Questions tagged [economics]

To be used for general economics questions that are in some way related to personal finance, the subject of this site. Avoid asking questions that are speculative in nature, academic, or unrelated to personal finance.

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NPV in trade projects

The question must be very simple but I'm still struggling. Let's suppose that I have an import-export business. Then I have a discounted CF which is formed by subtracting all costs & taxes from ...
Gigigi's user avatar
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28 votes
10 answers
9k views

Do you lose money if you don't use a plane ticket you won in a raffle?

My wife won 2 tickets from a major airline at the company she works for, after they did a employee only raffle that was free to enter. The problem: there is a caveat: the ticket must be booked for a ...
webyacusa's user avatar
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0 votes
0 answers
69 views

What does Ben Graham mean with this

In the Intelligent Investor graham says : ” investor should be able to count on the current 3.5% dividend return on his stocks and also an average annual appreciation of 4%. As we shall later explain ...
Ode's user avatar
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0 votes
1 answer
81 views

IRR -> Reinvestment Assumption Or Myth (And What It Actually Means)

I've been trying to wrap my head around a downside of using IRR - the reinvestment assumption. I don't really understand the concept on how IRR assumes that we reinvest at the IRR, if IRR is for ...
Wet Don's user avatar
0 votes
1 answer
57 views

What happens if the volatility in the equity market increases? Does interest rates move up or down?

I think both can happen and here is my reasoning. Please correct me if I am wrong. During times of increased volatility in the equity market, investors adopt a more risk-averse approach and gravitate ...
CountDOOKU's user avatar
-1 votes
2 answers
121 views

Resources vs. Assets

I read an excerpt on Quora from the book, "Rich Dad, Poor Dad": If you want to be rich you must know the difference between an asset and a liability and you must buy assets. This may sound ...
Vinay Sharma's user avatar
0 votes
1 answer
57 views

Rationale behind market weighting in ETFs / indices

From what I understand, most global ETFs use weighting based on capitalization; so for instance there are more US stocks than European stocks in them because the US is a larger market than Europe. If ...
Federico Poloni's user avatar
0 votes
0 answers
28 views

How We Decide n in Compound Interest Rate Table When Annual Expenses Increasing After Certain Year?

I don't understand that, in this question's solution for HEPS9, why we take n as 6. And why we use A/G for SP240 and P/G for HEPS9. Question: Solution: Compound Interest Rate Table:
XcellentEEE's user avatar
33 votes
12 answers
8k views

Where does the value of money go during inflation?

I was wondering if I put $1000 in the piggy bank for a year and the inflation being 10%, and everything else being constant, 1 year later that $1000 in cash money can only buy goods that today would ...
user1070087's user avatar
0 votes
1 answer
105 views

Mortgage ETFs going down while inflation is going up?

So I'm looking at these popular mortgage ETFs, MORT and BKLN, and they have been going down over the past year, while inflation has been going up. Any idea as to why? Real estate is often regarded as ...
nijshar28's user avatar
2 votes
1 answer
344 views

Relationship between interest rates and DCF discount rates

I've been reading that interest rates lower the over future cash flows of equities, hence their decline as money can be moved elsewhere for better returns. What is the direct relationship between ...
pstatix's user avatar
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1 vote
1 answer
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Is the holiday season an unwise time to apply for credit?

Given the rise in consumer spending during the holidays, do lenders mitigate the increased demand for credit by offering lower credit limits than usual, or having stricter criteria for approval?
stateazure's user avatar
0 votes
2 answers
154 views

Is there a way to tell what price a stock will be before the market opens?

I was reading about an Atlassian security vulnerability and was curious as to the effects on its stock price. Surprisingly, its stock price over the past 5 days was up 6.83%!? But I checked and Monday ...
stevec's user avatar
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-1 votes
3 answers
396 views

Why sell stocks when inflation is high?

It doesn’t make much sense to me why the stock market (sometimes, today isn’t really an example) does more poorly when inflation is high. If CPI was high, I would think you’d want your $$$ invested in ...
Cotton Headed Ninnymuggins's user avatar
0 votes
2 answers
101 views

Foundational equations or concepts of Finance [closed]

For the other sciences it´s easy to point to the most important equations, inequalities, propositions or concepts that ground the discipline. If I want to explain Finance to a physicist say, what are ...
BCLC's user avatar
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0 answers
29 views

Why does some key figures differ from one annual report to another

I´ve started to read some annual reports lately and inserted some into my excel sheet to calculate some key figures, but saw that column with "Total assets" differ than reads in the last ...
Valdemar's user avatar
0 votes
2 answers
185 views

What is the US subprime crisis of 2008? [closed]

I have heard that after the US subprime crisis of 2008,particularly a lot of people were pointing fingers at the Economic policymakers. I am not really familiar with why it is so, a detailed ...
Rajorshi Koyal's user avatar
1 vote
2 answers
219 views

Will home prices ever stop rising or go down? [closed]

I'm from EU and home prices in my city went up by 10% each year before pandemic, when pandemic started everyone said that home prices will go down, but it didn't, quite opposite it keeps rising. Stock ...
Andrew Sasha's user avatar
1 vote
4 answers
646 views

Why don't companies just print more of valuable items?

