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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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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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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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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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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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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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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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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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 ...
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Did real interest rates decrease during the Great Recession
Assuming the stock market/housing market crash decreased consumer wealth, decreased business confidence, and decreased expected appreciation rates on houses (thus increasing perceived user cost of ...
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Leveraged Return on Investment
A general return on investment (ROI) formula is:
\begin{equation}
\text{ROI}=\frac{\text{Net Profit}}{\text{Total Investment}}.
\end{equation}
But if you think about an investment that requires some ...
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How do stockbrokers purchase shares?
Do they use "Direct Stock Plans," or some other method?
Not sure if this is the right place to ask, but I'm curious.
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How to calculate capital investment?
So i have this question:
After spending 3 million on research, Better Mousetraps has developed a new trap. The project requires an initial investment in plant and equipment of 6 million. This ...
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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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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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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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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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