BU111 Chapter Notes - Chapter 5: Working Capital, Call Option, Price Drop
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BU111 Full Course Notes
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Chapter 5 economic factors: canadian financial system. If you understand it from the investors" perspective, you understand corporation"s perspective. The dollar today is not the same value as the dollar tomorrow: effect of trade balance on domestic economy. Balance of trade means imports vs. exports can be a surplus or deficit. Imports < exports means trade deficit bad because money is leaving the country as we are paying companies that sell their product in our country from abroad. Balance of payments: difference between money flowing in and out of the country as a result of trade and other transactions: effect of exchange rates on competitive advantage. When the exchange rate (value of currency) goes up, it increases your buying power. More imports, less exports when high exchange rate bad for exporter; less competitive: effect of gdp on standard of living. Gdp can sometimes overstate the true value inaccuracies.
