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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Is investment a type of saving or expenditure
I am confused that if investment is a type of saving or a expenditure .if investment is a type of expenditure then is saving is what is left after subtracting consumption and investment from income
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In the event of a company's bankruptcy, how does a SPV continue operations if it can no longer collect payments on collateral
Let's say a company sells car loans (or mortgages or credit cards, I don't think it really matters). The company sells the loans to an SPV, who then issues securities backed by the cash flows the SPV ...
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When should a company's revenue and share price grow faster or slower than the economy?
I was listening to a famous investor discuss an investment of his in an interview. He had bought shares in a bank that was quite successful, though it was a small bank. The bank is based in a highly ...
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What addition study subjects are required in the investment field [closed]
Being a CFA student, for example, I feel I need an additional course in statistics and math, but I've never worked in the field. And maybe, as a specialist working in the profession for some time you ...
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Is a home (primary residence) purchase a form of investment in macroeconomics?
From Wikipedia, investment in macroeconomics is the purchase of goods that are not consumed within a short amount of time (say 3 years). In this sense, home purchase seems to be a form of investment. ...
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USD/CAD fx: What's the difference between Buying USD and Selling CAD?
Beginner question here.
I'm Canadian, and my investement account is, by default, in CAD currency.
Recently I wanted by buy a US stock so I had to convert some of my CAD money in USD money.
There ...
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Screw foreign investment, lets just print money
We often hear of countries securing foreign investment. Stores like this are trumped as major achievements. Foreign investment also has criticisms - profits generated in a country end up going abroad, ...
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Impact of election outcomes on individual's mood? Behavioral Finance
I am currently working on my thesis in behavioral finance. My topic is about short term stock returns after the elections. One paper ("Sport Sentiments and Stock Returns") proves that the losing ...
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Aggregation theorems hold if endowments are endogenous?
I have a specific question about considering a representative agent. According to Rubinstein 1974, in an inter-temporal economy with $N$ individuals each one with initial endowment $e_i$ and ...
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Calculating Annualized Average Return
I am currently working on a problem set in a book that asks me to compute the annualized average return for a portfolio, benchmark, and then the relative return from the annual returns reported. I ...
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What sort of impact would one expect on investment as a result of an approaching election?
I am looking to observe and possibly quantify private investment during election periods.
I am interested in any studies, particularly empirical, which discuss the impacts elections can have on the ...
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Does dollar cost averaging actually have any advantage over one time investment?
Some banks promote savings plans by stating that investing a fixed amount of money in regular time intervals minimizes the average buying price or the downside risk (dollar cost averaging). Since the ...
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Is the loan principal ever delivered in pieces over time?
Not sure if this is the right place for this question but it's more of a theoretical finance question than a personal finance question.
So a loan has a principal amount that is given to the borrower ...
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How can foreign protectionism affect local FDI
I am citing an article here:
In a speech at the G-20 in Istanbul, TİM’s Mehmet Büyükekşi said, “Protectionism is increasing in every market around the world and it is affecting not only Turkish ...
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Diagram with axes $r$ and $S,I$
In the figure below, I have a coordinate system where $r$ depends on $I$ or $S$, but I do not completely understand why I can have multiple functions inside this coordinate system.
Why can I write $S(...
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Inverse/negative relationship between investments and interest rate
The investments (I) have a negative relationship with interest rate (r)
$$
I = e-f \cdot r.
$$
So $e$ can be interpreted as a minimum level of investments while $f$ can be interpreted as how much the ...
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Instrument suggestions for FDI
I am extremely stuck on trying to think of an instrument for the location of FDI within a country. The instrument must be correlated with foreign firms, but not correlated with domestically-owned ...
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Are savings necessary for economic growth?
So, I've had this confusion for a long time. We all know how spending is absolutely vital for economic growth. However, at the same time, are savings necessary too?
My initial opinion was "no". In a ...
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Historical returns for popular American funds over 20-30 years?
I have seen charts like this one showing the return for the past 100+ years cited as evidence why one should invest in stocks for their retirement. I don't disagree with that, but realistically, ...
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Savings = investment with private money creation?
I've been reading some introductory macroeconomics and I'm struggling to understand one of the basic accounting identities. In a closed economy with a fixed money supply it's clear that every dollar ...
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Correlation and Causality: Data comparison of educational spending and GDP growth
I am interested as to whether or not Educational spending does or does not affect GDP and GDP growth (and as an aside GDP per Capita).
As an overview, I've ranked the countries in each aspect (with 1 ...
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Selling my software suite to another company (acquisition) [closed]
I am trying to calculate a price to sell my software suite to another company. Let say my revenue is \$500,000 a year with only about \$50,000 costs each year. The rate of growth of revenue has been ...
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How interest rates affect investment [duplicate]
We know that a rise in real interest rates will cool down the economy in terms of investments. An increase in interest rate will provide higher incentive for saving rather than consumption. So people ...
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Testing Tobin's q theory predictions
I'm reading this great intermediate level macroeconomic book by Carlin and Soskice, and on page 31, when discussing the empirical studies testing the Tobin's q theory to explain the behaviour of ...
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What does "the world's strongest currency" title mean for investors? [closed]
Kuwaiti Dinar shows up as the most expensive in the world. Does that mean I better invest in KWD (or the safe USD) instead of my home currency (IDR)?
