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does random walk theory imply that it s impossible to make money in stocks | no according to random walk theory it is impossible to consistently outperform the market over the long term through stock picking or market timing however it is still possible to profit in the stock market by buying and holding a diversified portfolio of stocks such as with an index fund | |
does random walk theory apply only to stocks | no while it is most commonly applied to the stock market it can also be applied to other financial markets such as the bond forex and commodities markets among others | |
is random walk theory correct | random walk theory is widely debated among financial economists and market practitioners while some agree with its basic tenets others have challenged its assumptions and have proposed alternative theories of how and why prices move some have pointed out instances where stock prices do not follow a random walk such as ... | |
what is a range | range refers to the difference between the low and high prices for a security or index over a specific time it defines the difference between the highest and lowest prices traded for a defined period such as a day a month or a year the range is marked on charts for a single trading period as the high and low points on ... | |
what is a high beta index | a high beta index is made up of volatile stocks they re generally riskier but they can be enticing for investors who are willing to gamble a little to achieve better returns 2 | |
what is a range bound trading strategy | range trading is what the name implies an investor sells and buys within a range of prices one at which a stock is currently trading and the other to which they believe it will rise the investor trades within those price ranges the tactic can be used repeatedly over a set period until the current price of the stock is ... | |
what is a downside to range trading | all trading strategies come with some component of risk and risk increases when market trends are changing from contraction to expansion and back again the success of range trading depends heavily on a trader being able to identify a market s trend during their times of trading 3the bottom linethe success of range trad... | |
what is the ratchet effect | the ratchet effect is an economic process that is difficult to reverse once it is underway or has already occurred a ratchet is an analogy to a mechanical ratchet which spins one way but not the other in an economic process that tends to only work one way the results or side effects of the process may reinforce the cau... | |
what is a rate and term refinance | a rate and term refinance is a type of mortgage loan refinancing that results in a lower interest rate or loan term or a combination of both a rate and term refinance does not provide any upfront money to the borrower which is why it s also known as a no cash out refinance conversely with a cash out refinance the home ... | |
when considering any of these options it is important to calculate all the implications carefully and see how they compare to keeping your current mortgage | examples of rate and term refinancinglet s say you have been paying off a 30 year mortgage for 10 years and interest rates suddenly drop you might want to take advantage of the new rates one option would be to refinance the balance left on the original mortgage at that lower rate for a new 30 year full term the new loa... | |
what is the difference between a refinance and a cash out refinance | a rate and term refinance is when a mortgage loan is refinanced by replacing the existing mortgage with a new loan usually with a lower interest rate a cash out refinance is when the mortgage loan is replaced by a new loan but the loan balance increases since the home s equity is exchanged for cash | |
what are the benefits of a rate and term refinance | a rate and term refinance can help you take advantage of a drop in mortgage rates lowering your monthly payment or you can choose to shorten the loan s term and pay off the mortgage earlier instead of benefiting from a lower monthly payment | |
what are the risks of a cash out refinance | a cash out refinance increases the mortgage loan balance since it reduces the equity in the home in exchange for cash as a result borrowers who lose their jobs or experience a reduction in income are at a greater risk of default or foreclosure the bottom linerate and term refinancing usually means a lower interest rate... | |
what is rate of change roc | the rate of change roc is the speed at which a variable changes over a specific period of time roc is often used when speaking about momentum and it can generally be expressed as a ratio between a change in one variable relative to a corresponding change in another graphically the rate of change is represented by the s... | |
how to find the rate of change | the general formula for the rate of change is roc x1 x2 t1 t2 where x1 x2 is the change in variable being measured and t1 t2 is the amount of time it took for the change to happen 1this formula can also be written as | |
where | in finance the calculation for roc can also be computed as a return over time in this instance the formula uses the current value of a stock or index and divides it by the value from an earlier period subtract one and multiply the resulting number by 100 to give it a percentage representation r o c current value previo... | |
what are other terms for rate of change | the rate of change may go by other terms depending on the context when talking about speed or velocity for instance acceleration deceleration is the rate of change in statistics and regression modeling the rate of change is defined by the slope of the line of best fit for populations the rate of change is called the gr... | |
