Questions tagged [investment]

Regarding the purchasing of capital and productive materials by firms. this differs from saving which is a similar action done by consumers.

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Do stock indexes (S&P 500, DJ, ...) directly depend on inflation?

I can't understand what stock indexes really are. What they are representing? As far as I know, they represent relative change (in points) in the prices of shares of a given set of companies. Is that ...
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I have tried to solve it but my answers are wrong so i needed help

anyone can solve this question and make me understand
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Understanding the Formula For the Accumulation/Distribution

My understanding of the essence of the Accumulation/Distribution Index is that it tracks the closing price of a security during each period relative to its price range for that period, something like ...
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Open Interest On Stocks

According to the first bullet point in this explanation, "In the stock market, open interest is the number of buy orders submitted before the market opens. When the open interest is high, people ...
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The case where the entire amount of investment goods are supplied by the imports

A positive investment multiplier does not exist in an open economy simple Keynesian model when the entire amount of investment goods is supplied from import. Examine the validity of this statement. My ...
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How are retail investors served on the primary market?

When a company issues new shares on the primary market, is it possible or even obligatory to reserve a given amount for retail investors? If it is possible: How often is this done? (From Wikipedia I ...
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Differences between stocks and bonds

I just learned what bonds are. They seem similar to stocks, but different in key ways. I'd like to know all the ways. I'll list the differences that I currently believe they have. The only reason I'm ...
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Momentum Indicators/Oscellators for Trading

The concept of momentum in trading is a bit weird to me. It seems to me to be measuring a first derivative or first difference of price, or something in that ballpark depending on the exact formulae ...
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Investment variable in GDP - Data Selection - World Bank, IMF

I want to test the correlation of a variable with investment in the national income formula C+I+G+NX. Using IMF data, there are a lot of different investment variables in different formats. What would ...
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Is there a consensus that carbon prices are poor at driving investment?

A post dated 2017 by Skillings on the website of E3G, a think tank focusing on the political economy of climate change, refers (in the 5th paragraph) to: "recent emerging consensus that, whilst ...
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Why does interest rate differential affect capital flow in equities?

With the recent news of US fed hikes, there are emerging markets where central banks have decided not to raise rates, like in India, Indonesia, China, etc. The common theme I read everywhere is this - ...
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Is there a scenario where investment and interest rates could both be increasing

Is there a scenario where investment and interest rates could both be increasing? I know that lower interest rates lead to increase borrowing and thus increased investment spending. So there is ...
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Information Asymmetry in capital markets: EU ad-hoc announcements/8-K filings in other countries

In many countries, companies whose securities are traded on a stock exchange are subject to an ad-hoc disclosure requirement. This ad-hoc announcement publication duty refers to the obligation to ...
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Are major banks in US necessarily going to benefit from the rise of federal fund rates?

https://wtvbam.com/2022/01/05/fed-funds-futures-see-rate-hike-in-march-after-minutes-of-policy-meeting/ It is believed that Fed is very likely to raise the Federal Fund rates in the next a couple of ...
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Discrepancies Between Total Investment Amount and Paid-in Capital

My surervisor purcahsed investment data from a market analysis company. The data lists investment Amount (in dollar) and Total Paid-In Capital (in dollar) for each start-up company. Sometimes those ...
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Which model of capital accumulation do macroeconomists prefer, renting model or investing model?

Consider a closed economy with perfect competition, no government and no fiat money. Consumer goods are aggregated as a single type of goods and prices are measured in units of goods. For such an ...
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Why do we have *daily* series of T-bill yields?

I understand that each week the US Treasury issues new T-bills at different maturities (1-month, 3-months, 1-year, etc). As far as I understand, this issuance happens every Tuesday. After the auction, ...
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Why we say "active investing puzzle" while we already know the reason?

Han,2021 describe active investing puzzle as: Notably, individual investors trade actively and have invested in active investment funds for decades, and they thereby have on average underperformed ...
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How does foreign aid money help another country develop?

How does fiat currency help a country's economic growth? For example, if a certain country such as the U.S or Brazil gives 1billion dollars to a developing country like Angola or Congo, how does that ...
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Are there stock exchange public offerings aimed for a fixed number of buyers?

If I am not mistaken any public offering is locked after "enough" entities have become shareholders (after a certain amount of money was invested/promised). Therefore, locking a public ...
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How to compare investments with different risk and expected return?

Supposing I can choose to invest money in several different investments, each having risk $\sigma_i$, for example, calculated as standard deviation and expected return $r_i$ let's assume they have ...
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How to account for the cost of financing in discounted cash flow analysis?

The discount rate accounts for the opportunity cost of capital the cost of capital (and usually also for risk, but let's ignore it) So, if I invest 1000 and I get 1100 in return next year, you could ...
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Risk seeking investors: Do they benefit from return at all?

Starring on the indifference curves for different types of risk preferences I ask myself why the risk seeking investor would be indifferent between an investment on the far left of his indifference ...
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Why does a risk-return relationship that has historically been positive confirm risk averse investors?

As I am reading through a corporate finance textbook I came across the following figure that plots the relationship between risk and return for different asset classes: The textbook states: Figure ...
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Confusion regarding the definition of inflation premium

'Inflation premium' is defined here as the higher return that investors demand in exchange for investing in a long-term security, where inflation has a greater potential to reduce the real return. In ...
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Relationship between taxation, national debt, and pool of private investment money

We've all heard the argument that an increase in taxation of the wealthy, or of investment earnings in particular (capital gains + dividends) will discourage investment and hurt the overall economy. ...
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What does the term "non-commercial, patient equity" mean in its entirety?

