Business & Finance homework help

• Ask a probing question, substantiated with additional background information, evidence or research.

• Share an insight from having read your colleagues’ postings, synthesizing the information to provide new perspectives.

• Offer and support an alternative perspective using readings from the classroom or from your own research.

• Validate an idea with your own experience and additional research.

• Make a suggestion based on additional evidence drawn from readings or after synthesizing multiple postings.

• Expand on your colleagues’ postings by providing additional insights or contrasting perspectives based on readings and evidence.

 
 
Discussion_
Author:  Ramakrishna Ganga
Part-1
Interest rates
 
 
 
The most important factor for the influencing of the interest rate is to understand about the ways in which the inflation is likely to deviate from the target. If the bank is seen to forecast the inflation there is used for the rising of the target. In the bank forecast inflation that is seen used for the fall below the target as they are seen to cut the interest rate as they are seen to boost the consumer spending and also the economic growth.
 
Key factors that influence inflation and interest rate. There is the economic growth rate as it is based on the underlying trend rate. In these cases, the economic growth is seen to increase to cause inflationary pressure. There is the spare capacity which is considered as the amount of spare capacity that is seen to be difficult for the calculations. There is the wage inflation that is leads for the higher costs for the firms and higher spending. This is considered as the important factors which is used for the unemployment as it is used for the depress of the wage inflation and it is also used for keeping the pressure low. There are the rising commodities that is seen to have the tendency to be volatile that is used as the guide for the underlying inflation. In this the house prices do not really influence the CPI and it is about the rising house prices that is seen to cause a positive wealth effect and it is about the higher consumer spending. There is the higher confidence that will lead to higher spending (Liao & Errico, 2020).
 
 
 
Stock valuation
 
 
 
The stock valuation is about the several methods that is used for the valuation of the company and the stock. In this each has its own strength and weaknesses. In this some of the models are trying to pin down the intrinsic value that is used for the own financial statement and projects as it is part of the relative valuation that is seen to function against the peers. In this there is the model that needs to be discount model that is considered which is considered to be simple and fairly reliable (Gornall & Strebulaev, 2020). In this case there will be multiple approaches that is used for the comparative evaluation of the company value in the market that is seen with the competitive or broader market. There is the choosing of the valuation method that will cause appropriate method for the firms that needs to be analyzing. They need to be focused on the suitable approach for arriving at a better estimate (Bats, Giuliodori, & Houben, 2020).
 
 
 
Reference:
 
Bats, J., Giuliodori, M., & Houben, A. (2020). Monetary policy effects in times of negative interest rates: What do bank stock prices tell us? (No. 694). Netherlands Central Bank, Research Department.
 
Gornall, W., & Strebulaev, I. A. (2020). Squaring venture capital valuations with reality. Journal of Financial Economics, 135(1), 120-143.
 
Liao, S., & Errico, M. (2020). Corporate investment and stock market valuation.