What high interest rates do to the flow of funds

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Question: One of the important events that has become a real problem this year is rising global interest rates. While it is expected that interest rates would raise the debt payments that a firm has to pay to its lenders, it may not be as intuitive to understand what high interest rates do to the flow of funds. Write a short answer as to how investment banks, as intermediaries between firms in M&A transactions and bond holders, are being negatively impacted by high interest rates, especially when there is a greater amount of time between the initial raising of capital and the deployment of this capital.

Reference no: EM133284425

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