how do you solve rate of change problems | rate of change problems can generally be approached using the formula r d t or rate of change equals the distance traveled divided by the time it takes to do so depending on the context involved in the problem the change in distance can be replaced with a different variable such as the change in value or price | |
how do traders use the price rate of change indicator | the price rate of change roc indicator is used in technical analysis to measure momentum a positive roc can confirm a bullish trend while a negative roc indicates a bearish one when the price is consolidating the roc will hover near zero the bottom linerate of change roc is an important concept that tells us not just t... | |
what is a rate of return ror | a rate of return ror is the net gain or loss of an investment over a specified time period expressed as a percentage of the investment s initial cost when calculating the rate of return you are determining the percentage change from the beginning of the period until the end investopedia ellen lindnerunderstanding a rat... | |
what are some alternatives to the rate of return | the internal rate of return irr and the compound annual growth rate cagr are good alternatives to ror irr is the discount rate that makes the net present value of all cash flows equal to zero cagr refers to the annual growth rate of an investment taking into account the effect of compound interest | |
what are some drawbacks of ror | the rate of return disregards some key factors in an investment like the time value of money the timing and size of cash flows and the risk and uncertainty associated with any investment | |
what is considered a good return on an investment | a good return on investment is generally considered to be about 7 per year which is also the average annual return of the s p 500 adjusting for inflation the bottom linethe rate of return ror is a simple to calculate metric that shows the net gain or loss of an investment or project over a set period of time ror is exp... | |
what is a rating | a rating is an assessment tool assigned by an analyst or rating agency to a stock or bond the rating assigned indicates the stock or bond s level of investment opportunity the three major rating agencies are standard poor s moody s investors service and fitch ratings | |
how a rating works | analysts who work on both the buy side and sell side of the industry research stocks and write opinions on those stocks which will often include a rating such as buy hold or sell meanwhile bonds are rated by the three major bond rating agencies a company can improve its rating score by maintaining as little debt as pos... | |
when it comes to major wall street banks and institutions they all use different terminology and classifications morgan stanley for example uses the terms overweight equal weight and underweight the timeline for its ratings is 12 to 18 months 1 credit suisse uses the terms outperform neutral and underperform which is b... | in august 2023 fitch ratings dropped the credit rating of the united states from aaa to aa citing a steady deterioration in standards of governance within congress over raising the country s debt ceiling these bouts of brinkmanship raised the prospects that the u s might eventually default on some debts increasing the ... | |
what does speculative mean in bond ratings | a bond is considered speculative if it has a rating of bbb or lower from standard and poor s or a rating of baa3 or lower from moody s these ratings indicate a relatively high degree of credit risk and borrowers must pay higher interest rates to accomodate the higher risk | |
what happens when a credit rating drops | a lower credit rating means that credit agencies believe the borrower is becoming more risky either due to a higher level of debt falling income or other causes that make the borrower less able to pay their obligations these borrowers will need to pay higher interest rates to make up for the increased risk to lenders t... | |
what is ratio analysis | ratio analysis is a method of examining a company s balance sheet and income statement to learn about its liquidity operational efficiency and profitability it doesn t involve one single metric instead it is a way of analyzing a variety of financial data about a company ratio analysis is a cornerstone of fundamental eq... | |
how ratio analysis works | investors and analysts use ratio analysis to evaluate the financial health of companies by scrutinizing past and current financial statements for example comparing the price per share to earnings per share allows investors to find the price to earnings p e ratio a key metric for determining the value of a company s sto... | |
when performing ratio analysis over time be mindful of seasonality and how temporary fluctuations may impact month over month ratio calculations | comparative ratio analysis can be used to understand how a company s performance compares to similar companies in the same industry for example a company with a 10 gross profit margin may be in good financial shape if other companies in the same sector have gross profit margins of 5 however if the majority of competito... | |
when using ratio analysis to compare different companies be sure to | different industries have different ratio expectations a debt equity ratio that might be normal for a utility company that can obtain low cost debt might be deemed unsustainably high for a technology company that relies more heavily on private investor funding companies may set internal targets for their financial rati... | |
what are the types of ratio analysis | financial ratio analysis is often broken into six different types profitability solvency liquidity turnover coverage and market prospects ratios other non financial metrics may be scattered across various departments and industries for example a marketing department may use a conversion click ratio to analyze customer ... | |
