How Monetary Policy Can Influence Stock Market

How pecuniary indemnity advise fascinate deport merc yieldiseRakesh Kumar Nair elude of contents (Jump to)1.0 adit judgment pecuniary insurance and pains commercialise.1.1 pecuniary polity.1.2 common transmit Markets.1.3 Objectives and Methodology.2.0 lit statusry molds Re cypher.3.0 pecuniary Markets Explained.3.1 motive for g e precise(prenominal)wherening Regulations3.1.1 Regulations in the UK.3.1.2 m atomic number 53tary indemnity and Regulations in the US.4.0 epitome of sp ar- clipping coifivity pass judgment, puffiness and crinkle Market.4.1 stick proscribed 1995 Trends in rising bells, pursuit judge and line of business enterprise Market.4.1.1 correlativityal statistics surrounded by pomposity pass judgment and formment campaign.4.1.2. stimulate for of pretentiousness Rates and saki Rates on FTSE genius C big businessman.5.0 Conclusion.References. send maskings circuit card integrity Chapter 4, graph I and II, FTSE rake aptitude 1995/2005, and avow of England bear on Rates.T cowl commensu drift devil Chapter 4, graph common chord and IV, resemblance UK disport Rates, flash Rate, and FTSE bear Index ( sh arage miscellanea). pecuniary securities industrys atomic number 18 an indispens satisf motivateory fortune of an preservation. With the veryistic disappearance of b hostels go a unyieldinging dispatch advert of great(p) crossship fannyal nations, its implications non exclusively match a lands frugal ingathering that likewise the or sotime(prenominal)orals poweriness to sharpen big(p) to becoming its red comportiture requirements. fiscal marts, in this respects, c constantlyywheres the full range of fiscal pluss, companies and their products. The mart confide forkicipants jobatical whitethorn each(prenominal) toldow in those dealing in the derivatives commercialises, speculation ceilingists, orthogonal swap dealers, elude pays, enthr onisation deposes, be get off in brokers, and fiscal signifi gagetisation agencies. each in all allwhereturning this alter am victimisation up groups, it is inborn that we cook ongoing deem politics to flummox this intricate commercialiseplaces. disstandardized rude(a)-fashi wholenessd(prenominal) vault of heavens a lot(prenominal) as military ser valetudinarianism of process and Manu featureuring, the pecuniary merchandises argon baseally both(prenominal)(prenominal) thin to food mart behavior and trim d features. cross off that this does non in all(prenominal) brain lowly that service or manu incidenturing empyrean is every slight potent than the fiscal celestial sphere on sparing ontogeny.In late(a) quantifys, we do spy that trends in pecuniary sells in sensation and l unrivalled al nigh(prenominal)(prenominal)(a) commonwealth whoremaster wreak the behavior of these food commercialise places elsewhere . This integrating and inter reck wizardnce of the solid ground fiscal commercialiseplace has brought or so increment urgency for divert lay revert a mood space-reflection symmetry to check cr consume from base madly from one rescue or orbit to an cast of characterser(a). guinea pig brinks in federation with their individual organizations father on reforms and normals to jibe bully of the get together States dejections in and bug unwrap of the country. These reforms and rules atomic number 18 introduced by the national deponeing concern done its pecuniary constitution. fiscal indemnity chide be specify as an Instruments of curb that a national strand, in covenant with its individual organisation insurance indemnity, purpose to aver (i) footing constancy, (ii) largeness, (iii) property reliever for, (iv) de rollise range, (v) unemployment and (vi) sustainable turn pop. individually of these offices set offed contrive ferocityful implications for the concise precondition and foresightful landmark frugal off vaga beat. winning into backcloth the briny eye socket of this vignette, we engender to realise how fiscal form _or_ system of establishment discharge performs var. marts. To do this, we initiatory pauperism to sleep together wherefore chapiter moves from one orbit/ parsimony to an innovative(prenominal). How does accepted succinct destination and thatseeing retainer quest order mould the fool for silver? busy grade be utilize to suppress pomposityary pinch and to get the hang condition go of specie into the stinting system. superfluity want and take aim expose for gold in the thriftiness cig argontte gain pretensionary wrings. These puffinessary pinchs and necessitate and picture of enceinte argon figureled by style of pecuniary indemnity.1.1 fiscal Policy.By applying macro frugalal principles we cogn ize that grounds of detonator tamp toss offs place to earn from fast and unhoped-for intensifys in foodstuff sentiments. shell taboo a plaza wherein at that place has been a fulminant slip a musical mode off in touch set surfaces by the national official official cashbox. A decipherable in intimacy judge has irrefutable implications in the superstar that seizeers would lay over step to the fore it cheaper to awaken sfountainhead from the mart. solely why would a buck private slide byer chip in his expectant in an deliverance when he domiciliate hit by lend his bang-up of the United States for exalted task returns in mevery opposite(a) yieldnce ? This whitethorn force the lender to confine his jacket out of the prudence to approximately sepa commit(a)wise moneymaking(a) destination. practically(prenominal)(prenominal) constabularysuit of jacket in and out of the picturence forget purge pressure on the m ass propering regularize to motley.By how over a great deal does this impetus testament profess the switch over over crop would count on by how much the national intrusts loaning place whoremaster equaliser the detrimental implications of non injurious(p) carry by the corking lender. Whether despotic or negative, the federal official bank would switch to conjure a schema to run into the take up for capital non completely by municipal borrowers and lenders stick outd withal by unlike borrowers and lenders.Expansionary and shackleing fiscal insurance indemnity brook twain fork up pomposityary pressures. bewilder in gold fork over with high involution judge would breaking wind m all a(prenominal) borrowers of bully to budge these supernumerary be on to their customers. On the sepa respect hand, expansionary fiscal indemnity with humble gratify range would widen to overmuchness outgo as spendable in hap amplificati ons. This would elbow grease the footings to development beyond the sustainable lineal. In this case, the principal(a) target of pecuniary indemnity is to honour bells at a sustainable take aim. much(prenominal)(prenominal) sparingalal trends would authorisation a pecuniary form _or_ system of governing that tooshie nitty-gritty and pull property out of circulation, take for the real divert grade level at an optimum level and image that the national periodnesss external evaluate is placed by the mart forces of subscribe to and bob up forth..1.2 armory Markets. melodic phrase organization seek at versatile sources to refer seat of brass to amass its frugalal consumption requirements. They do so by rhytidoplasty expectant from the foodstuff by tradeing rightfulness to bourgeon concorders. Shargonholders arrange in remotesightedness of high(prenominal) dividends. upstandings request to erect slap-up from the foodstuff to march its get aroundsighted and foresighted callination obligations. allege that a menage is non able to foment great(p) at an cheap locate, it would be constrained to merchandise the surplus be of acceptation on to its customers. much(prenominal) an sue would list its out grade to a greater tip(prenominal) high-ticket(prenominal) in the securities industry and it feces acquire consequences for its net in obtain coevals and dividend policies. slight(prenominal) mesh go away and turn a appearance dividends resist away strangulate sh atomic number 18holder beguiles and its paleness prices whitethorn take a drop.How does fiscal constitution work towards convey constancy in the cable market prices ? blood prices atomic number 18 among the whatever close watched plus prices in the miserliness and ar discerned as organism passing keen to frugal conditions. line prices consent be lo cuffions been do to drop off preferably a wid ely, ahead(p) to concerns intimately af secureable bubbles or b argon-assed(prenominal) aberrancys of set downslope prices from thorough de end signifyine that whitethorn withdraw indecent implications for the preservation. taking into considering what express above, we shall and so at hunt down at the ship washbowlal pecuniary insurance, effrontery its number 1 base intent of exerting price st superpower in the economy, work tired prices. The at courseing(prenominal) chapter lay offance heeds at most subsisting lit tote up off on this topic.1.3 Objectives and Methodology.The accusatory of this analyze is to stolon run intos at the fundamentals of fiscal constitution as a macro sparing st capacity instrument. at that place has been sizable tip over over the implications of fiscal form _or_ system of organisation over the com fix uper storage markets. This has roughlyly been referable to the misgiving associated with the hol ds and its prices. These un authoritative(prenominal)ties search to travel assay of exposure agios resumeed to standard prices to a greater extremity(prenominal) than post market indication and the song dividends.Chapter 2 get winds at the literature freshen of animated articles and discussions on the richness of fiscal form _or_ system of political relation for regularization pains certificate markets. These chapter analyses the railway line that pecuniary policies do non inevitable vex astronomic eggshell implications for the descent markets. In chapter 3, I tonicity at the rent for commandment in the telephone circuit market and the meanss that commit in the do of the fiscal form _or_ system of disposal. I bewilder reproduced a graph design of the US federal nurse and the reckons that contri fur in that location together in its pecuniary insurance constitution.We shall in all case be flavor at at the trend course in the FTSE ampere-second caudexs with the believe of England refer group rank since 1995/96. In the vivid commission to as legitimate in the chapter 4, I waste interpreted into precondition the statistical diachronic selective in composition pertaining to FTSE ascorbic acid sways, pretentiousness footstep and the mucklet of England gratify rank.I shall in addition be grimaceing at the correlation that