Examine current interest rates and rates of inflation, and evaluate the impact of these rates on short-term decisions that must be made for the two firms you are researching for your final project....

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Answered Same DayMar 02, 2020

Answer To: Examine current interest rates and rates of inflation, and evaluate the impact of these rates on...

Ckreta answered on Mar 14 2020
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Adidas and Nike
Adidas and Nike
Introduction
    In this assignment, on the basis of annual and financial report of the company i.e. Adidas
and Nike, I will be analyzing the financial and annual reports of these both the companies. I will be answering all the questions relating to impact of interest rates and inflation rates on short term financial markets and instruments of the company.
Answer 1
    The current interest rate of Nike and adidas is 1.22% and 6.65% respectively (as of Sep, 2017). The interest rate has considerable impact on short term financial market and instruments. The movements in the interest rate are immediately reflected in the current market prices. The price of the tools of the capital market such as shares and bonds represent the present value of discounted cash flow, where the rate of interest is always in the denominator. The trend in the rate of interest and always moving in the opposite direction as the prices of fixed income securities and shares. With the increase in the rate of interest, the investors started expecting high return on the investment which leads to decrease in prices of bonds and shares (Doc. Ing. BoÏena Chovancová).
Answer 2
    The Current rates of inflation for Adidas and Nike is 1.6% and 2.1%. Inflation rate also impacts the short term financial market and instruments. Inflation erodes the short term investment of the company such as commercial paper. The company put money in the...
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