Both EBITDA to enterprise value and P E ratios can be linked to interest rates through the discount rate used in discounted cash flow valuation Holding all else equal, when discount rates are higher, valuation ratios are lower Perhaps because of this, we tend to see stock prices as well as the valu...

Nominal interest rate real inflation If real rates go up it indicates a preferen ...

Both EBITDA to enterprise value and P/ E ratios can be linked to interest rates through the

Question:

Both EBITDA to enterprise value and P/ E ratios can be linked to interest rates through the used in valuation. Holding all else equal, when discount rates are higher, valuation ratios are lower. Perhaps because of this, we tend to see stock prices as well as the value of private business transactions decline when interest rates increase.
Macroeconomists like to describe interest rates as consisting of two components: the real interest rate component and an expected inflation component. In some situations, increases in interest rates are the result of an increasing real interest rate; in other situations, the cause of an interest rate increase is an increase in expected inflation. How might valuation ratios be expected to respond to an interest rate increase generated by an increase in expected inflation versus an interest rate increase that represents an increase in real interest rates? Discounted Cash Flows
What is Discounted Cash Flows? Discounted Cash Flows is a valuation technique used by investors and financial experts for the purpose of interpreting the performance of an underlying assets or investment. It uses a discount rate that is most... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...