Effect on interest rates due to the investment in REITs

Masters
Essay
Miscellaneous
Pages 7 (1757 words)
Download 0
The earnings by oil groups and record returns in services businesses revived the fortunes in manufacturing sector in Britain in 2006. The capital invested by UK companies in manufacturing sector rose to 15.5 percent in the final quarter. …

Introduction

This is due to the boosted sales that enabled companies exploit the increased pricing power. The driving force behind record fourth quarter returns was sharp gains on gross trading profits. The Bank of England has concern about the companies' attempts to boost the prices. According to the experts' opinion, the rising pricing power of the companies may trigger the rise in interest rates as the demand for credit increases. The oil companies gained in fourth quarter after average performance in third quarter. Compared to 2005, the profitability in the manufacturing sector climbed back into double figures. The rate of return has increased to 10 percent in fourth quarter. In third quarter it is just 6.9. The increase in pricing power of the companies has shown its effect on real estate sector also and the industry benefited from low interest rates existed last year and the pricing power enjoyed by them. According to the opinion of the analysis, the UK corporate sector remained to enjoy the continued strong profitability during this year as energy prices have been reduced. Though there are high energy costs, the companies have gained from the high pricing power. The decrease of energy costs and a retained pricing power will increase the profitability of the companies further. As the firms are pushing up their prices, the profitability is set to be increased. ...
Download paper
Not exactly what you need?

Related papers

Interest Rates Essay
Thirdly and lastly, the lender has to be compensated for the decrease in value of the money due to inflation, for example a dozen eggs might cost 100rs today and after a year they might cost 110rs, so if I have loaned any one 100rs I will want 110rs back because that is what 100rs is NOW worth or that is the equivalent value. There are basically two theories that explain how interest rates are…
Bond Prices and Interest Rates
Similarly, a bond is said to be offered at a discount on its par value, if the bond price is less than the par value which occurs in the instance when the rate of return that is offered by the bond is less than the market rate of return that is offered on other similar risk assets in the market. A bond is said to be priced at par value if the market price of the bond is equal to the par value of…
Interest Rates Rise in the UK
These effects caused by a low inflation, low interest, but highly tax economy are the outcomes that are a current and continuing to thwart economic competitiveness and equilibrium across the UK manufacturing base.…
Effect of Marriages on Crime Rates
In this paper the authors through evidence are illustrating that marriage can reduce the crimes committed by an individual as it can involve the individual in social bonds. According to the authors the research done by them is however not accurate as all the figures in an individual's life cannot be kept constant and this restrains the authors to conclude authentically that marriage reduces the…
the determinants of the rate of interest and the significance of interest rates to policy makers and other economic actors.
It is described as interest in percentage of the amount of funds borrowed. This is a simple explanation of the rate of interest. Let's review some definitions of the rate of interest to comprehend the concept (Unit 3).…
Effect on interest rates due to the investment in REITs
This is due to the boosted sales that enabled companies exploit the increased pricing power. The driving force behind record fourth quarter returns was sharp gains on gross trading profits. The Bank of England has concern about the companies' attempts to boost the prices. According to the experts' opinion, the rising pricing power of the companies may trigger the rise in interest rates as the…
Interest Rates an Exchange Rate
The government raised interest rates to increase the demand for pound in the international market, this increase in demand was anticipated to make the pound stronger against other major currencies, however a speculative attack by investors led to the loss of funds, the government lost and some investors gained huge profits on that day.…