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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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Are corporate savings deflationary?

Example: Apple. People "overpay" for their products, money that ends up in corporate savings and not in their competitors' coffers, sort of a black hole because Apple doesn't see enough investment ...
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How to calculate payback period of the project?

In order to finish a technological product, it was spent 50000 dollars (for materials, salary). 500 dollars per month is needed for support of the project (will be spend for servers). This product ...
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1answer
19 views

Is FDI the principal route for funds directed offshore to return to a country?

Is foreign direct investment the principal route for funds directed offshore to return to a country? For example, the UK has perpetual trade deficit. But the sterling sent overseas must make its way ...
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Economic Metrics (ROI, PP, NPW)

So I am doing this project, which includes in calculating the Economic Metrics for a profitability analysis. I have calculated Return on Investment (ROI), Net Present Worth (NPW) and Payback Period (...
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How does a govt surplus increases investment?

From the closed economy equilibrium condition $I = S + (T - G)$, how does exactly a surplus (which I assume would be used for paying debt) increases investment in the same amount? I ask that because ...
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What mathematical structure or formalism can be used for modelling strategic investment decisions of agents in the context of competition?

I'm trying to analyze the decisions of agents in investing scarce resource like time and money into developing their product/service/offering in the presence of competition. I need to know what kind ...
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401k vs stock investments when it comes to taxes

I'm a bit confused about what makes more economical sense when it comes to investing and taxes: 401k investments vs investments on your own. I'll try to formulate my questions as a simple example. ...
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Are that models that explain how companies become more efficient?

I'm trying to model/understand the following intuition: Company makes a product Product gets sold, company makes a profit Company does something with the profit to become "better" at what they do: ...
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Tax Cuts Affect on Economy?

If we look at the equation for national Savings = S(priv) + S(pub) = [Y-C+Tran-T] + [T-G-Tran] = Y - C - G . We see that Tax falls out of the equation. Therefore, does that mean changes in taxation ...
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Open offer made by companies to take over [closed]

What is open offer in simple terms? What is its meaning in cases of taking over the major stakes in other company?
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Why tax investment?

I assume that investing is more useful than consuming for society as a whole, at least in the long run. But then why isn't the government taxing consumption more and investment less? This would create ...
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Comparing values of 5s and 7% notes

I am a beginner in investment. I was reading Security Analysis (Sixth Edition) by Benjamin Graham, and on page 63 the last paragraph is written that: A third kind of analytical conclusion may be ...
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Investor sentiments in large open economy under Mundell Fleming Model

So I have been studying the Mundell Fleming Model, I fail to understand the impact of investment sentiments in a large open economy. This is what I think : Positive investment sentiments will ...
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107 views

Why do riskier investments pay more?

I'm talking about bonds, stocks, and the sort. I understand that an individual investor that's planning to invest, say, 50% of his savings, may require a higher expected gain to go for a riskier ...
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49 views

Net present value of studying?

Suppose I attend college with 10k tuition fee per year meanwhile I have a part time job for 5k annually. After 3 years, I get a job for 45 years and earn 40k each year. What is my net present value in ...
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Estimation of investment adjustment costs

Hi I am working on a problem set in my macroeconomics course. I have a hard time figuring out how to get started on one of the problems. The set-up is the following. A price-taking firm maximizes: $\...
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1answer
38 views

Hypothetical price of a city (e.g. Munich) [closed]

At lunch we pondered, how much a hypothetical investor would have to pay for a whole city. What would the combined value of all real estate in a large city (like Munich) be? Is there a way to ...
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Measuring the capacity of an investment strategy

From talking to people, an investment strategies capacity seems to have a major effect on performance once it becomes popular. XIV seems to be a good example. But, what I have yet to hear is how ...
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1answer
28 views

What country has the highest requirements for loans?

I was looking to find countries with the toughest regulations on loans(general loans not any specific ones) By that I mean: I mainly care to know where it is toughest for people to get a loan from a ...
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49 views

How do government purchases crowd out the private sector?

I am curious about how government purchases crowd out the private sector (if it does). If we look at a graph of the composition of US GDP, it seems that government purchases and investment are ...
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How much precious metals prices come from their use as investement vs practical use

Some precious metal price come almost exclusively from their value as an investement, as gold, while some others like palladium or osmium have important uses in industries. But lately those metals ...
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log returns in finance

Why are log returns used in finance? For example to calculate a stocks performance. There are a lot of articles on that topic yet I don't find them very helpful. Could somebody please explain step by ...
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106 views

Bank Runs During the 1930s

Why were there numerous banks run right after the stock market crash of 1929? Why would a bank fail because the stock market crashes?
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Why do we consider purchase of house by households as investment?

According to what I have read, investment is the expenditure on creation of capital goods, which means that it is done by producers. Then why do we treat buying of house by households as investment ...
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Do consumers also invest?

Definition of Investment that I have found: Investment is the expenditure incurred on the procurement of such capital assets that would help in further production . According to this, it means that ...
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Is the definition of Investment variable in Economics?

I studied that Investment is the expenditure incurred on the procurement of such goods that would help us in production of goods and services. And mainly consists of Fixed and Inventory Investment ...
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2answers
43 views

Yield To Maturity exact meaning

From investopedia: "YTM is the total return anticipated on a bond if the bond is held until it matures" I have also seen this interpretation used in other sources however this seems wrong to me. ...
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What is the Canonical Metric for Investment? (U.S.)