I just had somebody show off her Pokémon card collection. One of the cards is worth a lot of money now for some reason. Why doesn't Pokémon, Inc. just print more of that particular card? Do they have ...
Chantra's user avatar
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20 votes
4 answers
4k views

Why is so much focus put on the Dow Jones Industrial Average?

The Dow Jones Industrial Average is derived from the sum of the stock prices of 30 large-cap companies, divided by the Dow Divisor which, at the moment is actually a multiplier. It's mostly NYSE ...
Dancrumb's user avatar
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0 votes
1 answer
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Why did the Baltic Dry Index rise by 65% (YTD)? [closed]

The global economy is (almost) stopped and the price of crude oil is very low, so why did the Baltic Dry Index — an index that shows the cost per unit time of transportation in principal routes around ...
david.t_92's user avatar
2 votes
3 answers
199 views

What is Real versus Nominal value?

The last version of the Wikipedian article "Real versus nominal value (economics)" has this definition of the subject: In economics, nominal value is measured in terms of money, whereas ...
George's user avatar
  • 21
0 votes
1 answer
77 views

At what % about the stock price should I sell and take my profits? [closed]

at what percentage above the cost price should you walk? prices fluctuate therefore? what should the end point be?
Kwadzo's user avatar
  • 31
3 votes
2 answers
1k views

What is the safest asset to hold if you think a longterm depression is coming?

I'm obviously not a financial advisor, nor do I have a crystal ball. But the more I read/think about the global macro-level outlook the more I believe a long and deep correction is coming. Anyone with ...
bbrails09's user avatar
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-2 votes
2 answers
131 views

What determined the "cost of borrowing money" or the interest rate in a gold-based economy [closed]

In the modern economy, the central bank decides the cost of borrowing money using interest rates along with other several tools and technic. But I was wondering, in a gold-based economy (not the gold ...
noobforever's user avatar
2 votes
0 answers
185 views

How much value has the US Dollar lost or gained in 2020, compared to the US Dollar in 2019?

There's a lot of news about the Federal Reserve printing money. I have a hard time imagining the relative change in value of the USD. (or EURO for that matter) I tried to calculate but it's hard: ...
Frank De Smedt's user avatar
0 votes
0 answers
87 views

Assumptions in Conventional Finance

These are the 3 main assumptions used in Conventional Finance: Price of assets are correct, ie equal to it's intrinsic value Resources are allocated effectively World is fair and so are the market (...
hitesh_a_h's user avatar
-3 votes
1 answer
152 views

How likely is a total economic collapse due to the potential coronavirus impact? [closed]

Most signs show that lockdown could easily stretch through the summer. A freeze in consumer spending would cause multiple industries to fail causing a ripple effect. To be specific, if lockdown lasts ...
user96764's user avatar
4 votes
1 answer
197 views

Shall we expect high inflation when government provides financial aid during covid-19?

I am not clear about the source of money when UK and US announced the COVID-19 financial help. For example, in the UK an employee may be eligible for 80% of the wage, capped at £2500, given their job ...
oleksii's user avatar
  • 191
27 votes
11 answers
11k views

Should I ask the seller of a house for a price reduction given a recession is almost certain?

I've gone sale agreed (note: "sale agreed" means the sale has been agreed in principle - no contracts have been signed, no non-refundable deposits have been made etc.) on a house. The market ...
TomSelleck's user avatar
1 vote
3 answers
294 views

Am I less likely to get approved for credit during the COVID-19 pandemic?

I've been thinking about applying for a new credit card or two, as I've been building up credit for awhile and basically all my hard pulls have fallen off of my credit report. Given that COVID-19 is ...
TheEnvironmentalist's user avatar
2 votes
3 answers
3k views

Where does the money from the US $2T stimulus package come from? [closed]

The US Senate announced to $2T stimulus package to help keep the economy up and running. Where does the government come up with that type of money? Surely they don't have that much cash available?
Phil's user avatar
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2 votes
3 answers
391 views

Are Social Security payments threatened by the Coronavirus crisis?

