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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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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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101 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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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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35 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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21 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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39 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 fianance

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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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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11 views

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
38 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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92 views

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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190 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
115 views

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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45 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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134 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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2answers
157 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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21 views

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
115 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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37 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
38 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 ...
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What is the difference between a loan and an investment?

IMF, WB, ADB, IDB, AIIB are known to give loans. On the other hand, China is said to be investing in Pakistani project termed as CPEC. What is the difference between these two terms in these two ...
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Monthly savings plans

Monthly savings plans in stocks or funds are typical investments for many people. On aggregate, these plans generate a large demand on the underlying assets, often around the end/beginning of a month. ...
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1answer
230 views

Difference between Negotiable Instrument and Financial Asset

So here are the two pages I was reading to try and understand : Negotiable Instrument and Financial Asset Confusion started as both pages use Certificates of Deposits(CDs) as an example.So a CD is ...
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1answer
33 views

Is there any investment model with time-varying depreciation rate?

Is there investment model with different depreciation rate. For example, d1(depreciation rate in 1 period), d2(depreciation rate in 2 period)
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87 views

Is Foreign investment positive or negative for a country? [closed]

When a state company is sold to foreigners in a country, people who live in that country generally do not like it. Because the company is sold to foreigners. People are acting with a sense of ...
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1answer
21 views

What aspects of macroeconomics should I address for convincing an investor to invest in a certain country? [closed]

I have a task at my internship which is to write 2 pages about the economic conditions in my country. My question is what I could include in my research. Surely, I'll address inflation, currency ...
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121 views

Why would males' shorter pension's savings produce more, and not less, income?

Source: The European Union: A Beginner's Guide (1 ed. 2012) by Alasdair Blair. [p 139:]  Gender has traditionally played a key role in the pricing of insurance policies.   In 2004 an EU Directive ...
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595 views

What is the danger of (China's) investment-led growth as opposed to consumption-led growth?

I keep reading that China must switch to consumption-led growth or productivity-led growth, that investment-led growth is 'dangerous.' I understand that it is probably not sustainable in the sense ...
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1answer
55 views

An explanation of the formula for the present value of an annuity

I'm reading a book that gives three formulas. In all of these formulas: $x$ is the amount of money to be received in the future $n$ is the number of years $r$ is the interest rate. The first is the ...
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44 views

Collar strategy for options trading [closed]

I am new to investing on the market so I am doing some research and studying. From what I can tell, the purpose of a collar strategy for options trading is to protect your gains you've made on the ...