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doesn t take risk into account | based largely on historic dataexpected return examplethe expected return does not just apply to a single security or asset it can also be expanded to analyze a portfolio containing many investments if the expected return for each investment is known the portfolio s overall expected return is a weighted average of the e... | |
how is expected return used in finance | expected return calculations are a key piece of both business operations and financial theory including in the well known models of modern portfolio theory mpt or the black scholes options pricing model it is a tool used to determine whether an investment has a positive or negative average net outcome the calculation i... | |
what are historical returns | historical returns are the past performance of a security or index such as the s p 500 analysts review historical return data when trying to predict future returns or to estimate how a security might react to a particular economic situation such as a drop in consumer spending historical returns can also be useful when ... | |
how does expected return differ from standard deviation | expected return and standard deviation are two statistical measures that can be used to analyze a portfolio the expected return of a portfolio is the anticipated amount of returns that a portfolio may generate making it the mean average of the portfolio s possible return distribution standard deviation of a portfolio o... | |
what is expected utility | expected utility is an economic term summarizing the utility that an entity or aggregate economy is expected to reach under any number of circumstances the expected utility is calculated by taking the weighted average of all possible outcomes under certain circumstances with the weights being assigned by the likelihoo... | |
what is expected utility | expected utility is an economic term summarizing the utility that an entity or aggregate economy is expected to reach under any number of circumstances the expected utility is calculated by taking the weighted average of all possible outcomes under certain circumstances with the weights being assigned by the likelihoo... | |
what is the expenditure method | the expenditure method is a system for calculating gross domestic product gdp that combines consumption investment government spending and net exports it is the most common way to estimate gdp it says everything that the private sector including consumers and private firms and government spend within the borders of a p... | |
how the expenditure method works | expenditure is a reference to spending in economics another term for consumer spending is demand the total spending or demand in the economy is known as aggregate demand this is why the gdp formula is actually the same as the formula for calculating aggregate demand because of this aggregate demand and expenditure gdp ... | |
what is an expense | an expense is the cost of operations that a company incurs to generate revenue it is simply defined as the cost one is required to spend on obtaining something as the popular saying goes it costs money to make money common expenses include payments to suppliers employee wages factory leases and equipment depreciation b... | |
how expenses are recorded | companies break down their revenues and expenses in their income statements accountants record expenses through one of two accounting methods cash basis or accrual basis under cash basis accounting expenses are recorded when they are paid in contrast under the accrual method expenses are recorded when they are incurred... | |
what are examples of expenses | examples of expenses include rent utilities wages salaries maintenance depreciation insurance and the cost of goods sold expenses are usually recurring payments needed to operate a business | |
what are the types of expenses | expenses can be categorized in a variety of ways expenses can be defined as fixed expenses such as rent or mortgage those that do not change with the change in production expenses can also be defined as variable expenses those that change with the change in production these include utilities and the cost of goods sold ... | |
is salary considered an expense | yes salary is considered an expense and is reported as such on a company s income statement the bottom linean expense is a cost that businesses incur in running their operations expenses include wages salaries maintenance rent and depreciation expenses are deducted from revenue to arrive at profits businesses are allow... | |
what is an expense ratio | the expense ratio is how much you pay a mutual fund or etf per year expressed as a percent of your investments so if you have 5 000 invested in an etf with an expense ratio of 04 you ll pay the fund 2 annually an expense ratio is determined by dividing a fund s operating expenses by its net assets operating expenses re... | |
where | you ll need to locate the fund s operating expenses in its financial statements and net assets on its webpage or financial statements generally the lower the expense ratio the better it is for most investors 2components of an expense ratiomost expenses within a fund are variable however the variable expenses are fixed ... | |
what does expense ratio mean | the expense ratio is how much of a fund s assets are used towards administrative and other operating expenses because an expense ratio reduces a fund s assets it reduces the returns investors receive | |
why is expense ratio important | the expense ratio of a fund or etf is important because it lets an investor know how much they pay to invest in a specific fund and how much their returns will be reduced the lower the expense ratio the better because an investor receives higher returns on their invested capital 3 | |
how is expense ratio calculated | the expense ratio is calculated by dividing a fund s net expenses by its net assets the bottom lineexpense ratios are taken from mutual fund and etf returns to help pay for operations and fund management the expense ratio charged to investors will vary depending on the fund s investment strategy and level of trading ac... | |
what is an experience rating | an experience rating is the amount of loss that an insured party experiences compared to the amount of loss that similar insured parties have experience rating is most commonly associated with workers compensation insurance it is used to calculate the experience modification factor 1understanding experience ratingsinsu... | |
how an experience rating is used | an experience modifier is the adjustment of annual premium based on previous loss experience 1 for instance three years of loss experience are typically used to determine the experience modifier for a workers compensation policy an experience modifier is calculated every year a modifier may be less than greater than or... | |
what is an expiration date | an expiration date is the last day that a consumable product such as food or medicine will be at its best quality according to the manufacturer there are important differences between expiration dates on food and those on medicine understanding an expiration datea product may have a sell by date a use by date a best by... | |
when determining the date by which a product will be of the best quality producers and retailers consider factors like the length of time and the temperature at which a food is stored while it s in transit and while it s being offered for sale | other factors such as the particular characteristics of the food and its type of packaging will affect how long a product will be of optimum quality the date on perishable food is a good indicator of how long it has been sitting around in a warehouse or on the store shelves it also suggests that the product may or may ... | |
