Please assist! This information will be use as informative guide to further assist and will be useful to develop better understanding with regard to the given topics. Please complete with references.
How your prediction of inflation or deflation will affect your personal investment decisions.
Amadeo, K. (2010). How does inflation impact my life? Retrieved November, 2010, from http://useconomy.about.com/od/inflationfaq/f/infl_impact.htm
Hellerstein, R. (1997). The impact of inflation. Retrieved November, 2010, from http://www.bos.frb.org/economic/nerr/rr1997/winter/hell97_1.htm© BrainMass Inc. brainmass.com October 25, 2018, 7:23 am ad1c9bdddf
INFLATION/DEFLATION AND PERSONAL INVESTMENT DECISIONS
Inflation is a situation where there is a sustained increase in prices of commodities. As noted by an online source, inflation hurts buying power (Amadeo, 2010). How does inflation impact my life?
(Retrieved November, 2010, from: http://useconomy.about.com/od/inflationfaq/f/infl_impact.htm)
As such, commodities would become more expensive while people would feel poorer because they could buy lesser amounts of commodity out of the same amount of money that they have. This is an indication of lesser purchasing power of money.
Inflation and consumption, savings, and investments
Because prices have gone up, households tend to utilize most (if not all) of their meagre income for consumption and least (if not zero) for their savings which should have been a source of their investments.
With a prediction of an increase in inflation rate, there is then a tendency for households and individuals to buy now, instead of later because of the expectations that commodities will cost more in the future. ...
Monetary policy and financial institutions for deflation are examined.
Exchange Rates Research
Using the information in Figure 11.1 on p. 328.
Describe your findings in a 200- to 300-word response.
1. You are assigned the duty of ensuring the availability of 100,000 yen for the payment that is scheduled for next month.
Considering that your company possesses only U.S. dollars, identify the spot and forward exchange rates. What are
the factors that affect your decision of utilizing spot versus forward exchange rates? Which one would you choose?
How many dollars do you have to spend to acquire the amount of yen required?
2. As an entrepreneur, you are interested in expanding your business to either Poland or Portugal. As part of your initial
analysis, you would like to know how much investment is needed to go to these markets. In order to get a rough number,
you hire a consulting firm to do initial investment analysis. The consulting firm provides you a short report about how much
money is needed for both countries. The numbers provided are: one million zloty (Poland's currency) and 45 million escudo
(Portugal's currency). To make a clear comparison, you need to convert these currencies to U.S. dollars. Do the conversion
and suggest where to invest.