what are the uses of ratio analysis | ratio analysis serves three main uses first ratio analysis can be performed to track changes within a company s financial health over time and predict future performance second ratio analysis can be performed to compare results between competitors third ratio analysis can be performed to strive for specific internally ... | |
why is ratio analysis important | ratio analysis can be used to understand the financial and operational health of a company static numbers on their own may not fully explain how a company is performing consider a business that made 1 billion in revenue last quarter though this seems ideal the company might have had a negative gross profit margin a dec... | |
what is an example of ratio analysis | consider the inventory turnover ratio that measures how quickly a company converts inventory to a sale a company can track its inventory turnover over a full calendar year to see how quickly it converted goods to cash each month then a company can explore the reasons certain months lagged or why certain months exceeded... | |
what is rational behavior | rational behavior refers to a decision making process that is based on making choices that result in the optimal level of benefit or utility for an individual the assumption of rational behavior implies that people would rather take actions that benefit them versus actions that are neutral or harm them most classical e... | |
what is rational choice theory | rational choice theory states that individuals use rational calculations to make choices and achieve outcomes that are aligned with their own personal objectives these results are also associated with maximizing an individual s self interest using rational choice theory is expected to result in outcomes that provide pe... | |
what is rational choice theory | the key premise of rational choice theory is that people don t randomly select products off the shelf rather they use a logical decision making process that takes into account the costs and benefits of various options weighing the options against each other who founded rational choice theory adam smith who proposed the... | |
what are the main goals of rational choice theory | the main goal of rational choice theory is to explain why individuals and larger groups make certain choices based on specific costs and rewards according to rational choice theory individuals use their self interests to make choices that will provide them with the greatest benefit people weigh their options and make t... | |
what is rational choice theory in international relations | states intergovernmental organizations nongovernmental organizations and multinational corporations are all made up of human beings in order to understand the actions of these entities we must understand the behavior of the humans running them rational choice theory helps to explain how leaders and other important deci... | |
what are the strengths of rational choice theory | one of the strengths of rational choice theory is the versatility of its application it can be applied to many different disciplines and areas of study it also makes reasonable assumptions and compelling logic the theory also encourages individuals to make sound economic decisions by making sound economic decisions it ... | |
what is rational expectations theory | the rational expectations theory is a concept and modeling technique that is used widely in macroeconomics the theory posits that individuals base their decisions on three primary factors their human rationality the information available to them and their past experiences the theory suggests that people s current expec... | |
what is rationalization | rationalization is the reorganization of a company in order to increase its operating efficiency this sort of reorganization may lead to an expansion or reduction in company size a change of policy or an alteration of strategy pertaining to particular products offered similar to a reorganization a rationalization is mo... | |
what is asset rationalization | asset rationalization is the process of reorganizing a company s assets in order to increase operating efficiencies and ultimately improve its bottom line | |
what are the dangers of rationalization | dangers of rationalization include focusing too much on optimization at the expense of human capital the possibility of negative cultural changes and allocating capital in an ultimately inefficient manner | |
what is rationalization in economics | in economics rationalization is the process of changing a preexisting workflow into one that s more goal oriented and based on a specific set of rules the bottom linerationalization is the reorganization of a company to increase its operating efficiency it may lead to an expansion or reduction in company size a change ... | |
what is rationing | rationing is the practice of controlling the distribution of a good or service in order to cope with scarcity rationing is a mandate of the government at the local or federal level it can be undertaken in response to adverse weather conditions trade or import export restrictions or in more extreme cases during a recess... | |
how rationing works | rationing involves the controlled distribution of a scarce good or service an individual might be allotted a certain amount of food per week for example or households might be allowed to water their lawns only on certain days according to the law of supply and demand when the available supply of a good or service falls... | |
what are raw materials | raw materials are materials or substances used in the primary production or manufacturing of goods raw materials are commodities that are bought and sold on commodities exchanges worldwide businesses buy and sell raw materials in the factor market because raw materials are factors of production investopedia nez riazund... | |
