Macroeconomics and Investment Returns: An Overview
Case Study Analysis Solutions
This Case is about Finance
Publication Date: 08/16/1999
The overview briefly explains the consequent impact on investment yields and the relationship between the macro behaviors of the market. It is designed to be used within a class on portfolio management or investments. The note shows this theorem suggests the long run expected real yields on equities are determined by the estimated average growth rate and the dividend growth rate in dividends, which then is dependent upon long run macroeconomic increase. Estimated long term real yields on bonds are determined by the yield to maturity and the long run inflation rate. A summary of the best way to identify business cycle standings is an important part of this evaluation. Additionally, the evaluation targets strategies for identifying disequilibrium scenarios for interest rates. Eventually, the note concludes by discussing some short run effects on macroeconomic variables and the crucial function of monetary policy.