RSM100Y1 Lecture Notes - Lecture 8: Canadian Dollar, Foreign Exchange Market, Management Accounting
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What"s happening in business world? (ousing market is still booming: --limited supply of houses in toronto (cid:523)the supply is relatively inelastic(cid:524) --dollar is down, buying houses as an investment. --low interest rate, easier to borrow money, more people buy house, house price is higher. --interest rate goes down, the value of a dollar is likely to go down. As the interest rate falls, people will save less money as deposits and they will more likely to invest in the foreign currency market. The demand for foreign currencies (cid:523)especially the hard currencies(cid:524) will go up and the demand for can $ will go down. Consequently, the value of a dollar will be pushed down. --new bonds pay less interest, bonds is less desirable(cid:524) (cid:523))n economics, as the market interest rate falls, already issued bond will be more desirable and the prices will go up(cid:524) --the manufacturing sector may boost up (cid:523)not until (cid:884)(cid:882)(cid:883)7(cid:524)
