- 9 Marks
AFM – Nov 2017 – L3 – Q1a – Role and Responsibility towards Stakeholders
Explains two reasons why interest rates rise in periods of inflation and discuss the implications of high or fluctuating interest rates on business financing and asset-holding decisions.
Question
Under conditions of inflation, it is common for interest rates to rise possibly at a rate different from those applicable to goods and services.
Required:
i) Explain TWO possible reasons for this phenomenon.
(3 marks)
ii)
Discuss the implications of high or fluctuating interest rates for:
- Business financing; and (3 marks)
- Assets-holding decisions. (3 marks)
(Give examples of the types of actions that a company might take)
Find Related Questions by Tags, levels, etc.
Report an error