Case Study
For this module, you should focus on identifying the underlying assumptions made in the case and view it from a finance / economics perspective. Your write-up should focus on the following questions:
- When the Fed decided to engage in quantitative easing (OE), what underlying assumptions were being made about its impact? Did those end up being true?
- Whatwere the main mechanisms through which QE may stimulate the economy? Consider how QE may affect different economic sectors (households, banks, corporations), and think about different macroeconomic variables (inflation, lending, employment, etc.) that will be most affected.
- Finally, what impact will QE have on a company's cost of capital, its capital structure, and the valuation of its stock price?