when a company uses raw materials inventory in production it transfers them from the raw materials inventory to the work in process inventory when a company completes its work in process items it adds the finished items to the finished goods inventory making them ready for sale | direct vs indirect raw materialsin some cases raw materials may be divided into two categories direct and indirect whether a raw material is direct or indirect will influence where it is reported on the balance sheet and how it is expensed on the income statement direct raw materials are materials that companies direct... | |
what are raw materials in food | raw materials in food can be standalone items like meats milk fruits and vegetables they can also refer to the ingredients that go into a food item or recipe for instance milk is a raw material used in the production of cheese and yogurt | |
is water a raw material | yes water can be thought of as a raw material that is used in a wide range of products and production processes from beverages to agriculture to industrial uses | |
what is the difference between inventory and raw materials | in many cases raw materials are a type of inventory it represents goods on a balance sheet that have not yet been converted to work in progress or a finished product companies often buy acquire or extract raw materials for use then report raw materials as an asset then as the company uses raw materials in the productio... | |
how do companies get raw materials | companies are often very strategic in how they obtain raw materials for many it makes most financial sense to work closely with a reliable third party that collects and distributes the raw materials in other cases it may be more efficient for companies to establish production facilities that directly collect the raw ma... | |
what is reaganomics | reaganomics refers to the economic policies of ronald reagan the 40th u s president serving from 1981 1989 his economic policies called for widespread tax cuts decreased social spending increased military spending and the deregulation of domestic markets these policies were introduced in response to a prolonged period ... | |
what did reaganomics do | reaganomics reduced taxes on individuals and businesses as well as cutting federal regulations and domestic social programs | |
what were the goals of reaganomics | reaganomics sought to reduce the cost of doing business by reducing tax burdens relaxing regulations and price controls and cutting domestic spending programs reagan also sought to reduce inflation by tightening the money supply | |
what were the major parts of reaganomics | the four main pillars of reaganomics were tax cuts deregulation cuts to domestic social spending and reducing inflation did reagan ever say trickle down while there is no record of president reagan using the phrase trickle down his economic philosophy was closely aligned with the idea that business friendly policies wo... | |
does trickle down economics really work | while economists remain divided into various elements of reaganomics the suggestion that wealth would trickle down has so far remained unrealized on the contrary economic studies have found that tax cuts such as those enacted by reagan tend to increase economic inequality rather than reduce it 7the bottom linereaganomi... | |
what is a real asset | real assets are physical assets that have an intrinsic worth due to their substance and properties real assets include precious metals commodities real estate land equipment and natural resources they are appropriate for inclusion in most diversified portfolios because of their relatively low correlation with financial... | |
what is the real economic growth rate | the real economic growth rate or real gdp growth rate measures economic growth as expressed by gross domestic product gdp from one period to another adjusted for inflation or deflation in other words it reveals changes in the value of all goods and services produced by an economy the economic output of a country while ... | |
how the real economic growth rate is used | a country s real economic growth rate is helpful to policymakers when making fiscal policy or monetary policy decisions these decisions might be applied to spur economic growth or control inflation real economic growth rate figures serve two purposes economic growth rates are also useful for businesses and investors an... | |
how do you calculate the real economic growth rate | there are two ways to calculate the real economic growth rate real gdp can be calculated by taking the difference between the most recent year s real gdp and the prior year s real gdp then divide this difference by the prior year s real gdp alternatively real gdp can be determined if nominal gdp and the prevailing infl... | |
what is the real gdp growth rate | the annualized real gdp growth rate for the united states in the first quarter of 2024 was 1 4 2 | |
what is the difference between nominal gdp and real gdp | nominal gdp measures a nation s annual production of goods and services using actual market prices or values real gdp measures goods and services by adjusting for inflation both measurements are useful for evaluating a nation s financial health though real gdp is generally a more accurate representation of underlying e... | |
why is real gdp important | real gdp is informative of the size of the economy and the performance of recent economic activity the real growth rate is often used as a performance indicator as it often provides better guidance on economic conditions due to actual activity as opposed to growth due to inflated prices the bottom linethe real gdp grow... | |
what is the real effective exchange rate reer | the real effective exchange rate reer is the weighted average of a country s currency in relation to an index or basket of other major currencies the weights are determined by comparing the relative trade balance of a country s currency against that of each country in the index an increase in a nation s reer is an indi... | |
