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If interest rates are low, the marginal investor sees little benefit to deferring the enjoyment of their earnings. A great deal of bonds and bank deposits are u
by nickff 10y ago
If interest rates are low, the marginal investor sees little benefit to deferring the enjoyment of their earnings. A great deal of bonds and bank deposits are used to finance corporate investments in human resources and technology; from giving a line of credit to a family owned restaurant to buying an SMA line for an electronics manufacturer.
- guelo 10y agoThat makes no sense at all to me. If a company wants to borrow money to finance corporate expansion low rates is a great time to do it because the money is cheap.
- jessaustin 10y agoParent is talking about investors, not about firms. From afar, there seems to be a great deal of overlap. Up close, not so much. An eternal task for executives is convincing owners that the firm shouldn't just sell all its assets and distribute the proceeds.