Question

In: Finance

How does the interest rate affect international trading and investment.

How does the interest rate affect international trading and investment.

Solutions

Expert Solution

Interest rate have a major impact on international trading and investment and it will impact them as follows-

A. Interest rate will be increasing aur decreasing the overall cost of operation for various businesses all across the globe so it will lead to change in investment perspective.

B. Interest rate changed by the central bank is always impacted into the markets efficiently because interest rate change will be leading to quick reactions from the market which can impact the trading and investment positions to a large extent

C. interest rate is often used for encountering the inflation in the economy and it is also used for encountering the monetary supply so it will be used by the central bank in order to control the level of monetary flow in the economy and it will impact the overall investment pattern.

D. lower amount of interest rate will also mean that people will be taking leverage and investing into the stock market

E. Interest rates are also impacting the performance of the financial sector to the large extent and hence it will impact the overall structure of the profits for various Financial institutions and it will determined by the investment by various analyst.

F. Interest rate change will also help in a major interpretation of the movement of the Global market in in a particular trend because majority of the central banks are following each other.


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