A little background: I am just an ordinary person ...
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If a currency crashes, does that effect the value of rare or collector coins?
I own lots of collectable coins from the 70's (mostly mint dollars and quarters.) Some of my friends are telling me that the US economy is going to crash and the the dollar is going to lose its value....
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What is this economic theory? Cost of investment vs production accounting for time?
I know there has got to be a standard set of theories or formulas to chart this but I don't know how to search for it. Other than a great place like this. :)
I'm a software developer and not an ...
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Relationship between Real Interest Rate and Employment
The country of Kingsland is considering the introduction of a
compulsory retirement saving scheme. Under this scheme all workers are
required to save ten per cent of their annual wages and ...
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What is the difference between present value and face value?
What is the difference between present value and face value?
When I search this question on Google is says they're the same in some cases and different in others. It says they are the same when the ...
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Why a new startup should ask a big investment company to value them as low as possible? [duplicate]
In "Silicon Valley TV Series" (in first episode of the second season) a bunch of guys, designed a new algorithm, and asked big companies to invest in that project and value their product.
At a ...
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Best resources to self-educate myself in economics
I want to learn Economics by myself and I'm looking to build a path with people who're in this field to how and in what order should I learn Economics, I did some research and I've found many ...
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What is the relationship between the demand for loanable funds and investment?
If the demand for loanable funds decreases, investment increases because the real interest rate decreases. Isn't that a contradiction, because loanable funds are used for investment, and a decrease in ...
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Savings and investment relation to interest rate, loanable funds theory, paradox of thrift [closed]
HOw can it all be linked? I think I know but I am only a fresher so.
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Which capital accumulation is right? $K_t = (1-\delta)K_{t-1} +I_t$ or $K_t = (1-\delta)K_{t-1}+I_{t-1}$?
In a lot of models with capital, I find different variants of capital accumulation formula as follows:
$K_t = (1-\delta)K_{t-1} +I_t$ or
$K_t = (1-\delta)K_{t-1}+I_{t-1}$
Which one is more ...
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Does aggregate demand increase investments?
I just read that increase in aggregate demand increases investment for a given interest rate. How is it possible because when aggregate demand increases, this shifts the demand for money to the right ...
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How exactly do Participatory Notes induce volatility into the economy?
I was reading up on participatory notes. Wikipedia defines these as "instruments issued by registered foreign institutional investors (FII) to overseas investors, who wish to invest in the Indian ...
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Will the goods market be in equilbrium along the AD curve?
This is a question which was asked in the entrance to Jawaharlal Nehru University's (New Delhi) entrance for their post-grad program specializing in International Economics in 2014.
Which of the ...
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Project Financing Evaluation and accounting
While evaluating the whole entrerprise value of Falck Renewables using the discounted cash flow method I end up with a negative continuing value and economic profit due to the negative spread between ...
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Capital in a credit frictions model
I won't go into detail of this model because it's really just one point that i'm confused about. This question is based on a model by Matsuyama (2007).
Agents are deciding whether to invest in a ...
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Optimisation of bonds
I'm doing an optimisation problem but don't understand what the terms mean.
Suppose someone wants to invest $110,000.
They have 4 choices as to what they invest their money into:
municipal bond ...
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Is over-valuation of a start up genuinely detrimental to the start up's future?
I recently watched S02E01 of Silicon Valley.
In it, having demonstrated a breakthrough algorithm, the guys are pursued by investors with increasing funding offers.
However, the founder is warned ...
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Investment = Saving relation in an open economy
I am reading the book Macroeconomics by Olivier Blanchard.
It states that an alternative way of looking at an goods market equilibrium is investment = saving. In an open economy it states the ...
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Is there a theory about investors' behaviour during bubbles?
As far as I can see there are two senses in which it's 'rational' for an investor to buy during a bubble.
The investor has erroneously overvalued the value of the stock/commodity.
The investor is ...
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Bubble and productive investments
Is there some consenus in the literature as to what features characterize a bubble investment as distinct from a productive investment?
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Scaling Adjustment Costs
Take a cont. diff, convex and increasing cost function $c(X)$. Say you start with a stock $K$, and want to (dis)invest $I$. Many adjustment cost functions (for example, the first example on page 2 ...
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Does the amount of inward investments affect inflation?
I understand that inflation has an impact on the foreign direct investment. But can the opposite be true? The amount of foreign direct investment has an impact on the inflation of the country that ...
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Does 'ethical investing' have any effect?
Some mutual funds make a point of only investing in ethical companies (eg avoiding arms companies, polluters, human rights violators, etc).
Or other organisations pressure funds to stop investing in ...
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Derive marginal productivity conditions in DW Jorgenson paper
I'm reading Jorgenson, Dale W. (1963), "Capital Theory and Investment Behavior", American Economic Review. Vol 53, No. 2, pp. 247-259. http://www.jstor.org/stable/pdfplus/1823868.pdf
I would like ...
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Lower ROI because of zero interest rate
I've heard an interview with Bill Gross in which he claims that one of the problems with lower interest rate is that it leads to a lower return on investment (ROI) in the real economy.
How can that ...
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How does economics cope with production processes that have large lumpy investment requirements?
If seems that all equations (e.g. Price elasticity of supply ) assume that there is a marginal cost of production that is nicely related to the level of output. But clearly you can’t buy half a new ...
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