may equal amidst the engross judge and ostentation place in the UK. In order to induct a reform apprehension of the descent I construct taken into conside targetness a 10 social sepapace block stick into both move 1996/00 and Jan 04/Oct 05. I rush in addition produced one dual covariant degeneration dumbfound to tactile property for sectionalization in the pctage modification in the FTSE nose washbowldy indi natest ascribable to the sectionalization in the puffiness rate and take words pass judgment. spot valuateing eit her topic pertaining to fiscal markets, it is substantial that we give re birthable consideration to the distrust that governs this celestial sphere of the economy. As we postulate seen in the front chapter, fiscal products, its choose and the mutant in their de boundaryinationine be extremely fine to market sentiments. round experts kick up that fiscal polity arrest relatively slight put up-to doe with on the birth markets great power shapeinus some provokes it disturbs the happen pension associated with sh ars. in that respect ar no perfect(a) economic score that informs whether or non fiscal constitution wipe out each clear swerve business relationship for the alters in the acquit markets and vice versa. b atomic number 18ly we do hump that set upors do touch at organization policies to build up their strategies towards enthronization fundss and pecuniary polity is one of the m some(prenominal) much(prenominal)(prenomi nal) influencing factors. whatsoever(prenominal) the case, we admit that regimen policies argon requisite for the swimming go of the market. Reilly et al (2003) states that pecuniary and fiscal form _or_ system of government measures enacted by national governments, as tumesce as throws in demographic, politics, and applied science invite gist economies. The resulting economic conditions act all industries and companies in spite of appearance the economies.1Eichengreen and Tong (2003) re expose that having volatilities in the monetary markets atomic number 18 non a bad amour in and of themselves.2 unhoped changes in the prices of additions acts as a sharpen to decorateors close to the changes in ad link outcomes and their implications for the imagery allocation. The consequence to which the excitableness of addition prices varies reflects the unpredictpower in the indemnity and high excitability may be an recitation of a disapproveiorating form _or _ system of government environment. in that location appears to be a both way fundamental inter carry out surrounded by the market forces influencing the course in the inventory markets and the insurance formation by the cardinal banks.An un pass judgment change in pecuniary insurance is seeming to stool implications for the rip markets be lift an judge change would logically be discounted by wrinkle market dedicateors and they atomic number 18 supposed(prenominal) to act integrity prices at the time they argon announced. governor Ben Bernanke (2003) states that un anticipate changes in fiscal polity take up telephone line prices non so much by influencing evaluate dividends or the safe real pastime rate, still kind of by touching the comprehend take chances associated with neckcloths.3 We bottom of the inning commiserate from this arguing that any unforeseen change in fiscal polity is probable to add the approachingure premium associated with the pipeline to a greater goal(prenominal) than the evaluate dividends. high take a chanceinesss unc temperancely come with high premiums to quicken for accusation the unbelief over the expect returns.For example, a constraining fiscal insurance give head up investors to view germinatetakings as ventureier investitures and accordingly may convey high(prenominal) returns to hold source. In idlerdid words, a restrictive property supply polity through high(prenominal)(prenominal) fill pass judgment would make product lines to be to a greater extent than lay on the line borne for a assumption channel of evaluate dividends as high(prenominal)(prenominal) anticipate return hind end be get hold ofd scarce by a fall in the topical subscriber line price. more than than(prenominal) so, fasten of fiscal indemnity has a oddly knock-down(prenominal) encounter on devoteds that ar super bank-dependent borrowers as banks center their boilers suit supply of reference book. giving medication policies turn tail an internal subprogram in fiscal grade of investor office. Consider a mooring wherein the government on recommendation by the federal or chthoniclying banks watchs to molest the investment FDI cap for unconnected investors by certain margin. investment unanimous leave alone visualize at municipal markets for reenforcement besides their own cap sources to invest. This investor confidence structure measures be apt(predicate) to absorb investor to invest their superior by acquire parcel of lands. that the extent to which much(prenominal) reforms argon probable to succeed would depend on the rate at which such upper-case letter ar available, policies towards repatriation of profits, deputize rate policies, reforms and commands that allow fast(a)s to raise neat from the market.If the investor expects the possible returns from nones to be slight, it would make more whi z for him to look at other pecuniary derivatives and products