interview question- good example?
hey guys,
Whats a good example of a recent macroeconomic event/announcement that effected the value of a firm?
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I would guess a change in interest rates are the easiest example, don't if you are from the U.S. or somewhere else, but depending on what is considered recent, you could go with that. It can effect the value of a firm in quite a few ways, from risk free rates and in turn discount rates (i.e. WACC, and in turn, Terminal Value), to interest earned on items like cash holdings in banks.
A lot of answers come to mind, i.e. industrial production went down, industrial industry growth is slowing down, we are likely to see less revenue growth in this industrial firm, perhaps tighter margins, as well.
Exchange rates adjusting could affect a firm doing business in a lot of nations, this can be affected through interest rate annoucements, inflation, unemployment, production, etc.
1) Write-downs
2) Fed as a back-stop and babysitter
3) Credit market turmoil
4) Slow down in deal flow and sell-side mandates (decreased revs)
Higher inflation leading to a decreased strength of the local currency, which can affect sales and production costs if the corporation is multinational.
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