Suppose a friend you know requires a mortgage loan

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Financing of debt

1. Assume a friend you know needs a mortgage loan to purchase a house. Your friend can purchase it now or wait until later and is unsure of what to do. What major economic indicators would you suggest they examine? To be specific, what would affect their decision to borrow now or postpone the purchase?

2. For the past 3 years a major department store chain has averaged approximately $10 billion in long-term debt. For the sake of argument, let us assume that either now or one-year from now they wish to add an additional $5 billion to finance store expansion. This is a given and does not need to be commented on. How could changes in Federal Reserve policy affect the store's decision of when or if to raise the additional debt?

Reference no: EM1326897

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