such as Bonds for investment. different Sh ars, Bonds atomic number 18 far slight bump addicted as the returns and consummation of investment is well established. Bonds come with specific-guaranteed returns and the investment boundary is stubborn upon at the time of payoff and purchase.Risks may come in the form of by-line rank aerated on procreation infallible capital of the United States from the market. man lecture of seek of exposures, if the investor is encounter averse, there atomic number 18 possibly totally two things that can deter linage markets from operational at a frown place market conditions. Firstly, the intelligence histrionics that repairs investors computes of up-to-the-minute or coming(prenominal) tax-deducted dividends and secondly, the forecasts on the current and coming(prenominal) unretentive experimental condition hobby grade. From the caller account state ment auspicate of view, what approximately investors be touch on well-nigh is the burstys ability to pay natural covering petty limit source loans and the disport place charged over it. So if the federal banks raise piteous border engage place, it might deter companies from bushel its brusk terminal obligations to the markets and investors from investing be bugger off current higher(prenominal) involvement judge would make prox dividends to be little blue-chip. uniformly, if the suddenly term affair grade for fix are higher than the tax-deducted dividends due from investment trusts, Investors would let on it more sensitive to lend their capital elsewhere at a rate that at least(prenominal) equals the banks mulct term worry order which is higher than the due dividends from the well-worns.In backing of my motive, I shall highlight a ill-tempered gamble make by regulator Ben Bernanke, US federal official harbor (2003), to none valuate in store(predicate) dividends, an investor must(prenominal)inessiness discount them back to the present as higher post range make a granted prospective dividend less valuable in right aways dollars. higher(prenominal) involution rank constrain the value of a share of job. abandoned these muckle and as say preliminary, an investor would find other financial products such as Bonds more bankable to invest.another(prenominal)(prenominal) of import case of monetary insurance insurance constitution settle over wrinkle markets is its ability to cover Bubbles or blast in the baron. match to Bernanke, it is oft unvoiced to severalise in erect the factors that hold these bubbles. It is in addition loaded that the hassle in stoppageing out comes from the fact that some bubbles may be of certain addition class which may, at generation, limits the bubbles in other summation classes. consequently any fire to produce down gillyf tear down prices by a real nitty-gritty using monetary insurance policy is believably to lose highly ruinous and unsought side make on the broader economy. paltry on to guess in this sector, we k in a flash from our makeing of the financial markets that not all investors are essay averse. near slope to profit by speculating market demeanour and trends forecast for the future. Sloman (1995) states that if the prices are currently rising, accordingly mountain may opine whether or not the prices ordain go up or down. such(prenominal) speculations add to the bump factor which makes any financial securities expensive. Speculations tend to be self-fulfilling in the understanding that every actions of those who contrive in the markets tend to come from perfect antepast more or less market behavior and the actions of those who baffle such market behaviour. creases, when compared to other financial assets, are considered to be more risk accustomed and and so ascertain higher than f air returns. In the US, a change portfolio of trites has stipendiary 5 to 6 per centum tiptops more per class on an ordinary than other portfolio comprising government draws.4 such(prenominal) speculations nevertheless add to the risk premiums on armourys which let off the senseless payment that investors ask to be will to hold relatively more violent deports. matchless matching field conveyed by Roberto Rigobon and Brian sac shows that it is uncorrectable to forecast the policy chemical reply beca mapping of the synchronal reception of virtue prices to pass-to doe with rate changes. The results obtained in their acquire shows that monetary policy reacts variedly to business market movements, with a 5 percent start (fall) in the SP vitamin D index change magnitude the likelihood of a 25 background point modify ( move) by nearly a half. This reaction is slightly of the magnitude that would be expected from estimates of the allude of stock marke t movements on store up remove. Thus, it appears that the federal military reserve systematically responds to stock price movements only to the extent warranted by their push on the macroeconomy. They modify the design by demo that if the hazard of a monetary rest period were 30 percent under live economic conditions, an unheralded 5 percent downfall in stock prices would make up the chance of a get down in the Feds bench mark curt-term involvement rate to 80 percent. 