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Identify decisions made by key organizational stakeholders that are affected by interest rates.
Identify how interest rates affect the cost of operating the business

Find the current yield curve and interpret the effect of its shape on decision-making within the organization

Evaluate how changes in interest rates affect the customer demand for the product in the scenario.

Explain how business planning and operations are dependant on monetary variables other than interest rates.

International monetary fund site: http://www.imf.org/external/pubs/ft/weo/2007/02/weodata/weoselgr.aspx.

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Identify decisions made by key organizational stakeholders that are affected by interest rates.
Some of the decisions made by key organizational stakeholders that are significantly affected by interest rates and their fluctuations are:
1. Mortgage arrangements for approved sales. Mortgage rates are directly related to interest rates. The higher interest rates are the higher mortgage rates will be which can significantly affect customers ability to pay their mortgage and hence the attractiveness of buying a new car
2. How Big Auto manages its cash which include decisions on sources of funds, investment decisions for excess cash, and management of interest rate exposures
3. How to dispose of excess cash - distribute to shareholders or reinvest in the company with the profitability of investment choices significantly affected by interest rates.

Identify how interest rates affect the cost of operating the business
Price levels are dependent on interest rates and in turn affect demand especially of price sensitive products such as automobiles. When interest rates increase, the prices of production factors might also increase which can result to the increase in the total cost of producing a quantity of a product. This increase in total cost would then drive the final price of the product in the market.

Find the current yield curve and interpret the effect of its shape on decision-making within the organization

The interest rate yield curve provides a visual representation of the fluctuations in interest rate. From the above graph, it appears that interest rates of the different sovereign securities move in the same way and direction. Analysis of the yield curve can aid management in effective decision making. An upward trend in the ...

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