Source: https://www.undp.org/sites/g/files/zskgke326/files/publications/2018%20DREI%20Off-Grid%20Full%20Report%20Final%20(20190306).pdf (pg. 15) This term is used to describe financing in solar mini-...
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What would happen if individuals stopped investing their money in conservative low-yield products? [closed]

There has been a rise in popularity of retail investing in stocks driven by higher annual % returns. The % returns offered by things like banking savings accounts or government bonds seem a lot less ...
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Is there any consensus on investment spending?

I know there is never a total consensus among economist but do economist on average want to see investment spending increase? I speaking from the perspective of someone in the US.
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Does savings always equal investment? Are there any cases where savings could be removed from the economic system altogether and break the balance?

Assuming a closed economy, does savings always have to equal investment? If an individual produces a certain amount of a resource and saves it, that becomes part of the savings of the economy. However,...
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Proximity-concentration hypothesis: homogeneous firms and symmetric countries

Hi everyone I am running into a stone wall and don't seem to be able to solve this, can someone show me the steps how I can insert 1 into 2 and get 3. $B=\frac{f_E+f_D}{φ^{(σ−1)}*(1+τ^{(1-σ)})}$ $π =...
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What happens to an MBS if all the underlying mortgages are fully paid back by the borrowers much before the maturity date?

What would happen to an MBS (mortgage-backed security) if hypothetically speaking all the underlying mortgages were fully paid back by the mortgagees (borrowers), much before the maturity date? I ...
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How did investment go from exogenous to endogenous in the IS/LM model?

Context: I am currently taking an introductory course to macroeconomics and we are on the topic of Keynesian Economic and the IS/LM model. Initially we saw that the investment (I) component of ...
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Why do stocks that don’t pay any dividends change price when the company does better?

I don’t understand why (non-dividend paying) stocks increase in price when a company is successful; is it just because everyone expects that everyone else will find it more valuable because the ...
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Negative Interest Rates and Pension Funds [closed]

How do negative interest rates impact the future prospect and business model of (defined benefit) pension funds? What could be winning investment strategies for pension funds in a negative interest ...
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Perfectly functioning credit markets and consumer saving

Today in my Macroeconomics lecture, while covering the Real Intertemporal Model with Investment (Chapter 11 of Williamson's Macroeconomics), my professor proponed that a key assumption to not make ...
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Uses of simple interest

Recently I started to read again Brealey & Myers's "Principles of Corporate Finance" (an older edition I hold it since I attended to the university course on Economics and Corporate ...
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Why doesn't stock market help to boost the economic growth directly?

For example, during the recession, the central bank often goes to buy financial instruments that are riskier than government bonds (such as corporate bonds)- which is called "quantitative easing&...
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Treatment of natural disasters and wars in consumption of fixed capital

Assets destroyed by natural disasters and wars are not included in consumption of fixed capital (CFC) in the US NIPA or the UN SNA. Suppose though that the US decided to start including such asset ...
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Does treasury pay interest+ face value to the fed?

heard all the profit that the fed makes goes into treasury.. does that mean the treasury department can make unlimited money buy selling bonds to the fed? like if they issue bond to people, and the ...
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What is the main difference between FDI and short run capital inflows/outflows?

What is the main difference between FDI and short run capital inflows/outflows? I feel like both are quite similar in their nature but I don't understand the distinction between the two fully. Many ...
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mortgage rate in 2008 [closed]

if banks and finanfial entity paniced, which cause people to stop lending which leads to higher interest rate, how did the mortage rate stayed the same in 2008? it barely dropped. It's kind of ...
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Is investment in real estate a real investment?

In the book The Financial Crisis and the Free Market Cure in chapter 3 author said that investment in real estate is not really investment. It is jobs that create ...
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What does it mean, 'Higher interest rates attract FIIs and FPIs'?

What would interest rates have anything to do with shares? When we say a higher interest rate attracts FII/FPI, does it not mean it is investing in shares of a company? For example, how does it help a ...
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loanable funds theory: why is the supply of loanable funds equal to saving (+ dishoarding + new money)?

It seems that the loanable funds theory suggests that all that is saved is supplied in the market for loanable funds. This makes sense when we are talking about 'household saving' (i.e. household ...
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Does salary contribute to GDP under the expenditure approach?

The question really confuses me. On one hand, we can consider the wages as purchasing services from employees. On the other hand, the salary is also part of the cost of the products, thus it isn't &...
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Where does investment originate from in the circular flow model?

The above image is from my macroeconomics textbook. I’m struggling to understand the “financial markets” corner. If financial markets refers to banking and perhaps the stock market, is it true that ...
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Productive and Non-productive investment

What is the exact difference between Productive and non-productive investment? There is no hard and fast distinction that I could find. Additionally, Is it correct for me to label non-productive ...
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Keynes' conception of investment

Keynes defines saving as equal to investment, saying: "Having now defined both income and consumption, the definition of saving, which is the excess of income over consumption, naturally follows ....
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Negative Risk Free Rate Sharpe Ratio

currently I am writing my Master-Thesis about SRI-Fonds. For analysing Sharpe Ratios from different Fonds I need to use the risk free rate (e.g. Euribor 3M). Unfortunately I can‘t find anything about ...
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