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1 vote

Why is beta linear?

Beta is intended to measure the risk of an asset (measured by variance in returns) versus some benchmark (typically defined vaguely as "the market"). A linear beta is simple - it does not ...
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2 votes

How do I buy a life insurance policy as a collateral?

I have no idea what the life insurance thing is about. (See edit below.) Keeping the old house only makes sense if you are going to use that house for something that is worth continuing to pay ...
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2 votes

Why is beta linear?

It really goes back to the Capital Asset Pricing Model (CAPM), which became a central pillar of modern finance and portfolio theory. One can devise more complex models but that doesn't mean they'll be ...
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1 vote

For mutual funds, does average annual return mean compounded annually or continually or daily?

You should use annual compounding since that's how it was measured, but it shouldn't make a significant difference. There is enough variance in historical returns that the margin of error for ...
  • 119k
2 votes

How do I buy a life insurance policy as a collateral?

It's very common to buy a house, and then sometime later sell this house and use the equity as a down payment on a bigger house. For example, you buy a house that costs $100,000. Over some period of ...
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1 vote

Why is beta linear?

This linear assumption is done all over the place in science and engineering. Sometimes, it works. Not always. For example, consider a spring. It has a force F = k*x ...but does it? No. Actually it ...
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1 vote

For mutual funds, does average annual return mean compounded annually or continually or daily?

Annually. If portfolio returns 9,21% annually, then after 4 years the return would be +42,25%
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0 votes

How do stock analysts estimate the earnings for a publicly traded company? What about costs?

There are a number of ways to estimate earnings for a publicly traded company. One way is to look at the company's financial statements. This will give you an idea of the company's overall ...
2 votes

Why is Year-Over-Year (YOY) important?

As Year-Over-Year(YOY) can compare each metrics that repeat on annual, quarterly, or monthly basis across the company's reporting requirements. One of the major reason when analyzing performance in ...
55 votes

Why is Year-Over-Year (YOY) important?

Many business and economic metrics are seasonal - for example, many retailers make the majority of their revenue in the fourth quarter due to holiday sales. Many business make the majority of their ...
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0 votes

How much accounting knowledge is needed to read financial statements of publicly traded companies?

For analyzing most companies, with possibly the exception of financial institutions, not much. Of course you have to know the basics (how to read a balance sheet, statement of operations, cashflow ...

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