Hot answers tagged

23 votes
Accepted

Why is bartering uncommon in modern countries?

The main likely reasons why barter is not more common are: The inconvenience of having to find another party who both offers what you want and wants what you offer. Even if such a party can be ...
user avatar
  • 6,813
22 votes

Are financial markets "unique" for each "currency pair", or are they simply "translated"?

It's not clear what level of answer you're looking for, so here is a much more basic answer. There are indeed many exchanges with many different prices. However, if you have noticed that you could ...
user avatar
19 votes
Accepted

How is it possible that all currency exchange rates are fixed w.r.t. to each other?

International currency markets are highly liquid, with near-instant transfer of knowledge between trading centres. This means that any arbitrage opportunities tend to get resolved within seconds. To ...
user avatar
  • 8,002
17 votes

Why is bartering uncommon in modern countries?

In the countries that I am familiar with (such as Canada), using barter to avoid taxes is definitely illegal. You are required to report the dollar value of the exchange as revenue. It is treated as ...
user avatar
8 votes

Are financial markets "unique" for each "currency pair", or are they simply "translated"?

Economic analysis always requires making some assumptions at some point. The assumptions that you make should try to fit reality the best that they can. Regarding your specific situation, there is a ...
user avatar
  • 9,137
4 votes

Why is bartering uncommon in modern countries?

The same reason why money became popular in the first place: bartering doesn't scale well. Even if you're able to evade taxes by bartering, the inconvenience makes it difficult to take advantage of ...
user avatar
  • 139
4 votes

Optimal price function: application of calculus of variations

Not really an answer, but too long for comment. The $P$ in your $$y(u,v)^*= \frac{v-P(y^*)}{P'(y^*)} +u$$ expression from the insider's problem and the $P$ in the expression $$ \min_{P(\cdot)} \...
user avatar
  • 2,559
3 votes
Accepted

Uniform price vs. pay-as-bid auctions in energy markets

I believe "Auctions of Homogeneous Goods: A Case for Pay-as-Bid" by Pycia and Woodward answers your questions theoretically. This is quite recent and their results are striking. They also ...
user avatar
  • 5,090
3 votes

If you simply "copy" the trades of a professional trader, but with less money, isn't that *guaranteed* profits?

Within finance, there is interest in attempting to replicate the positions of strongly performing funds. So your basic premise has some merit. However, most funds attempt to obscure what they are ...
user avatar
3 votes

What is the correct way of calculating the "average" price based on the "Open,High,Low,Close" daily trade fields?

You cannot obtain that information with the data provided. You would need periodic samples throughout the day.
user avatar
3 votes
Accepted

How is bartering (goods for goods) conceptually related to trading (goods for money) and monetary (money for money) exchange?

Consider an economy where there are $N$ goods and assets. How do you purchase a good? If $n \cdot (n-1)$ forms of exchange are possible because all $n$ goods can be all other $n-1$ goods then this is ...
user avatar
  • 15.8k
2 votes

Why is bartering uncommon in modern countries?

It doesn't save money. Keep in mind that revenue taxes are calculated after deduction of expenses. So if I sell something for 50€, and buy something for 50€, the total earnings of my company have not ...
user avatar
2 votes
Accepted

Why would using real-time settlements have helped combat some of the chaos that occurred during the January 2021 GameStop saga?

It would not prevent speculation driven bubble like GME but it would arguably prevent the situations such as Robin Hood being forced to restrict trading. This is because when you buy stock your ...
user avatar
  • 42.3k
2 votes

Why do derivative contracts represent no wealth?

A derivative is a financial instrument whose value is dependent on an underlying asset. However it does not represent this asset nor does it hold any claim on the asset. At the end of the day, the ...
user avatar
  • 8,632
1 vote
Accepted

Why is equity trading an active contribution to the development and growth of economy?

How can one explain in a few words why equity trading is an active contribution to the development and growth of economy? In brief the explanation is simply that capital markets (e.g. stock market) ...
user avatar
  • 42.3k
1 vote
Accepted

Why we say "active investing puzzle" while we already know the reason?

The puzzle always was why people invest in active funds not why active funds under-perform. As long as there are people choosing active funds the puzzle remains. Even if masses would switch from ...
user avatar
  • 2,184
1 vote

European Commission getting rid of excess carbon emission permits

What were these excess permits of carbon emissions? Is it the amount of permits that are still up for sale (or to be distributed for free); and hence, aren't used? Page 92 of the ETS handbook states ...
user avatar
1 vote

Are financial markets "unique" for each "currency pair", or are they simply "translated"?

A quote would be on an exchange, and currency involved is whatever is specified on the exchange. There may be multiple exchanges - with different prices. (Price deviations between markets for ...
user avatar
1 vote

Are there internationally published sources of trade sanctions?

Try the WTO's Trade Monitoring Database.
user avatar
  • 2,764
1 vote

Do leverage pools force net negative outcomes? How are leveraged futures profits payed?

Any part of you question about futures is above my pay grade since I know diddly about them. What I do know is that ignoring frictional costs, options and futures are a zero sum game. Winners win ...
user avatar
1 vote

Do leverage pools force net negative outcomes? How are leveraged futures profits payed?

Warning I am currently editing this answer, as I feel like I might have come to incorrect conclusions. (Maybe I didn't, but I am putting this warning in place in case I did). I hope to update this ...
user avatar
1 vote

Why might it make sense to buy bonds in a company facing restructuring?

There are experts in distressed debt. They buy the debt at a deep discount to face value, with the belief that the salvage value is greater than what they paid. To do this successfully, knowledge of ...
user avatar
1 vote
Accepted

Why would oil suppliers choose a lower priced contract?

This is because for the price comparison it is not relevant what the exchange rate is now but what it will be at the time of delivery. The difference between these corresponds to different ...
user avatar
  • 42.3k
1 vote

Uniform price vs discriminatory price double auction

I guess the main reason why you could not find an answer is that economists do not know, see, for instance this chapter of "Electricity Markets." The auction theorist Peter Cramton has a few ...
user avatar
  • 5,090
1 vote
Accepted

Banks providing loans

If you have an estimate of the probabilities of each scenario, say with probability $p\in[0,1]$ the loan is repaid (assuming no other scenario exists), then you can calculate the expected value of ...
user avatar
  • 14.4k
1 vote

How is bartering (goods for goods) conceptually related to trading (goods for money) and monetary (money for money) exchange?

I think it really depends on your what you mean by the words "trading", "bartering" and "monetary exchange". E.g. the sentence "I will trade my apple for your orange" describes a barter, yet it uses ...
user avatar
  • 26.2k
1 vote

How is it possible that all currency exchange rates are fixed w.r.t. to each other?

What you're describing doesn't work on the open market, where any arbitrage opportunity is scooped up within milliseconds by thousands of trading algorithms. That's because currency markets are ...
user avatar
  • 150

Only top scored, non community-wiki answers of a minimum length are eligible