I'm currently taking a run-of-the-mill Intermediate Macro class and have coursework which asks to produce a vis that tracks U.S. Investment from 1970-2014. What is the salient/canonical National ...
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Fixed-income investment in a low interest-rate environment

From an investment perspective, it seems to me that a low interest-rate environment can yield to some relatively "un-risky" profits. As the interest-rate can barely go lower, we now it should rise ...
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The connection between risk and the quality of investment decision

Is there any psychological model that suggests that for optimum quality of investment decision, there has to be some risk involved?
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255 views

Can't a country grow its GDP without foreign investment?

Whenever various developing countries around the world talk about growing their economies, they talk about facilitating foreign investments and they put so much emphasis on it as if a country's ...
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Investor's optimization problem with risk aversion

Consider an investor with initial wealth $w$ and has to decide how to invest it. There is a riskless asset with rate of return $r$. The risky asset has return $x_i$ with probability $\pi_i$ for $i=1,2,...
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Why wouldn't an arbitrageur who shorts an overpriced security, and longs a substitute company, break even?

A Random Walk Down Wall Street (2015 11 ed, but an 2019 ed. is upcoming). p. 249 Top.   Suppose irrational investors cause an oil company security to become overpriced relative to both its ...
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When to invest into additional products?

This is a very applied question so I hope it's the correct adress here for it: I'm running a small entertaining business for virtual reality experiences. Investment was about 120 k. I now build it ...
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Why would the rich care about the poor's overinvestment in riskier investments?

Glasbeek, Harry. BA, LLB (Melbourne), JD (Chicago). Class Privilege: How Law Shelters Shareholders and Coddles Capitalism (2017). p. 196 Bottom.   Also, from an investor's point of view, limited ...
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Does savings lead to investment in physical capital?

In the introductory macroecon textbook I'm reading, it's made clear that savings=investment. Mathematically, this makes sense to me. However, I'm having trouble understanding the qualitative ...
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What is the easiest and cheapest way to store big money with option to any moment get then in cash? [closed]

Imagine I have a lot of money and my number 1 aim is to store them somewhere where I can get them fast if I need them. I don’t want to have dividends from my money but if I will it would be great. ...
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1answer
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Summary data on venture capital

Is there a trade group, government, or other publication providing data on aggregate venture capital investment? Specifically, I'm interested in how overall venture capital funding has changed over ...
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3answers
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Should housing be considered a form of capital for the purpose of capital gains taxation?

Economists across the political spectrum almost unanimously oppose the home mortgage interest tax deduction. While I'm sure there are a few whom I've missed, I could only find a single professional ...
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46 views

Are stock exchanges market makers?

Are stock exchanges like NASDAQ and NYSE market makers? In other words, are they providing liquidity by pairing individual buyers and sellers with each other in real-time? Or does it work differently?
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183 views

Interest Rate and Foreign / Domestic Investment

I read that increased interest rate attracts foreign investment but discourages domestic investment. Why does interest rate have different effects on foreign and domestic investments?
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208 views

How does IS-LM model reduced investor confidence?

I am doing an essay on how a sovereign debt rating downgrade to junk status affects the economy. I wanted to use a theoretical framework to think about it, and seeing as an increase in the interest ...
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Concept of return on investment but for the state instead a firm

So, following a discussion I had today, I have the following question. If we use the return on investment (ROI) to describe the gain of an investment is there a similar concept not for a company but ...
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1answer
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Why FDI stock in the same year is different in the same reports?

From World Investment Report 2003, in 2000, the US has 12.4% GDP as FDI inward stock and 13.2% GDP as FDI outward stock. These numbers are equivalent to 1274720 million USD, and 1356960 million USD. ...
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Why is investment not a cost in firms profit functions?

In all textbooks I've seen profits is written as: $$\pi=py-wL-rK$$ It is evident here that w and r are operational costs. But unless there is no depreciation and the level of capital is to remain ...
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Best strategy for investing and buying out property with many owners(20+)

First I am not economist, so sory if I am not using economicaly correct language. But this is a real life situation. I would like to know what are the buy out strategies for investor when he has to ...
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2answers
143 views

How does Bolivia maintain its high economic growth and the highest direct foreign investment in South America, despite its economic policies?

Nationalization of industries has always been anathema to foreign investment yet Bolivia now has the highest foreign direct investment despite Evo Morales' policies. Also not that it is always bad but ...
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1answer
45 views

Kelly criterion wealth allocation alternatives

Thanks for your patience with answering my question. I am interested in building an optimal wealth allocation strategy across multiple betting opportunities, correlated or uncorrelated and with ...
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1answer
43 views

In Mankiw's Macreoconomics, how come capital is assumed to be fixed while investment is assumed to be variable?

I'm looking at Greg Mankiw's Macroeconomics (7th edition), at the model presented in chapter 3: $Y = C + I + G,$ where $Y$ is total output, $C = C(Y-T)$ is consumption, $T$ are net taxes (fixed by ...
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How can I change this formula to better calculate the reward of some financial movements? (avoiding to consider maturation)

I am here to ask you a suggestion about how to correctly handle this situation related to how to calculate the earned money into an financial investment. Here you can find a basic Excel sheet related ...