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Unformatted text preview: interest rates and inflation are at a high than the theory can work. When the market is flowing naturally, the inflation would work perfectly into the equation of an interest rate. 4.) Investors do not like inflation because the bonds investors buy into does not make them profit because the companies are not making money. When a company is fluctuating at a constant flow, the interest on the bond will make more money for the investor visa versa if there is a high inflation. 5.) During a recession, your interest rates will decrease because once again if the company you invested a stock into is struggling not only will your interest rate decrease you are losing money. In a recession the major forces for expected interest rates is you can not predict how your bond will come out I mean do not expect to much with a tough economy if your company is struggling your bond will as well....
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This note was uploaded on 01/05/2012 for the course 101 melissa jo taught by Professor Acc101 during the Spring '11 term at Aarhus Universitet.
- Spring '11