3/31/2005

Bonds up, dollar down

The article stated that the dollar is losing value and interest rates on bonds are increasing. This information seems like it should be used when making managerial decision on how much cash should be held by the corporation verses reinvested in other assets. The amount of cash a company has effect’s the market value of the stock. Do economic factors carry as much weight as the market value of their stock when making managerial decisions?

2 comments:

rico said...

Economic factors and stock price mean a lot to a company. The fact is though, one can not determine which factor to use in a decision making process without looking at what is best for the company. One decision may value economic factors, while another may reflect the price of the stock. You have to look inside the company to see what needs to be done first, then see which factors affect your decision more.

Dr. Tufte said...

-1 on Kenny's post for no link.

Dealing with how economic events like this affect the cash positions of firms is a staple of MBA level corporate finance. People get paid a lot of money for managing this sort of risk.