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Lecture5 - Investment Environment AEM 423 Copyright by...

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AEM 423 Copyright © by Vicki Bogan Investment Environment Economic Environment Economic environment is critical to financial markets Wall Street economists spend considerable time and effort trying to forecast the economic environment in which the financial markets operate
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Economic Environment During an economic boom Sales increase Profits grow Stock prices march upward Generally interests rates tend to rise As firms increase their demand for credit to finance expanding inventories and capital spending Technology stocks and cyclical stocks do especially well Economic Environment During an economic downturn Sales decrease Profits decline Stock prices move down Generally interests rates tend to fall
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