how to calculate the real effective exchange rate reer | a nation s currency may be considered undervalued overvalued or in equilibrium with those of other nations that it trades with a state of equilibrium means that demand and supply are equally balanced and prices will remain stable a country s reer measures how well that equilibrium is being held reer is determined by ta... | |
what does the real effective exchange rate reer tell you | a country s reer is an important measure when assessing its trade capabilities reer can be used to measure the equilibrium value of a country s currency identify the underlying factors of a country s trade flow and analyze the impact that other factors such as competition and technological changes have on a country and... | |
what is the real effective change rate | the real effective exchange rate is a measure of the relative strength of a nation s currency in comparison with those of the nations it trades with it is used to judge whether the nation s currency is undervalued or overvalued or ideally fairly valued | |
how do you calculate real effective exchange rate | first weigh each nation s exchange rate to reflect its share of the home country s foreign trade multiply all of the weighted exchange rates then multiply the total by 100 that is its reer or skip the mathematics and go to the bank for international settlements website for its updated effective exchange rate indices | |
what is the difference between real exchange rate and real effective exchange rate | the real exchange rate is the current price businesses and consumers will pay to buy a foreign product using their home currencies for example if the current u s exchange rate between the u s and britain was 138 u s dollars for one pound an american consumer would need 1 38 to buy one pound worth of goods | |
what is the difference between neer and reer | the nominal effective exchange rate neer and the real effective exchange rate reer are both indicators of a nation s competitiveness in relation to its trading partners neer is the average rate at which one nation s currency is valued in comparison with a basket of other currencies weighted for the percentage of trade ... | |
what does a high reer mean | an increase in a nation s reer means businesses and consumers have to pay more for the products they export while their own people are paying less for the products that it imports it is losing its trade competitiveness 2 | |
what is real estate | real estate is defined as the land and any permanent structures like a home or improvements attached to the land whether natural or man made real estate is a form of real property it differs from personal property which is not permanently attached to the land such as vehicles boats jewelry furniture and farm equipment ... | |
what are types of real estate | residential real estate any property used for residential purposes examples include single family homes condos cooperatives duplexes townhouses and multifamily residences commercial real estate any property used exclusively for business purposes such as apartment complexes gas stations grocery stores hospitals hotels o... | |
how to invest in real estate | some of the most common ways to invest in real estate include homeownership investment or rental properties and house flipping one type of real estate investor is a real estate wholesaler who contracts a home with a seller then finds an interested party to buy it real estate wholesalers generally find and contract dist... | |
is usually illiquid | influenced by highly local factorsrequires big initial capital outlaymay require active management and expertiseinvesting in real estate indirectly is done through a real estate investment trust reit a company that holds a portfolio of income producing real estate there are several types of reits including equity mortg... | |
what are the best ways to finance a real estate investment | real estate is commonly purchased with cash or financed with a mortgage through a private or commercial lender | |
what is real estate development | real estate development or property development includes activities that range from renovating existing buildings to the purchase of raw land and the sale of developed land or parcels to others | |
what careers are common in the real estate industry | common careers found in the real estate industry include leasing agent foreclosure specialist title examiner home inspector real estate appraiser real estate agent and mortgage broker | |
a real estate agent is a licensed professional who arranges property transactions connects buyers and sellers and represents them in negotiations real estate agents are usually paid through a commission a percentage of the property s sale price so their income depends on the size and number of deals they close in almos... | yurle villegas investopedia | |
what a real estate agent does | real estate agents usually specialize in either commercial or residential real estate in either case their duties largely depend on whether they work for the buyer or the seller agents who work for the seller known as listing agents advise clients on how to price the property and prepare it for sale they commonly suppl... | |
when you re engaged in a real estate transaction you should be clear about which party a real estate agent represents the buyer the seller or both parties 3 the party that the real estate agents represent and have a fiduciary responsibility to can significantly affect how they act during the transaction state laws regu... | dual agency in which one person represents both the buyer and seller in a real estate transaction is illegal in eight states alaska colorado florida kansas maryland texas vermont and wyoming real estate agent compensationtraditionally agents were paid a percentage of the property s sale price through commission the mor... | |
