Financial Theory FAQs

  1. How do drawdowns help assess investment risk?

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

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

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

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

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

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

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

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

  10. How risky is a straddle?

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

  12. What is the formula for calculating opportunity cost?

  13. What does a strong null hypothesis mean?

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

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

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

  17. Does agency theory apply to brokers and clients?

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

  19. What is the concept of utility in microeconomics?

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

  21. What are the best measurements of economic growth

  22. How does economics study human action and behavior?

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

  24. Why is the Gordon Growth Model not more widely used?

  25. How does the risk of investing in the metals and mining sector compare to the broader ...

  26. Why do some people consider the law of demand to be a tautology?

  27. What are the primary risks associated with investing in the drugs sector?

  28. Are there ETFs that track the drugs sector?

  29. Has the Efficient Market Hypothesis been proven correct or incorrect?

  30. Are economic recessions inevitable?

  31. What is capital structure theory?

  32. What is the formula for calculating the capital asset pricing model (CAPM)?

  33. Why are there no profits in a perfectly competitive market?

  34. What is the difference between financial capital and economic capital?

  35. How do economists define moral hazard?

  36. How do fund managers use correlation to create portfolio diversity?

  37. How do the investment risks differ between options and futures?

  38. What is the Austrian Theory of the Business Cycle?

  39. How do interest rates coordinate savings and investment in the economy?

  40. How is an economy formed and why does it grow?

  41. Why is PPP (purchasing power parity) controversial?

  42. How is correlation used in modern portfolio theory?

  43. What investments have been the poorest historical performers?

  44. What are risks associated with investing in the oil & gas drilling sector?

  45. What does the efficient market hypothesis assume about fair value?

  46. What types of investors are best-suited for stop loss orders?

  47. How do I use the CAPM (capital asset pricing model) to determine the cost of equity?

  48. What math skills do I need to study microeconomics?

  49. Why do high profiting sales mitigate credit risk?

  50. How does the "Buffett Premium" increase Berkshire Hathaway's stock price?

  51. What kinds of topics does microeconomics cover?

  52. How do you calculate the ratio between debt and equity in the cost of capital

  53. How does quantitative easing in the U.S. affect the stock market?

  54. Which countries are most productive in terms of GDP?

  55. How do you calculate costs of capital when budgeting new projects?

  56. How does a nation transition from a socialist economy to a free market economy

  57. What is cash or pro forma income on an income statement?

  58. What are the risks involved in OTC (over-the-counter) trading?

  59. How should young people invest in a bear market?

  60. What is the difference between the cost of capital and required return?

  61. What is the difference between yield to maturity and the spot rate?

  62. Why was the practice of depreciating assets for accounting purposes created?

  63. How do companies measure labor supply in human resources planning?

  64. Why are OTC (over-the-counter) transactions controversial?

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

  66. What is arbitrage pricing theory?

  67. What does a high weighted average cost of capital (WACC) signify?

  68. How do economists and psychologists calculate diminishing marginal utility differently?

  69. What does the law of diminishing marginal utility explain?

  70. How can retirees protect their wealth in a bear market?

  71. How does the invisible hand phenomenon affect investment markets?

  72. What is the affect of the invisible hand on consumers?

  73. What are some examples of economies of scale?

  74. How can quantitative easing be effective in the economy?

  75. What is the advantage of using the relative strength index (RSI)?

  76. What's the difference between r-squared and correlation?

  77. What are the most common issues with Serial Correlation in stocks?

  78. How do I calculate yield to maturity of a zero coupon bond?

  79. What does the term 'invisible hand' refer to in the economy?

  80. At what level is the current account deficit considered excessive, in terms of percent?

  81. What is the difference between yield and rate of return?

  82. What is the difference between a Sharpe ratio and a Sortino ratio

  83. How do you the calculate Sharpe ratio in Excel?

  84. What is a good Sharpe ratio?

  85. What are the risks associated with investing in telecommunication stocks

  86. How are corrective waves created?

  87. What does a mutual fund's beta coefficient measure?

  88. How do I judge a mutual fund's performance?

  89. What are the main differences between a systematic investment plan (SIP) and mutual ...

  90. What are the benefits and costs (or risks) of a systematic investment plan (SIP)?

  91. What are the differences between a systematic investment plan (SIP) and a recurring ...

  92. How can I protect my portfolio from market corrections?

  93. What's the difference between alpha and beta?

  94. What's the difference between a 401(k) and a pension plan?

  95. What is the difference between arbitrage and speculation?

  96. What are the main risks of after-hours trading?

  97. What is the difference between positive and normative economics?

  98. What is finance?

  99. How does a company switch from one stock exchange to another?

  100. How can I use layaway plans for budgeting?

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