Tutor profile: Ayush U.
How does central bank (monetary) intervention potentially impact levels of private investment?
A central bank has the ability to control money supply through various ways such as setting reserve requirements and discount rates for banks or trading government issued bonds. This influences the ability of banks to lend and effectively raises the cost of borrowing/price of money for businesses. This can either encourage or discourage business activity, therefore impacting private investment.
Why is the IRR considered the cutoff for a worthwhile investment?
The future value of money is not equal to what it is today. Using a discount rate (eg inflation, treasury yields), we must calculate the net present value (NPV) of future cash flows. A discount rate that results in NPV = 0 is considered the internal rate of return (IRR). Any investment with a rate of return higher than the IRR provides a higher return than an investment with zero risk, which provides the risk free rate, and is therefore, considered worthwhile.
How might you inspire a team with low morale?
The first step would be to identify the root cause of an issue, whether through observation or better yet, direct communication. Depending on the problem, morale can be uplifted by giving more autonomy/power, communicating the vision clearly, recognizing their efforts or honest feedback on their contributions. Nonetheless, more often than not, something can be done to boost team confidence.
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