A few of the impacts of changes in inflation levels on businesses are highlighted below:
1. Impacts Aggregate Demand: As income does …show more content…
Impacts Required Returns by Investors: Due to an increase in inflation, interest premium required by investors will increase. As a result, if companies cannot accommodate the return requirement, it will become more difficult to source finance for business operation and growth.
3. Currency appreciation or depreciation in the Forex Market: A rise in domestic price level will lead to imports becoming more favorable than exports. As a result, when inflation increases, currency tends to depreciate and vise-versa.
4. Purchasing Power Parity: A rise in inflation will decrease the purchasing power of disposable income of the consumer. Hence, consumers may experience a lower standard of living due to not being able to afford as …show more content…
Increase market liquidity of stock: A lower priced stock is easier to sell than a higher priced stock.
2. Indicates a company is doing well: As stock splits occur when shares prices are increasing, this signals to investors that a company still wants to make its shares available to investors who may not be able to purchase it otherwise.
3. No actual impact on the market: Stock splits do not impact an investor’s return, the company’s profit margins nor increase competitiveness, hence, stock splits do not impact the financial markets.
18. M&A, Corporate Spinoff:
An acquisition occurs when one company takes over another and becomes the new owner. In contrast, a merger is less hostile as it involves consent of both companies agree to go forward as a single new company rather than remain separately owned and operated. Unlike in acquisitions, both companies ' stocks are surrendered and new company stock is issued in its place.
A few of the impact of mergers and acquisitions on businesses are highlighted below:
1. Synergy: Usually, the result of the merger or acquisition is greater than the sum of two parts. For instance, the talent of the workforce of company A may be able to better use the resources of company