Category Investing Theory

An example of business fixed investment spending is?

Wondering what an example of business fixed investment spending is? Fixed investment refers to investment in fixed capital as well as to the replacement of depreciated fixed capital. Therefore fixed investment means investing in physical assets like: machinery, buldings, land, vehicles, installations or technology. The term “fixed” doesn’t mean essentialy that the asset “stays in one place” and is immobile physically, but it rather refers to the circulation of capital’s flows.

An example of business fixed investment spending is:

1. a purchase of a bond by General Electric Corporation.
2. a purchase of a home by a household.
3. $200 million of unsold cars at a car dealership.
4. a purchase of a computer by an accounting firm.

The correct answer is number 4.

What are the types of investments...

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An example of foreign direct investment would be?

Wonder what an example of foreign direct investment would be? Take a look at some examples of FDI.

Which of the following would be an example of foreign direct investment from the
United States to Taiwan?
1. Microsoft hiring a Taiwanese computer programmer to debug some software for
it.
2. A U.S. bank buys bonds issued by a Taiwan computer manufacturer.
3. The state of California renting space in Taipei for one of its employees to use
promoting tourism in California.
4. A U.S. car manufacturer entering into a contract with a Taiwan firm for the latter
to make and sell it spark plugs.
5. Warren Buffet (a U.S. citizen and investor) buying a controlling share in a Taiwanese
electronics firm.

The correct answer is 5.

Foreign direct investment (FDI) occurs when a foreign investor is the owner o...

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Gross IRR and net IRR

Gross IRR and net IRR explanation. As we know Gross IRR is calculated net of fees. Net IRR is net of mgmt fees, carried interest and other comp to the GP. Remember that net means after the fee is removed, and gross means before the fee is deducted. Why we show IRR? Firstable, when the client controls the cash flows to provide him with his company’s return. The return shows the manager’s performance and the impact of the company’s cash flow decisions. Why to show net? This reflects how company is doing, after:

– the impact of the manager’s decisions,
– the impact of the advisory fee,
– the impact of their cash flow decisions.

The second possibility could be if the manager is in control of the cash flow. Net can reflect whole impact and that’s why this should be a way better return...

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Criteria for an Autonomy of the Typical Central Bank

What are the Criteria for an Autonomy of the Typical Central Bank?

1. Functionality of institution – the institution must be so organized and administer of such instruments to be able to perform their own tasks, and therefore have the aspects of:
– The internal organization of the institution,
– The status of links with external institutions (mainly the government), the instruments of monetary policy.
2. Financial independence – to what extent government expenses are implemented by the central bank. The direct influence of the government on the central bank imposes automaticity of financing government expenses.
3. Independence of the authorities – in what way, by whom, and for how long central bank authorities are selected. In addition, can members of the bank be removed?

The authorities o...

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What are the Types of Insurance Policies?

What are the types of insurance policies? Here is a list of the different types of most often concluded insurances with a brief description.

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How to read Indexes on the Stock Market?

How can you read Indexes at the Stock Market? The increase of the index value compared to its value in the previous trading session indicates a positive trend. This implies development and prosperity. When there is a decrease, the interpretation is reversed. Indicators should also be analyzed for longer time intervals, in order to get rid of the influence of random fluctuations. This way you can simply interpret the indexes.
Apart from the already mentioned, in previous article, three indexes, Dow-Jones, there is a fourth one – a collective. It is the Dow-Jones Composite Index (DJCI so called Sixty-Five Stocks). This indicator is calculated based on the previous ones, and is based on 65 shares (20 + 30 + 15)...

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What are the Exchange Rate Tables?

Informations on stock exchange transactions are reported to the public. Such data is widely available, for example in the press and on the Internet. Some portals publish some detail data on the development of the stock exchange in terms of both current and (for better orientation) with regard to a previous period. Information about the rates are distributed in different forms which depends on the country. Regardless of the country a table must contain certain essential information, such as securities rate, fluctuation of the exchange rate in a period of time, volatility in the session, the estimated and actual asset’s income...

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What is a Stock Exchange?

What is a Stock Exchange and how does it work? The stock market is an essential part of the secondary capital market. Stock exchange is an organized market on which authorized entities carry out the transactions of purchase and sale of securities. The stock market is a market with a very high degree of formalization. Specified precisely is in fact the market itself, a market participant, the object of the transaction (security), price (exchange) transactions and, finally, the manner of its conclusion. Taking this into account, one can recognize the essence of the stock exchange as follows:
Stock Exchange is an institutionalized form of the capital market, where certain entities are transacting with a specific value in a particular mode...

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Money Market and Capital Market differences

What are the differences between Money Market and Capital Market? In financial markets transactions are combined with the capital. The market is an abstract concept here. This means, in principle, the process of sale and purchase of capital for expense – remuneration, which is a percentage. Anyone can be a participant of the financial market: the government, the company, a bank, or an individual. The condition for admission to the market is either adequate capital, which can be rented, or security – guarantee, on which you can take the capital, use it and pay percent on this account. Common are various types of divisions and definitions of financial markets...

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What is OTC market?

What OTC market means? At the capital market of securities there are being made transactions of medium and long term capitals. With some simplification it can be assumed that this type of capital is essentially financing medium-and long-term investments.
Capital market instruments of the securities market are mainly bonds and equities: long-term and medium-term securities.
The capital market therefore consists of two main segments :
– The stock market,
– The bond market.
As mentioned, the capital market is divided into primary and secondary. The primary market includes the issuance, which is the first sales of values ​​to the first investors. Secondary market, due to the mode of the transaction, can be divided very simply into two parts. This division looks as follows:
– The first segm...

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