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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11 views

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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In which domains independent of trading/investing is candlestick charting used?

When one queries the term "candlestick chart" in a search engine, the returned results relate to trading and investment techniques which utilize candlestick charts. However, a candlestick ...
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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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Does locking donations on an account for an extended amount of time (50 years) make sense?

Let currency C be a reward proportional to amount of carbon offsets (or any other social good). I am trying to invent a way to reward (to stimulate social good) holders of this currency. Let M be &...
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Are government bonds ever profitable

With most government bonds having interest rates being rather low, (0.254%) This being a whole 1.75% below target inflation (To clarify all rates are UK rates, and UK target inflation is 2%), and 1.54%...
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55 views

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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2k views

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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59 views

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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55 views

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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1k views

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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135 views

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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208 views

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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ROE for large North American pipelines

I am interested in how much "economic value" is/was forecast to accrue to various stakeholders as a result of the Keystone XL pipeline project and the DAPL pipeline project. I would be ...
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50 views

Can a position at a hedge fund be securitized?

Let's say that I'm an investor in a hedge fund, a recession just hit and I need cash asap. But the hedge fund either has infrequent redemption, or it locks my fund in, until the market gets better and ...
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GFCF/GPDI in Real GDP Calculations

I'm trying to understand how GPDI / GFCF are used in the real GDP calculations (when compared to net investment). In both the US / Denmark, the real GDP numbers seem to directly GPDI / GFCF without ...
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Is there contradiction between ''job creation“ and ”growth" as implemented by automation?

Joint goals of job creation and sustainable growth are the main goals of majority of EU funding schemes. E.g. European Innovation Institute explicitly states in its mission https://eit.europa.eu/who-...
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How can I tell who are major investors in an asset management group and their associated funds?

I am trying to determine which individuals/organizations are the largest investors in Netflix, but when I look at the list of top shareholders, they are all investment management groups. Investment ...
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Why does the answer not include increased negative unplanned stock investment?

I will focus on the event "c": The answer for "c" is following: A sharp increase in the rate of real GDP growth leads to a higher level of planned investment spending by producers, according to ...
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Does the federal reserve create any type of deadweight/welfare loss?

In microeconomics, we learn that when a good is overproduced or under produced, there is a dead weight loss associated with it. It seems like the same concept would apply to macroeconomics, where the ...
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95 views

How does the GDP multiplier work?

When we learn about the GDP multiplier, it is portrayed as 1/MPS, because savings are supposedly a leak out of consumer spending. However, what I don't understand is aren't those savings spent anyways ...
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4answers
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How does capital investment (factory, plant, etc.) benefit the region they are located in?

Generally, capital investment is always good for the economy, but I am not sure about the underlying mechanism. For example, if a car factory is built in a certain state, does it improve the economy ...
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1answer
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What value do virtual traders of commodity add to the market?

Many if not most companies trading in commodities are only trading them on paper. They will not use the commodity they are buying and can not take deliver of the physically commodity. What value do ...
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Job Search and the Investment Problem [closed]

I don't know what to take as the cost of accepting the job. Kindly guide me through deciding how to frame the equation.
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GDP(Expenditure view of GDP): /Why aren't investments categorized as non-final goods?

My understanding is that consumption = consumption of final goods = whatever consumers buy from companies (with an adjustment for export-import-process + maybe housing is slightly different (not ...
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How to borrow at risk free rate

When learning about derivatives, we learnt about risk-free hedges and portfolios. However, one of the concepts was about borrowing and lending at the risk free rate. Now, for lending it's as simple as ...
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456 views

Why salaries counted under Government expenditure in GDP

In the expenditure approach of GDP calculation, why are government employee's salary counted under Government approach while for private firms, we don't count salaries. I am unable to understand if ...
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Link between recession and decline in investments

I recently followed MIT online lectures for economy and I found this - one of the reason for investments decline in recession is bad expectations about economy -----> leading to Higher capital output ...
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Investments during recession

During Recession, banks loans decrease which leads to financial constraints and ultimately Investment suffers and declines. my question is - "Are loans lower because of demand or supply?" My ...
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Solving a problem using CAPM and capital structure theory

I am given the following problem: A firm currently owns assets worth $4$ milllion dollars that have a beta of 1. The risk-free interest rate is 10% and the market risk premium is 8%. Suppose the firm ...
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Private Investment Impact on Bond Yields

From Japan to the US to Germany, we are currently seeing longer term bond yields falling at an alarming rate. I tune into a fair bit of economic commentary, and can often come to some sort of ...
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How does investment lead to generation of jobs?

I quote from India's Economic Survey 2019 (an official document) - While the claim is often made that investment displaces jobs, this remains true only when viewed within the silo of a specific ...
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Does investment directly influence demand?

I quote from the first page of India's Economic Survey 2019 (an official document) - Investment, especially private investment, is the “key driver” that drives demand, creates capacity, ...
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231 views

Does stock picking work?

Does stock picking work? Why/why not? What does the research say about it? (I was expecting that this should already have been asked and looked quite extensively for such a question but couldn't find ...
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295 views

rental cost of capital

I am estimating time series for rental price of capital using Hall-Jorgenson method: $$r=\frac{P_k}{P}(i-inf+\delta)$$ here, $r$ is the rental cost of capital, $P_k$ is the price of capital goods (...
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Are sales (discounts) an investment or a loss?

Are sales (discounts) during a promotional period considered an investment by the company/manufacturer to drag in more customers? Or a loss that wouldn't be paid back anytime in the future, but also ...