what does a real estate agent do | a real estate agent juggles various tasks like property appraisals negotiations and administrative duties while also meeting with clients their research typically involves studying market trends property values local zoning laws neighborhood features and marketing strategies they also keep abreast of the latest real es... | |
how do i become a real estate agent | to become a real estate agent you need to complete some steps though these vary by jurisdiction here s what s typical you are above a certain age a legal resident of where you plan to practice have completed the necessary pre license education passed your state s real estate exam have activated your license and finally... | |
what is a real estate agent s salary | the median annual salary was 49 980 for real estate sales agents and 62 190 for real estate brokers in 2022 according to the u s bureau of labor statistics 11 however salaries for agents can vary significantly depending on experience and location these professionals make money primarily through commissions on property ... | |
what is a real estate professional | a real estate professional is someone who works in the real estate industry they can have different titles as an agent broker property manager or someone else involved in real estate 1 | |
what does it take to succeed as a real estate agent | to have success as a real estate agent you need good communication skills the ability to network be adept at technology and have an in depth knowledge of the relevant housing market 5 good real estate agents should also be skilled at setting goals creating a marketing plan maintaining connections with past clients and ... | |
a real estate investment group reig is a business that concentrates much of its efforts and capital on real estate in search of profits real estate investment groups may choose to buy renovate sell or finance properties real estate investment groups commonly buy multiunit properties sell units to investors and take ove... | understanding reigsreigs have several partners or private shareholders these investors provide a pool of capital and a greater ability to invest more broadly reigs focus much of their business on real estate but they are not subject to rules that require them to invest only in properties as such they can structure thei... | |
when run by experienced professionals the group s investments can be diversified well enough to lower risk and react to market volatility reigs also benefit from having few limits on what they can engage in and how they operate | reigs often have formal agreements stipulating when and how members can access their money if you want to withdraw from the group you may not recoup your investment or share of the profits immediately thus greatly limiting your liquidity reigs also can have set fees these fees can be costly especially when profits are ... | |
where can i find reigs | search online for real estate investment groups or connect with investors via social networking sites and interest groups such as linkedin or the national real estate investors association as a beginner it might be beneficial to join a local real estate group to become more closely connected with other investors and to... | |
how can i join a reig | you can join a reig or start your own professional networking groups and websites such as linkedin or the national real estate investors association are good starting points joining a group may be as simple as signing an agreement and paying dues | |
how much money do i need to join a reig | the amount of money you need largely depends on the group reigs often have bylaws which each member must follow each group sets its capital requirements and fees which could be due annually or more frequently minimum investments often range from 5 000 to 50 000 | |
a real estate investment group reig is a business that concentrates much of its efforts and capital on real estate in search of profits real estate investment groups may choose to buy renovate sell or finance properties real estate investment groups commonly buy multiunit properties sell units to investors and take ove... | understanding reigsreigs have several partners or private shareholders these investors provide a pool of capital and a greater ability to invest more broadly reigs focus much of their business on real estate but they are not subject to rules that require them to invest only in properties as such they can structure thei... | |
when run by experienced professionals the group s investments can be diversified well enough to lower risk and react to market volatility reigs also benefit from having few limits on what they can engage in and how they operate | reigs often have formal agreements stipulating when and how members can access their money if you want to withdraw from the group you may not recoup your investment or share of the profits immediately thus greatly limiting your liquidity reigs also can have set fees these fees can be costly especially when profits are ... | |
where can i find reigs | search online for real estate investment groups or connect with investors via social networking sites and interest groups such as linkedin or the national real estate investors association as a beginner it might be beneficial to join a local real estate group to become more closely connected with other investors and to... | |
how can i join a reig | you can join a reig or start your own professional networking groups and websites such as linkedin or the national real estate investors association are good starting points joining a group may be as simple as signing an agreement and paying dues | |
how much money do i need to join a reig | the amount of money you need largely depends on the group reigs often have bylaws which each member must follow each group sets its capital requirements and fees which could be due annually or more frequently minimum investments often range from 5 000 to 50 000 |
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