Question

State two ways in which inflation can be handled in investment analysis. Which way would you...

State two ways in which inflation can be handled in investment analysis. Which way would you recommend and why?

Homework Answers

Answer #1

Inflation can be handled in Investment analysis in following two ways-

A. Adjustment of discounting rate with the risk weightage in association with the inflation- Discounting rate should be adjusted in accordance with the inflation in the economy which will be providing with an appropriate rate which is used for discounting with the the overall cash flows and which will reflect the true cash flows after the effect of inflation

B. One can also try to consider the real rate of interest and one should also try to considered a time value of money factor in order to eliminate the effect of inflation from the overall Investment analysis in order to have a true and fair structure of the cash flows.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
, '' In what ways would you regard government expenditure as inflationary and what measures would...
, '' In what ways would you regard government expenditure as inflationary and what measures would you recommend inflation of this nature.
Apparently, Marginal Cost, MC can be calculated two ways – and each ‘way’ will result in...
Apparently, Marginal Cost, MC can be calculated two ways – and each ‘way’ will result in exactly the same answer!! Apparently, we either use the change in Total Cost, TC or the change in Total Variable Cost, TVC? i. Explain carefully WHY these two approaches result in exactly the same outcome or answer?
If you were stranded on a deserted island with only one method of Investment Analysis, which...
If you were stranded on a deserted island with only one method of Investment Analysis, which one would it be and why?
what are the various ways in which policy can raise the level of investment ? suppose...
what are the various ways in which policy can raise the level of investment ? suppose the economy is at full employment so that increases in aggregate expenditures would be inflationary . nevertheless , it is desirable to raise the share of investment in full employment income . what kinds and combinations of policies would be needed ?
Describe two ways in which psychological factors can contribute to depression. Describe two ways in which...
Describe two ways in which psychological factors can contribute to depression. Describe two ways in which biological influences can lead to depression.
Describe two ways in which psychological factors can contribute to depression. Describe two ways in which...
Describe two ways in which psychological factors can contribute to depression. Describe two ways in which biological influences can lead to depression.
State three ways by which the concentration of a protein in a cell can be regulated?
State three ways by which the concentration of a protein in a cell can be regulated?
Describe two ways you can improve gait speed. Which has the greater speed, 10m/sec or -20m/sec?...
Describe two ways you can improve gait speed. Which has the greater speed, 10m/sec or -20m/sec? Why? List the three variables that determine projectile motion. Which one do you have the most control over? Why? Which one has the biggest impact? Why?
Unemployment and Inflation Two of the biggest issues in macroeconomics are inflation and unemployment. Policymakers would...
Unemployment and Inflation Two of the biggest issues in macroeconomics are inflation and unemployment. Policymakers would like to keep both of these measures low. Often, however, there is a tradeoff between the two. A strong economy that lowers unemployment can put upward pressure on prices. A weak economy that lowers inflation can increase unemployment. We currently have the benefit of both very low unemployment and inflation. But things could change and it’s good to have policy plans in place before...
Read the following proposed research study. Please state the type of statistical analysis that you would...
Read the following proposed research study. Please state the type of statistical analysis that you would recommend to the researcher and what brought you to that conclusion: Flynn is interested in looking at the relationship between how valuable an item is and the likelihood it is to be stolen. He measures how valuable the item in and places it into 3 categories. He also determines whether the item is stolen or not.