Questions tagged [price-theory]
Relating to the formulating of prices for investments or the determination of equilibrium or optimal prices for goods & services.
16
questions
4
votes
2answers
130 views
Price discovery and index funds bubble
I have read an article and watched a couple of videos about a possible index fund bubble.
One of the arguments to justify this bubble is (if I have understood it correctly) that a very huge ...
0
votes
0answers
27 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 (...
1
vote
3answers
95 views
Order Book - Does the price (ask or bid) depend on the size of the order?
I still haven't quite grasped the concept of order book. In fact I still have a few questions like the one in the title.
I understand that in a market, at any given time, there is a list of pending ...
6
votes
3answers
394 views
Why does the iShares EEM ETF have a higher expense ratio than similar ETFs like VWO?
Why is iShares able to charge more for EEM in comparison to VWO (a very similar ETF)?
Investors/Traders are mostly institutional and in general, these entities have more insight (though simple ...
0
votes
2answers
641 views
How come stock price increase doesn't result in a volume increase as well?
If the stock goes up it means that more people are buying it right? So volume should be increasing along with stock price increase and vice versa, but that's not what is happening, why?
-1
votes
1answer
55 views
Theory/Strategy for pricing by volume
I don't know if this is the right SE site for this question. If not please advise. I found a "price-theory" tag, but if there are other relevant ones, please feel free to add them.
I'm running a ...
1
vote
1answer
356 views
compromise between 100% insurance and no insurance? (long term view)
Assume you can get private health insurance for different premiums, and they cover any directly health related costs (hospital stay, needed medicines, physiotherapy etc.) up to a maximum amount. It is ...
1
vote
1answer
278 views
Why doesn't the market capitalization of a company match its acquisition price during a takeover?
Amazon bought Whole Foods for $13.7B, but Whole Foods' market capitalization jumped to $17.6B. How are the shareholders of Whole Foods going to ultimately compensated? Do their shares turn into cash,...
2
votes
3answers
182 views
What is meant by “priced in”?
I've been trying to wrap my head around the idea of stocks with future earnings/value "priced in". How does this work exactly, with a fund. Does some manager look at the possible earnings a fund ...
1
vote
0answers
51 views
What does it mean to find the Present Value of a FRA?
What does it mean when the present value of a forward rate agreement is calculated? Is this a price that the owner of the FRA can sell it for?
Thanks for the help.
1
vote
0answers
44 views
Are there any methods to calculate the % of position size to cover my profits based on achieving expected returns and thereafter?
Perhaps modifying Kelly Criterion to gauge the % of bet size to cover and adjusting to a new expected value? I want to let my profits run without exiting the trade prematurely. (or should I just ...
-2
votes
1answer
769 views
How Is the Price of a Stock Determined? [duplicate]
From what I understand, the stock price is based on supply and demand. For example, if a stock that was priced at $0.01 was bought buy an investor who spent $5.00 (leaving him with 100 shares), it ...
1
vote
1answer
72 views
Which r in perpetuity formula to pricing a business?
I am trying to guess a price to sell my small business. I don't understand a thing in the perpetuity formula. Which is the correct rate I have to put on it?
5
votes
1answer
1k views
Why government bonds fluctuate so much, even though interest rates don't change that often?
Why do government bond prices fluctuate on a daily basis on the bond market?
I can understand the fluctuation of corporate bonds because they are tied to the credit worthiness of the company and ...
4
votes
3answers
2k views
Multiple people interested in an Apartment
I own a four family building which I am actively renting.
Every time I go to rent it I raise the rent slightly and I check the comparables in the area to make sure I am still not pricing myself out ...
5
votes
9answers
27k views
Why does a call option's price increase with higher volatility?
As per the Black-Scholes model, the value of a call option is directly proportional to the volatility. Without getting into the derivation of the BS equation, is it possible to intuitively understand ...
