Compare Inflation Measures, Including Their Uses and Limitations
There are two major measures of inflation: the consumer price index and the producer price index. Consumer Price Index (CPI) The consumer price index is an inflationary measure that considers using a consumption basket as a tool or an indicator…
Economic Indicators, Their Uses and Limitations
Economic indicators are variables that give information about the condition of the economy. Generally, economic indicators are grouped according to whether they are leading (forward-looking), lagging (backward-looking), or coincident (simultaneous with the economy). Leading Indicators Leading indicators include share prices,…
Effects of Combined Changes in Aggregate Supply and Demand on the Economy
Aggregate Demand Aggregate demand is the total demand for goods and services in an economy. It is defined as the sum of the amount spent on real goods and services by all economic agents. It is calculated as shown below….
Production Function Approach to Analyzing the Sources of Economic Growth
The production function (or Solow growth model) is used to determine the economy’s underlying source of growth. It attributes the growth of the gross domestic product (GDP) and productive capacity to: The production function explains that the gross domestic…
Value and Price of Forward and Futures Contracts
By assessing the difference between the investors’ determination of the value of a stock or option versus the prevailing market price, investors can either buy or sell the asset to attempt to profit from this discrepancy. However, the same terminology…
Mechanisms to Manage Stakeholder Relationships and Mitigate Associated Risks
In seeking to balance stakeholder interests, a company may employ various mechanisms in stakeholder management. Common mechanisms include: holding general meetings, electing a board of directors, having an audit function, company reporting and transparency, policies on related-party transactions, and remuneration…
Functions and Responsibilities of a Company’s Board of Directors and its Committees
The board of directors oversights company operations and serves as the link between its shareholders and managers. It has the ultimate responsibility of ensuring that the company adopts proper corporate governance principles and complies with all applicable laws and regulations….
Factors That Can Affect Stakeholder Relationships and Corporate Governance
Both market and non-market related factors can affect stakeholder relationships and corporate governance. Market factors are those factors that are related to the capital markets, while non-market factors are those that are not related to the capital markets. Market Factors…
Potential Risks of Poor Corporate Governance
Weaknesses in corporate governance practices and stakeholder management processes expose a company and its stakeholders to several risks. The reverse scenario is that effective corporate governance and stakeholder management practices can create several benefits for a company and its stakeholders….
Factors Relevant to the Analysis of Corporate Governance
There are several factors that analysts consider when assessing a company’s corporate governance structure and stakeholder management. These factors can provide important insights into the quality of management and the sources of potential risk. The factors that analysts look at…
