Inflation decreases the buying power of a dollar. So when the yearly inflation rate surpasses the 'rate of return ', the market participants lose invested funds due to the deterioration of purchasing power. According to several financial articles, the significance of inflation on investment is subjective to the kind of securities held. A higher yield on a stock is not a safer expenditure; one most also take into consideration the risks involved. Interest rate risk can affect various bonds in different ways. A bond 's yield-to-maturity is the "discount rate" used to make the present value (PV) of all the bond 's cash flows equal to its price. When a bond 's yield rises, its price goes down, when a bond 's return goes down, its price goes up. For example, according to the article titled "How Interest Rate Changes Affect the Price of Bonds" it states that "the discount rate applied is the percentage of interest prevailing in the market for bonds of the corresponding risk and maturity". The greater the "maturity" of the security expenditures, the higher the return unpredictability. A technique to adequately lessen security price volatility is to decrease maturities. Also, inflation consumes the buying capacity of a bond 's expectation. Moreover, t-bills do not present a risk-free return, since they are susceptible to economic expansion. A trade-off often shows the link connecting risk and return. Presented the opportunity amid (Garnger, 2010) "two alternatives
Inflation erodes the purchasing power of a bond 's future cash flows. A rise in inflation will cause investors to demand higher yields to compensate for inflation rate risk. Also, prices will tend to drop because the bond will be paying interest with less purchasing power.
The idea of “risk” is used in many fields and industries. There has been large efforts made towards the understanding of risk. Since, risk varies so much depending on the field of study, the need for learning about it is warranted. As can be imagined, the importance of risk in a market economy is crucial. In the 1990s, JP Morgan made the Value at Risk (VaR) a central component of its work efforts (Cecilia-Nicoleta, Anne-Marie, & Carmen-Maria, 2011).
The question of whether Michael Moore is a propagandist rather than a maker of documentaries assumes that documentaries are never propaganda, so I begin my search for the answer by looking up the definition of propaganda.
Olympia's skin in painted almost flat and white to barely show the curves on her body. Also, Olympia' cat is not sleeping comfortable at her feet, like the dog in Venus of Urbino, but the cat is frightening and arching it's back at viewers and it is ready for fighting back. Olympia's expression is neutral and her confident eyes gazing down at viewers in order to show her power, which is different from the young woman in Venus of Urbino with her flirting smile and flirting eyes glancing at viewers which expressing her sexual desire. Obviously, Manet was inspired by the painting Venus of Urbino by Titian, but Manet's techniques that applied on his paintings and his purposes of the painting were completely different which shocked the viewers at the time but later on made Olympia became one of his masterpieces. Even though,
Inflation is generally, defined as sustained or continuous increase in the general price level in an economy. Inflation has been described and categorised in terms of the rate at which the general price level is increasing , market mechanism , expectations and causes. In explaining the causes of inflation one common cause always surfaces for consideration and that is that inflation occurs when aggregate demand is growing at unsustainable rate leading to increased pressure on scarce resources. Or Inflation can be caused when aggregate demand exceeds aggregate supply. This is commonly referred to “demand-pull” factors. Other factors mentioned in economic theory are the “cost push” factors, inflation expectations.
Such decisions may affect the company’s profitability today but judging from the fact that high risk means low stock price and vice-versa, high return waits in the future.
Inflation is general defined as the devaluation of the currency with the comprehensive and continued rising price level, which means the purchase of money is persistent declining (James and Charles 1975). And this is generally considered as the result of the amount of money in circulation more than the actual needs of the economy. It will directly leads to the devaluation of paper money. If the income of residents do not change, then the living standard of citizens will dropped, which might result in the social and economic disorder and can negatively impact the development of the economy. However, within a certain period of time, moderate inflation can stimulate consumption, expand domestic demand and promote economic development (Trevithick and Mulvey 1996). For example, sometimes the government borrow money from the central bank to expand financial investment and take measures to ensure that the private sector investment is not reduced, which promote economic growth as a result of the increase in total investment. Another case is for producers that the speed of product prize rising is always faster than the that of the nominal wage, so the profit of the enterprise in the short term will increase, and the enterprise will expand investment, as a result, have an positive effect on the economy.