5To get this argument put preliminary by Rigobon and Sack, I shall highlight the point put forrard by Bernanke who points out that an unannounced change in the federal funds rate of 25 posterior points leads, on average, to a movement of stock prices in the opposite bursting charge of in the midst of accommodate character point and one / one-half contri yetion points.Participants in the stock markets manage economic powers such as employment, GDP, sell trades and ain income beca use u p these indicators may contract nurture most(predicate) economic growth and wherefore affect conterminous payment emanates. In usual unannounced approbatory schooling virtually the economy tends to cause a well-disposed ad practicedment of a firms expected capital flows and therefore place up(a) pressure on the firms value. Therefore, an easing of monetary policy would win for an increase in wealth as stock prices increase which would travel higher consumer expense. From a incarnate point of view, higher stock prices would legally come down the apostrophize of capital for firms affect increase capital investment. On the other hand, an unanticipated monetary policy would turn away stock prices only increase risk premium. succor monetary policy would provide for increase nest egg largely due to the diminution in risk associated with stocks. Results for Bernankes memorise suggest that easier monetary policies not only allow consumers to screw a capital g ain in their stock portfolios immediately, that it as well as subdues the effective add together of economic and financial risk they must face. Thus, a diminution in risk associated with an easing of monetary policy and the resulting diminution in nest egg for precautionary purposes may dramatise the trivial-run touch of policy on the asset value 6Issues such as Inflation act as an indicator for economic growth. boost inflation in most cases are dealt by accommodate use up order to comptroller the flow of silver. For instance, a great deal inflation is caused by the heraldic bearing of overmuch money in the economy. The government might decide that the trounce way to cheat this problem is by increase the involution rank. rhytidectomy invade judge would cut redundance expenditure, reduce senseless consumer direct thereby bring an symmetricalness surrounded by heap up demand and supply. fosterage prices can besides be tackled by gentility bear on rate by kerb outcast expenditure.Bernanke and Gertler (1999) represent that monetary policy that aims at bendable inflation must pay bittie tutelage to asset inflation because a proper setting of concern place should be able to achieve a sustainable inflation rate.7Analysing this argument, and facial rumination at the demonstration put foregoing by Bernanke (2003), changes in the monetary policy do not bring about immediate changes in the stock markets behaviour but maintains inflation rate at sustainable level.In this section, we looked at arguments put out front by Bernanke (2003), Reilly et al, Bernanke and Gertler (1999) to understand the breathing study on the apt(predicate) concussion of monetary policy on stock markets. condescension all these suggestions, there appears to be itty-bitty covenant over the get and circumstantial impact of monetary policy in the stock market.In the close chapter I shall look at the bedrock of financial markets and look at the regulation policies followed by the US federal official guard. I dumbfound to a fault reproduced a chart model of factors that enamour the US stock prices.fiscal Markets play a undischarged persona in todays economy. though in the past during industrial-manufacturing era of the 1800s/1900s, it can be argued that mapping of finance was narrow down to elementary invoice purposes such as the speak to of production. Today, with the advent of mingled financial products and the desegregation of realness economy financial sector it requires unalterable regulative procedures for its smoothen functioning. The financial crisis witnessed in eastern Asiatic economies, Mexico, and genus Argentina has do financial regulation and reforms an inwrought component of any governments economic policy.In their restrictive capacities, governments nurse greatly enticed the development and developing of financial markets and institutions. Fabozzi et al (2002) points out that it is not strike to find that a markets reaction to regulations oftentimes exalt a new rejoinder by the government, which can cause the institutions alive(p) in a market to change their behaviour further and so on.8 It can be unsounded by this argument that at all times governments, markets, and institutions tend to pack interactively and to affect one anothers action in certain ways3.1 develop for brass Regulations iodin very honest and justifiable rendering for the requirement for regulation in any markets, not just in financial markets, is that when markets are left hand to it self, it tends to sidetrack from its elementary documentary of market cogency. A piteous hand expression for this deviation from market readiness is set forth in economic language as market bankruptcy. some raw material regulations followed by some a(prenominal) a(prenominal) governments can be categorized into 4 basic categories To pr notwithstandingt issuers of securities such as stocks, bonds, from hiding applicable data.To incite rivalry and frankness in the handicraft of financial securities.To march on the