Sentences with phrase «finance theory»

I have worked on algorithms for systematic trading based on behavioral finance theories, related to applying concepts from information theory to financial markets.

One of the most fundamental ideas of finance theory is the notion that the stock market is «efficient,» making superior performance virtually impossible.

What finance theory does say is that when a portfolio is efficient, the only way to increase expected return is to load additional risk.

Corporate finance theory tells us that companies should only retain their cash flows if they have profitable projects to invest in.

The discussion of the law relating to financing practices, financial instruments and financial institutions will be integrated with a consideration of some of the topics that comprise modern finance theory.

Behavioral finance theory identifies a number of behaviors that investors typically fall prey to.

There's a big difference between college finance theories and discretionary price action trading.

If you're really looking for the foreign stock allocation sweet spot, finance theory points to 30 % as the magic percentage.

This is an area where finance theory needs to change.

Questions remain over whether these behavioral finance theories can be used to manage your money effectively and economically.

Tenets and Findings of Behavioral Finance This field of study argues that people are not nearly as rational as traditional finance theory makes out.

The hard form of behavioral finance theory suggests people are deeply irrational, in an economic sense, and government regulation is required to moderate irrational investor activity.

By 1987, the hottest innovation to come from finance theory was something marketed as «portfolio insurance.»

Finance theory says that an investor should not pay for beta (a degree to which a fund or portfolio performs in alignment with the overall market) but should only pay for alpha.

As we mentioned earlier, behavioral finance theories directly conflict with traditional finance academics.

Strengthening the liability side of the balance sheet changes the way assets are managed (the process is far better understood in finance theory than in economics), and the result is nearly always more productive use of the assets.

Classical finance theory espouses the notion that a natural tradeoff exists between risks and rewards, a concept clearly reflected among equity markets.

But everything I've seen in my years on Wall Street - and a lot of more current thinking on finance theory - says that that is simply not so» Robert Rubin

For example, investors dangerously misinterpret finance theory when they believe that a poorly diversified portfolio has a higher expected return because it is more risky.

That individual investors react more to their financial market losses than to their financial market gains is one of the more well - established behavioral finance theories put forth by Nobel Prize laureate Daniel Kahneman and Amos Tversky, and one that more and more financial advisors are taking into account these days as they seek to apply behavioral finance principles to their practices.

As this article on Investopedia explains, Behavioral Finance Theory argues that our natural priority is to avoid losses.

Behavioral finance theory attributes stock market bubbles to cognitive biases that lead to groupthink and herd behavior.

But it wasn't until 1968 when Kirzner started to really develop his interest in both investment finance theory and applications.

«Basic financing theory implies that higher interest rates lead to higher cap rates — especially since so much of the appeal of commercial real estate in this cycle has been the high rate of return compared to the low interest rates,» says Affleck.

«When it comes to eliminating guns — or anything else — from a broad - based index, there's a collision between finance theory and social responsibility,» says Hallett.

She pokes at the questionable assumptions underlying much of finance theory.

pdf) is a fantastic 2006 paper about investing in «unknown and unknowable» (UU) situations in which «traditional finance theory does not apply» because each is unique, so past data are non-existent, and therefore an obviously poor guide to evaluating the investment.

Finance theory suggests that an unlevered or net cash balance sheet should be rewarded with higher P / E multiples.

Or consider that less levered companies tend to return better over the long haul (Megginson, Corporate Finance Theory, page 307.)

WASHINGTON, Oct. 28 (UPI)-- The Efficient Market Hypothesis, first expounded in 1965 in a paper by Eugene Fama, is the capstone of modern finance theory, that has been responsible for three Nobel prizes in Economics (Modigliani, 1985, Markowitz / Miller / Sharpe, 1990, Merton / Scholes, 1997), although curiously enough not one for Fama himself.

Over the long term, finance theory says that such stocks should theoretically earn less than the risk - free interest rate, and sell at above - average price / earnings multiples because they provide «insurance benefits» for a portfolio.

In contrast to many other attempts to apply behavioral finance theories, these two leading indicators have the virtue of being quantifiable; in other words, they indicate the potential tipping points in human emotions.

His article fits all the behavioral finance theory, which we also discuss in the book.

Behavioral finance theory can be used to help investors develop a greater understanding of how their minds work and to show them that their investment decisions shouldn't be driven by emotion, but rather by a coherent strategy.

I won't bore you with the finance theory.

The belief that risk and expected returns go hand in hand is probably one of the most widely held misinterpretations of finance theory.

The Annuity Calculator on this page is based on the time - value - of - money or «finance theory» definition of annuity.

Clearly, that is not the same thing as the finance theory definition of annuity.

This annuity calculator was not designed to analyze an Insurance Annuity which can mean something entirely different from the finance theory definition.

There may be something to this Behavioral Finance Theory.

According to finance theory, the optimal approach is to make a lump sum investment; i.e., invest all of your money at once.

(Actually, according to behavioral finance theory, that's just the way you is!)

Today, however, we are confronted with growing evidence that the real world is so far away from offering a meaningfully positive risk - free rate that much of this finance theory is of doubtful merit.

The risk - free rate is central to both finance theory and investment practice.

I won't bore you with the finance theory.

This is a fundamental result of finance theory.

His article fits all the behavioral finance theory, which we also discuss in the book.

... the right interests (history, finance theory, markets — relatively easily acquired, as these subjects are fascinating), personality factors (discipline, controlled risk taking, decisiveness — not so easily acquired, but can be improved over time) and intelligence (not easily acquired, but perhaps the threshold isn't that high at 90th percentile).

Then Lipper uses a utility function based on behavioral finance theory to penalize periods of under performance against the peer group average, with more significant weightings being given to excess negative returns.In determining the universe of funds considered for an award, Lipper includes those registered for sale in the respective country as of the end of the calendar year that have at least 36 months of performance history.