Financial Theory FAQs

  1. How accurate is the equity risk premium in evaluating a stock?

  2. What are the most effective ways to reduce moral hazard?

  3. How does the risk of investing in the electronics sector compare to the broader market?

  4. How do markets account for systematic risk?

  5. What is the theory of asymmetric information in economics?

  6. How does market risk differ from specific risk?

  7. How is perpetuity used in the Dividend Discount Model?

  8. How valid is the notion of economies of scope?

  9. Can I use the current yield to compare a bond to an equity investment?

  10. How can a company resist a hostile takeover?

  11. What is the relationship between modified duration and interest rates?

  12. What are some examples of a value added tax?

  13. What level of correlation among investments will guarantee market returns but have ...

  14. What nations other than the U.S. have risk-free interest rates?

  15. How does unlevered beta help in risk management?

  16. When is a call option considered to be "in the money"?

  17. What's the difference between budgeting and financial forecasting?

  18. What is required to become an accredited investor in a private placement?

  19. Which markets are most prone to market failure from adverse selection?

  20. What does it mean to be absolutely risk averse?

  21. How does adverse selection affect insurance premiums?

  22. Are all fixed costs considered sunk costs?

  23. Can the Efficient Market Hypothesis explain economic bubbles?

  24. What is the variance/covariance matrix or parametric method in Value at Risk (VaR)?

  25. How is it possible for a rate to be entirely risk-free?

  26. What is backtesting in Value at Risk (VaR)?

  27. How do I discount Free Cash Flow to the Firm (FCFF)?

  28. What is RiskMetrics in Value at Risk (VaR)?

  29. What are some of the advantages and disadvantages of DuPont Analysis?

  30. How is risk priced in the market?

  31. How is risk aversion measured in Modern Portfolio Theory (MPT)?

  32. How do interest rates impact risk aversion in the market?

  33. Which asset classes are the most risky?

  34. How does the Fair Accounting Standards Board (FASB) regulate deferred tax liabilities?

  35. Why do some investors believe that unsystematic risk is not relevant?

  36. What is the difference between variance and covariance?

  37. Is variance good or bad for stock investors?

  38. How risky are small cap stocks?

  39. What are some common measures of risk used in risk management?

  40. How is the Capital Asset Pricing Model (CAPM) represented in the Security Market ...

  41. Where did market segmentation theory come from?

  42. What types of risk are incorporated in Security Market Line (SML) analysis?

  43. What's the difference between EaR, Value at Risk (VaR), and EVE?

  44. How do I interpret a Security Market Line (SML) graph?

  45. What is the relationship between confidence inferrals and a null hypothesis?

  46. Does 'hurdle rate' mean different things in different industries?

  47. Why does accumulated depreciation have a credit balance on the balance sheet?

  48. Why are treasury bond yields important to investors of other securities?

  49. How do modern corporations deal with agency problems?

  50. What is the difference between risk and opportunity cost?

  51. How do I set a strike price in a put?

  52. What kind of securities should a risk-averse investor buy?

  53. Is market risk premium the same for all investors and investments?

  54. How is the risk-free rate determined when calculating market risk premium?

  55. Where did Modern Portfolio Theory (MPT) come from?

  56. What is a relative standard error?

  57. When does positive correlation prove causation?

  58. How do sunk costs create a barrier to entry for new firms?

  59. Besides operating leverage, what are other important forms of leverage for businesses?

  60. Is the market risk premium the same for stocks and bonds?

  61. What are some examples of demand elasticity other than price elasticity of demand?

  62. Which factors are more important in determining the demand elasticity of a good or ...

  63. What factors cause investors to perceive large cap stocks as being low-risk?

  64. Is there a positive correlation between risk and return?

  65. How does money supply affect interest rates?

  66. What are the main arguments in favor of the privatization of public goods?

  67. How do returns on private equity investments compare to returns on other types of ...

  68. How does the risk profile of private equity investments compare to those of other ...

  69. What is the Weighted Alpha formula and how is it calculated?

  70. How do you calculate present value in Excel?

  71. What factors influence a change in demand elasticity?

  72. What factors might make a private placement a risky investment?

  73. When is the best time to buy a fixed income security?

  74. What is the formula for calculating the internal rate of return (IRR)?

  75. What does the Efficient Market Hypothesis have to say about fundamental analysis?

  76. What makes command economies fail?

  77. How do financial markets react to recessions?

  78. How do drawdowns help assess investment risk?

  79. How can you calculate Value at Risk (VaR) in Excel?

  80. Why is there a negative correlation between quantity demanded and price?

  81. What are the primary assumptions of Efficient Market Hypothesis?

  82. How exactly does buying on margin work and why is it controversial?

  83. Is it possible for a country to have a comparative advantage in everything?

  84. What economic measures can be taken to encourage free enterprise?

  85. How can an investor use the Z-Score to compare investment options?

  86. What are the different groups involved in corporate governance?

  87. How risky is a straddle?

  88. What is the difference between ceteris paribus and mutatis mutandis?

  89. What is the formula for calculating opportunity cost?

  90. What does a strong null hypothesis mean?

  91. How does disposable income influence the marginal propensity to consume (MPC)?

  92. What is the difference between ex-ante moral hazard and ex-post moral hazard?

  93. What are the differences between weak, strong and semi-strong versions of the Efficient ...

  94. Does agency theory apply to brokers and clients?

  95. What are some of the limitations of only looking at the rate of return for an investment?

  96. What is the concept of utility in microeconomics?

  97. What is the difference between cost of debt capital and cost of equity?

  98. How does economics study human action and behavior?

  99. What are the best measurements of economic growth

  100. How do different economic schools of thought treat the factors of production?

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