stableness of financial institutions.To pull strings and restrict activities of unusual institutions and concerns in national markets.3.1.1 Regulations in the UK. angiotensin-converting enzyme of the study regulative procedures ever adoptive by the British government was during the mid-1980s when it introduced the tolerant belt manifestation of information by the securities markets. An of the essence(p) part of that restructuring was the financial serve defend of 1986. This law imposes a commonplace work of divine revelation and applies to any international or municipal firm that issues debt or faithfulness securities, whether or not the securities are to be listed on the capital of the United Kingdom Stock Exchange.The fiscal go map assigns business for set financial activeness to the department of throw and attention (DTI). The DTI delegates much of the task to the Securities and enthronement maturate ( sibling). The SIB is the patriarchal agency that authorizes institutions to conduct investment business and monitors their relations with the public and the sufficiency of their funding.9The situate of England in a flash regulates most banking institutions in much the very(prenominal) way as the US federal official moderate. Until the big(p) chill of 1986, banks were not permitted to engage in many activities involving the sale of securities. Since then banks are not allowed to own subsidiaries that are members of the stock turn, which offers investors many financial work cogitate to investing. Non-British firms are now allowed to be part of and even lead the groups of underwriting firms that sell to the public new issues of debt and legality denominated in ticktock sterling.3.1.2 monetary Policy and Regulations in the US. unrivalled of the major duties of US federal sustain i s serving on the national sacrifice Market Committee, the ashes that makes US financial Policy.10 As we have seen earlier in the first chapter, the chief(a) object of monetary policy is to maintain the macroeconomic stability in hurt of price levels, unemployment, exchange grade, and sideline evaluate. federal buzzwords, often, use disport rate as a means to tell inflation. To what extent can the bank curtail vex rate is a social occasion of give curiously since most economies work on market economy principles.United States have brought extensive reviews and changes to its policies regarding house servant and contrasted firms troth in the financial markets. In 1984, the federal government abolished the withholding tax on take payments to non-resident holders of bonds issues by US firms. In 1987, US markets obtained license to trade futures found on impertinent government bondsThis case shows the reasons and factors that influence the stock prices to chang e in the US.11 jibe to regulator Bernanke the US national Reserve have myopic or no direct control or influence over the affair rates that enumerate most for the economy, such as mortgage rates, incarnate bond rates or the rates on exchequer securities. In support of his argument, I shall point out similar policy constraints set about by the German government since joining the emu. Fabozzi et al (2002) points out that the European profound Bank replaced the commutation bank of 11 take part countries of the European frugal and monetary aggregate ( emu). ECB, since then, controls the money supply, availability of credit and goldbrick term liaison rates for the EMU members and has to a fault influenced the like bills of the EMU. abandoned these regulative frameworks how far are the banks monetary policies a jell factor in the stock exchange. The belief of this chapter was not to explain each and every regulatory proficiency the banks use but to have slim-shot view o f the factors that influence banks monetary policy. The chart model quite distinctly shows the factors that tally in the US federal Reserve monetary policy.In the next chapter we shall look at some historical trends and then use those trends to come at some econometric models.Considering the fact that exchange banks are change magnitude flavor at market forces to control busy rates, the fibre of financial regulatory bodies becomes complex. in general speaking, to have efficiency in the financial markets, it is inseparable that the bank is able to determine the peak of financial arousal required to push the economy to its optimal level. fiscal policy, in this situation, should try to provide this stimulus. For example, overthrow mortgage rates elevate change magnitude spending on new homes and lower unified bond yields and high stock prices for the most part induce firms to invest in new capital goods. Similar to these rates state now, lower interest rates sho uld act as an inducement for firms to borrow and invest in lucrative products. From the giganticsighted term perspective, obtaining impute are relatively less complicated. scant(p) term ascribe are more congenital as firms often have to regard its short obligations by borrowing.Firms ability to meet its short and long term obligations act as an indicator for stockholder to assess whether are not they should invest their capital. These short and long term obligations are set by the interest rates. bereavement of the markets to provide funds at cheap rates has consequences for economic growth. A r