FAQs tagged as

Financial Theory

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  1. Did the repeal of the Glass-Steagall Act contribute to the 2008 financial crisis?

  2. How can the problem of asymmetric information be overcome?

  3. How were the figures 80 and 20 arrived at in the 80-20 rule (Pareto Principle)?

  4. What is a geometric mean in statistics?

  5. What are some real-life examples of the economies of scope?

  6. How reliable or accurate is marginal analysis?

  7. How is the 80-20 rule (Pareto Principle) used in management?

  8. Why does the efficient market hypothesis state that technical analysis is bunk?

  9. How do you use a financial calculator to determine present value?

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

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

  12. How does market risk differ from specific risk?

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

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

  15. How can a company resist a hostile takeover?

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

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

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

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

  20. Are all fixed costs considered sunk costs?

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

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

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

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

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

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

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

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

  29. What is the difference between variance and covariance?

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

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

  32. Where did market segmentation theory come from?

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

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

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

  36. How do modern corporations deal with agency problems?

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

  38. What is a relative standard error?

  39. When does positive correlation prove causation?

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

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

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

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

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

  45. How do you calculate present value in Excel?

  46. What factors influence a change in demand elasticity?

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

  48. What makes command economies fail?

  49. How do financial markets react to recessions?

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

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

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

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

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

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

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

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

  58. What does a strong null hypothesis mean?

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

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

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

  62. Does agency theory apply to brokers and clients?

  63. What is the concept of utility in microeconomics?

  64. What are the best measurements of economic growth

  65. How does economics study human action and behavior?

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

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

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

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

  70. Are economic recessions inevitable?

  71. What is capital structure theory?

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

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

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

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

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

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

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

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

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

  81. What kinds of topics does microeconomics cover?

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

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

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

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

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

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

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

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

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

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

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

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

  94. What is arbitrage pricing theory?

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

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

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

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

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

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

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