Inflation is the rate in which the prices and services are rising above zero percent, which involves a declining value in the power of currency. While deflation is when the inflation rate goes below zero, making it a negative inflation rate. “Inflation has a direct impact on the investment environment; a rising or declining inflation rate can shift the balance of investment returns between stock, bonds, and other alternatives” (Little, 2010). An economy having zero inflation will eventually result in deflation, which can be defined as a fall in the general price level. Economists tend to track and estimate the general price level using several different price indexes. One of the best-known price indexes to measure inflation is the consumer price index (CPI). In most developing countries, what considered being a healthy growth rate for the economy is have an annual interest rate of CPI around 2%. Inflation is used as a tool to maintain the level of general goods and services. Having remarkably high inflation can interfere with the operation of the financial market, and making the purchasing power of currency decreases. Also, it makes it more complicated for people to make good consumer decisions. Thus, making countries tend to target their inflation rate around CPI 2%, keeping the inflation rate low as possible, as it will keep the interest rate positive.
More Australians recorded “No religion” than any other belief category, in the 2016 Census. The results, released on 27 June 2017, show non-belief surging from 22.3% in 2011 to 3x.x%, overtaking Catholicism which fell from 25.3% to x.xx%.
Several literatures reveal a good number of different approaches and theories to the price of risk. The two main competing economic theories we shall consider are the classical expected utility theory, and the dual theory of risk which was developed by Yaari(1987).
The long-term maturity period affects the predictability of its yield. A technique to adequately lessen security price volatility is to decrease maturities. Also, inflation consumes the buying capacity of a bond 's expectation. Moreover, T-bills do not present a risk-free return, since they are susceptible to economic expansion.
Inflation is the rate of increase in prices for goods and services. A rise in inflation decreases the purchasing power of money, meaning consumers would have to pay more for a product than they would have had to a year earlier. It is widely accepted that there are two types of inflation, demand-pull inflation and cost-push inflation. Demand-pull inflation is triggered by demand surpassing the economy’s ability to produce those goods and services required to satisfy demand. Cost-push inflation occurs when prices increase due to a rise in production costs. This leads to a fall in aggregate supply meaning a rise in the price of goods and services. (Boundless).The government believes it is vital to have low inflation and the target has been 2% for many years. Inflation influences other key economic policies such as employment, the interest rate and exchange rate. (BBC business). Inflation is measure by the Office for National Statistics, there are two methods of measuring Inflation, consumer price index (CPI) and retail price Index (RPI), the primary objective of each method is to calculate the changes in the price of products in a basket. Both have over 700 items assigned to their basket, what differentiates both is that the RPI basket also includes housing costs such council tax, mortgage interest payments as well as state benefits and pensions (The Telegraph). The basket is updated annually, items are brought in or taken out depending on consumer spending patterns, this is to
Inflation decreases investment returns and has to be taken into account when creating portfolios for various stages of investors’ lifecycles. The majority of investors desire their investment portfolio to maintain and improve their purchasing power. Maintaining purchasing power signifies that investment returns need to expand beyond the inflation hurdle (Grelck, 2011).
Inflation is defined as a sustained increase in the general level of prices for goods and services [1]. It is measured as an annual percentage increase. When there is an inflation, the same amount of money buys a smaller percentage of a good or service compared to previous years. This means the value of money drops when inflation occurs. In economics, the value of money is viewed in terms of purchasing power, which is the real, tangible goods that can be bought by money. When inflation goes up, there is a decline in the purchasing power of money. For example, if the inflation rate is 3%, then theoretically a 1£ bottle of water will cost 1.03£ in the following year. After inflation, the same amount of money could not buy the same amount of goods it could beforehand.
Disadvantages of inflation include high inflation rates that can cause hesitation and mistakes leading to less investment. It is discussed that countries with higher inflation, have lower rates of investment and economic growth. The higher the inflation the lower world-wide competitiveness. Another disadvantage is menu costs and the costs of changing price lists, stabile wage growth and declining incomes. Most importantly it can dcreas the real value of savings, which may affect older people who live on savings. However, it does depend on whether interest rates are higher than the inflation rate.