I would like to know if it is likely that the United States government may have to reduce Social Security payments for the remainder of this year to help fund economic stimulus packages to help bail ...
user avatar
-3 votes
4 answers
315 views

What is the point of using percentages if you are going to have different "tiers" anyway? [closed]

I often see things like: People who make between "this and that" (range #1) amount of money per month/year must pay 1% in taxes. People who make between "this and that" (range #2) amount of ...
Jeffie Sieber's user avatar
15 votes
3 answers
2k views

Are lower interest rates bad for the lending perspective of banks?

I know that in times of lower interest rates borrowing from the bank is an easier task at least because its cheaper. However I am not yet convinced why a textbook source is stating that lower interest ...
Aurora Borealis's user avatar
1 vote
1 answer
65 views

Repaying with buying common goods

If two people share the expenses and person 'A' pays 20 in a supermarket then that person should receive 10 from person 'B' in cash to be fair If the person 'B' decides to repay instead of cash by ...
user92933's user avatar
1 vote
1 answer
613 views

Is the assertion 'loans create deposits' true in banking? [duplicate]

I have read that banks don't really need deposits to make loans but rather it is the other way round. I thought that banks could only lend out money that customers deposited. If this is the wrong ...
Melwin 's user avatar
2 votes
1 answer
150 views

What does it mean by Global recession? [closed]

I am bit curious to understand what it actually means when I read global recession is coming soon. There are some questions which pop in my mind reading such news. Some of them are: What causes ...
Mohit Sharma's user avatar
3 votes
3 answers
197 views

Interest rates and what does "discount" mean?

I was reading an article that says "Interest rates play an essential role in financial markets. Foremost, they represent the rate at which investors discount risk-free as well as risky future cash ...
noplace's user avatar
  • 143
2 votes
0 answers
101 views

The Fed Lowered Interest Rates, Are they going to buy Bonds?

The Fed just lowered interest rates yesterday by 0.25%. I haven't heard anyone mentioning a resurgence of quantitative easing (QE). Are they buying bonds in order to influence the interest rate? If ...
jyapx's user avatar
  • 212
0 votes
3 answers
207 views

Does yield curve inversion refer to the shape of the curve, or just its sign?

Yield curve inversion has recently been talked about as an indicator for recession. Mostly, I've heard this described as "10-year Treasury rates fall below 2-year Treasury rates." I would expect ...
jhch's user avatar
  • 179
1 vote
2 answers
186 views

How exactly does redenomination work?

basically I was having a history lesson in school and we were learning about inflation and how countries employed redenomination to save their suffering economies. I don't really understand how simply ...
Jeon Wonje's user avatar
1 vote
2 answers
128 views

Why do currency rates have an effect on the value of goods? [closed]

It is common to hear explanation like "Yuan has lost value, this helps Chinese exporters". Why does currency exchange rate have any effect at all on the price of goods? Let's say I own a widget ...
Money Ann's user avatar
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1 vote
0 answers
54 views

Is credit the principal force behind the business cycle, as claimed on a Dalio youtube video?

The following video https://www.youtube.com/watch?v=PHe0bXAIuk0 seems to argue that credit is the principal force behind the business cycle, as far as I cal tell. Is this considered to be a ...
user123124's user avatar
  • 1,085
0 votes
1 answer
45 views

What condition might cause Equities to rise, and corporate bond spreads to rise as well? [closed]

I was wondering about this earlier and I'm stumped.
D.Dog's user avatar
  • 1
0 votes
1 answer
147 views

What are the dates that the yield curve inverted?

For the purpose of investing, I've been reading about the yield curve inversion and what it might mean about the economy. Unfortunately, all articles that I was able to find by searching on Google ...
Zesty's user avatar
  • 625
1 vote
2 answers
1k views

Could the US demonetize large bills? If so, how can I protect myself if I rely on holding US dollars in cash?

There was a demonetization in India. I heard that this was difficult for Indian residents to handle. I understand most of the money is in digital forms, but there is still a large amount of actual ...
Neil's user avatar
  • 1,055
74 votes
13 answers
18k views

What (if any) is the reason to buy in small local stores?

Recently I have heard movements from the local stores (say clothes, electronics, foods, etc) and some politicians (of a particular wing) that argue that you should buy in local, small stores. ...
mrbolichi's user avatar
  • 771
1 vote
1 answer
282 views

On a statement of Harry Browne [closed]

I am reading a book on an investment strategy proposed by Harry Browne (1999, Fail-Safe Investing: Lifelong Financial Security in 30 minutes, pp. 39–40) known as the "permanent portfolio". ...
user123124's user avatar
  • 1,085
31 votes
4 answers
7k views

How exactly are exchange rates determined? [closed]

I was reading about how the exchange rates are fixed. I understand that demand and supply decide the exchange rate but how exactly is it done and by whom? For example, consider US and India. (https:/...
vikrant's user avatar
  • 437