It is often stated by economists that inflation can destroy the long-term value of companies. Describe exactly

Fantastic news! We've Found the answer you've been seeking!

Question:

It is often stated by economists that inflation can destroy the long-term value of companies. Describe exactly how inflation does this. Provide an example to show the destruction of value.

Also, under what circumstances, or unique characteristics of firms position the firm to perform well in an inflationary environment?

Finally, if a company's earnings grow at the same rate as inflation, is that sufficient to fend off inflation's value destroying effects?

Related Book For answer-question

Investment Analysis and Portfolio Management

ISBN: 978-0538482387

10th Edition

Authors: Frank K. Reilly, Keith C. Brown

See More Books

Posted Date: Mar 28, 2023 02:49 AM

See More Questions

The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
4. (a) (c) 6 -6 5 6 5 7 6 (b) (d) -5 6 6 -7 [6-5] 7-6
Determine Acquisition Cost Which of the following would be considered part of the acquisition cost of an asset? Transportation costs Installation costs Repair costs incurred at the time of purchase...
Graph each horizontal parabola, and give the domain and range. x = y 2 + 4y + 2
Is the use of AI technology for work automation ethical? Why or why not?
A 10-year, 12 percent semiannual coupon bond, with a par value of $1,000, may be called in 4 years at a call price of $1,060. The bond sells for $1,100. (Assume that the bond has just been issued.)...
The Keyshawn Harris officer earns $10,100 per month. As of May 31, her gross pay was $50,500. The Federal Insurance Contributions Act (FICA) tax rate for Social Security is 6.2% of the first $137,700...
Southeastern Foods has hired you to analyze their distribution-system design. The company has 11 distribution centers, with monthly volumes as listed below. Seven of these sites can support...
Numerically estimate the surface area. 1 The portion of z= x + y2 inside r = 2-2 cos 0. %3D %3D The portion of z = y below z=4 and between x -2 and x = 2. %3D The portion of z =4- x above z = 0 and...
True or False: Unless non-monetary considerations dictate otherwise, choose the mutually exclusive investment alternative that has the greatest future worth, regardless of the lives of the...
True or False: When using future worth analysis with mutually exclusive alternatives having unequal lives, always use a planning horizon equal to the least common multiple of lives.
Account balances for C Tobins as at 30 June 2022 are listed in figure 11.3. You are required to: a write in the account or statement and group abbreviations b allocate the account balances to either...
What do you think are some pressing questions for health communication researchers to investigate?
True or False: If $F W(\mathrm{~A})>F W(\mathrm{~B})$, then \(D P B P(\mathrm{~A})
Pacific Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2018 and was completed in 2019. Pacific recognizes revenue over time according to...
In the busy port of Chennai, India, the number of containers loaded onto ships during a 15-week period is as follows: 1. Develop a linear trend equation to forecast container loadings. 2. Using the...
When comparing futures and forward contracts, it has been said that futures are more liquid but forwards are more flexible. Explain what this statement means and comment on how differences in...
Which segment of the secondary stock market (listed exchanges or NASDAQ) is larger in terms of the number of issues? Which is larger in terms of the value of the issues traded?
As an investigator evaluating how well mutual fund managers select undervalued stocks or project market returns, discuss whether net or gross returns are more relevant.
The simply supported beam is composed of two W12 $\times 22$ sections built up as shown. Determine if the beam will safely support a loading of $w=2 \mathrm{kip} / \mathrm{ft}$. The allowable...
If $P=800 \mathrm{lb}$, determine the minimum dimension $a$ of the beam's cross section to the nearest $\frac{1}{8}$ in. to safely support the load. The wood species has an allowable normal...
If $a=3 \mathrm{in}$. and the wood has an allowable normal stress of $\sigma_{\text {allow }}=1.5 \mathrm{ksi}$, and an allowable shear stress of $\tau_{\text {allow }}=150 \mathrm{psi}$,...

It is often stated by economists that inflation can destroy the long-term value of companies. Describe exactly

Question:

Expert Answer:

Inflation can destroy the longterm value of companies by decreasing their purchasing power For examp... View the full answer

Investment Analysis and Portfolio Management

Students also viewed these accounting questions