrase during the Great Recession. The idea behind it is that…

A: Too big to fail or TBTF means that some organisations are so large and essential to the functioning…

Q: What are two monetary policies that could be implemented by the central bank which would have the…

A: Federal bank achieve of economic growth by monetary policy by increasing or decreasing money supply.

Q: The economy is said to be entering a recession but your company needs to borrow money for an…

A: Recession: Recession is a slowdown of economic activity. In recession there is an increase in…

Q: You are the CPA for a large firm that is having a rough year and may not make analysts’ forecasts.…

A: FIFO Method: First In, First Out (FIFO) is an accounting system that prioritizes asset disposal.…

Q: What are the implications of the change in present value based on risk (a decrease in FCF by 10%)?…

A: The implications of the change in present value based on risk are as follows: Risk reduction expands…

Q: An economy is making a rapid recovery from steep recession, and businesses foresee a need for large…

A: The question is based on the concept of demand curve and need of investment. The price of product…

Q: Which of the following industries is most likely to see reduced revenue due to a global recession?…

A: The correct answer to the question is "Travel Industry"Travel industry is likely to see reduced…

Q: Can a firm have negative residual income (i.e., abnormal earnings)? What does this mean? Suppose you…

A: The negative residual rate of return will reflect that the company is not able to maintain and…

Q: If we hold all other factors the same, an increase in interest rates will: a.

A: Option (a). Decrease the present value of a stream of constant payments we expect to receive.

Q: We know that the market should respond positively to good news and that good-news events such as the…

A: According to efficient market hypothesis, stock prices reflect all the information known to the…

Q: Short-term thinking can be disastrous for a business. What indicators are there to show that…

A: The measures that are used by the organization to check the financial health or the financial…

Q: which of the following is an example of unsystematic risk? decrease income tax for all company soft…

A: Systematic risk are the volatility risk or market risk or undiversifiable risk, which used to affect…

Concept explainers

Global issues

While studying the global issues, it is important to read the following topics to get a better knowledge:

Question

Branch of economics that analyzes the behavior and performance of an economy as a whole. It focuses on the study of aggregates and evaluates changes related to unemployment, gross domestic product, inflation, monetary and fiscal policies of the government.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Which of the following is an example of unsystematic risk? XYZ corp stock price fell when the news of a drop in GDP was released. When the new employment numbers showed the economy is creating more jobs, the stock market rose. ABC Manufacturing stock price falls upon the announcement that they have a parts shortage from their suppliers When news of strong consumer demand was released, proctor and gamble stock price rose The stock market rose at the announcement of higher GDP numbers
Provide an explanation of the impact of external factors on the financial position of your selected company. Use the Interest Rates Spreadsheet to demonstrate the implications of interest rate changes on at least one. Specifically, the following critical elements must be addressed: Macroeconomic Items: The CEO of your selected company is convinced that financial analysis should hinge only on what is happening internally within the company. Convince the CEO otherwise based on the following: Analyze the implications of interest rate changes on any of your calculations. Support your claims. Determine how an issue in the overall stock market—negative or positive—might impact the company’s stock valuation numbers, other financial variables, or its overall portfolio management. Support your response with evidence through research, references, and citations. Analyze the impact of any external factor of PepsiCo. discussed throughout the course on the company’s financial position.…
You are the CPA for a large firm that is having a rough year and may not make analysts’ forecasts. The firm is considering changing from LIFO to FIFO, as that will increase income and may put them at the point of making the analysts’ forecasts. Do you think that they should make the change? Why or why not
What are two monetary policies that could be implemented by the central bank which would have the same impact as unemployment benefits? Which policy above including unemployment benefits would be most effective in boosting the economy due to a decrease in economic activity
Companies often are under pressure to meet or beat Wall Street earnings projections in order to increase stock prices and also to increase the value of stock options. Some resort to earnings management practices to artificially create desired results. Required: 1. How can a company manage earnings by changing its depreciation method? Is this an effective technique to manage earnings? 2. How can a company manage earnings by changing the estimated useful lives of depreciable assets? Is this an effective technique to manage earnings? 3. Using a fictitious example and numbers you make up, describe in your own words how asset impairment losses could be used to manage earnings. How might that benefit the company?
Which of the following represent diversifiable risks? the president of a company suddenly resigns the economy goes into a recessionary period a company's product is recalled for defects the Federal Reserve unexpectedly changes interest rates Group of answer choices 2 and 4 only 1, 2, and 3 only 1, 2, and 4 only 1, 2, 3, and 4 1 and 3 only
There are claims that the central bank caused the recession, and due to them, production has dropped below the optimum level, and inflation has gone up. What would you say to defend the central bank? Explain in detail.
May I know the answer ?
If we hold all other factors the same, an increase in interest rates will: a. Decrease the present value of a stream of constant payments we expect to receive. b. Increase the present value of a stream of constant payments we expect to receive. c. Decrease the interest revenue that a company will earn on its funds that it holds in its interest-bearing checking account. d. No impact on how much a company should be willing to pay for factory equipment that is expected to significantly reduce the factory electricity costs.
The SEC is trying to get companies to notify the investment community more quickly when a "material change" will affect their forthcoming financial results. In what sense might a financial manager be seen as "more ethical" if he or she follows this directive and issues a press release indicating that sales will not be as high as previously anticipated?
How does a deterioration in balance sheets of financialinstitutions and the simultaneous failures of these institutions cause a decline in economic activity?
UANG Financials is quite certain that interest rates are going to decrease next month. How should the bank manager adjust the bank’s maturity gap to increase its equity value when interest rates decrease ? Group of answer choices The bank should set its maturity gap to a positive position. In this case, as rates decrease, market value of assets will increase by less than the increase in market value of liabilities. The bank should set its maturity gap to a negative position. In this case, as rates decrease, market value of assets will decrease by less than the decrease in market value of liabilities. The bank should set its maturity gap to a negative position. In this case, as rates decrease, market value of assets will decrease by more than the decrease in market value of liabilities. The bank should set its maturity gap to a positive position. In this case, as rates decrease, market value of assets will increase by more than the increase in market value of…