is it okay to use some medicines after their expiration dates | it is a bad idea to use any medicine after its expiration date it is no longer guaranteed to be safe or effective according to the food drug administration fda for that matter the fda warns that medicines should be stored properly to remain good until their expiration dates if they don t need to be refrigerated store t... | |
how long can you eat food past its expiration date | here s some advice from the u s department of agriculture the usda also has a chart indicating the shelf life of many food products 10can you eat expired food if it hasn t been opened the use by sell by and best by stamps all suggest an end date for the product in its unopened state most products are good for some time... | |
what is expiration time | the expiration time of an options contract or other derivative is the exact date and time when it is rendered null and void derivatives contracts that finish out of the money otm at the time of expiration will become worthless while in the money itm contracts will be evaluated based on the settlement price upon expiry ... | |
an option s expiration is the specific date and time when the option contract becomes invalid the expiration date is critical for both the option s buyer and seller for american options the buyer can exercise the option at any point up to and including the expiration date for european options the holder can only exerci... | the expiration date is crucial for an investor when dealing with options since it significantly affects the option s value and the strategies an investor may employ the date is almost always clearly stated in the option contract options can have various expiration periods ranging from as short as one day to several mon... | |
how options are valued at expiration | the expiration date affects the option s price or premium generally options with later expiration dates are more expensive because of the increased time value this gives the holder a longer period to benefit from favorable price movements in the underlying asset the value of an option is generally derived from its intr... | |
when an atm option expires it normally has no intrinsic value and is not automatically exercised since the option s strike price is equal to the underlying asset s value often traders holding atm options sell them before expiration to capture any remaining extrinsic value or time premium however given that the time val... | otm options have a strike price not favorable given the current market price of the underlying asset hence they usually expire worthless unlike itm options otm options will not be automatically exercised holders of these options often let them expire though they could try to sell them to recoup some of the initial prem... | |
how to pick the best options expiry date | choosing the best option expiry date is a decision that depends on your trading and investment strategy market conditions and your risk tolerance selecting the optimal expiry date for an options contract is critical for your strategy s success here s what s often considered in choosing an expiry date by carefully consi... | |
when you buy an option the following are the knowable factors that affect its price the current price of the underlying asset the strike price the interest rate if borrowing the type of option call or put the time to expiration of the option and any dividends on the underlying asset volatility is the one left out as th... | volatility is therefore crucial for option prices in essence volatility measures how much the underlying asset s price varies during a specific period two types of volatility are important when considering options and their contract expiration historical volatility this is the record of fluctuations in the underlying a... | |
where can you find options prices and their expiration dates | options prices and their respective dates can be accessed through brokerage platforms financial websites and trading apps they frequently have detailed quotes for options on stocks and other underlying assets the quote will typically include the current price or premium for the option the strike price the expiration da... | |
what are the valuation models for options | several valuation models are used to calculate an option s theoretical value including the black scholes model the binomial option pricing model monte carlo simulations and risk neutral probability these models account for factors such as stock price strike price time until expiration implied volatility and interest ra... | |
what is a calendar spread | a calendar spread is an options trading strategy that involves buying and selling options on the same underlying asset with the same strike price but with different expiration dates this strategy is also known as a time spread or horizontal spread the typical setup involves selling a short term option front month and b... | |
what is explicit cost | explicit costs are normal business costs that appear in a company s general ledger and directly affect its profitability they have clearly defined dollar amounts that flow through to the income statement examples of explicit costs include wages lease payments utilities raw materials and other direct costs 1understandin... | |
what are explicit costs | explicit costs are tangible expenses that appear in a company s general ledger and are used to determine profitability examples include wages lease payments utilities and raw materials | |
what are implicit costs | implicit costs are not clearly defined and don t get reported as expenses when a company allocates its resources it forgoes the ability to earn money off the use of those resources elsewhere it is the cost of the use of an asset | |
what is accounting profit | accounting profit is the money left over in a business after deducting explicit costs from total revenue | |
what is economic profit | economic profit measures how a company is faring compared with its competition it uses both explicit and implicit costs a company can have a positive accounting profit while maintaining a zero economic profit the bottom lineexplicit costs are the out of pocket expenses incurred by a business in the production of goods ... | |
what is exploration production e p | exploration production e p is a specific sector within the oil and gas industry linked to the early stage of energy production which generally involves searching for and extracting oil and gas an e p company finds and extracts the raw materials used in the energy business typically they do not refine or produce energy ... | |
what does e p stand for in oil and gas | e p is short for exploration and production which is the early stage of energy production that consists of looking for oil and gas and then extracting it | |
what is the difference between exploration and production | exploration is the process of examining places where abundant oil and natural gas resources potentially exist under the earth s surface once these places have been identified production commences to collect and extract | |
what are the 3 stages of oil and gas | the oil and gas industry is generally broken down into three segments upstream midstream and downstream the first phase is upstream which is when companies initially explore and then start drilling and extracting oil and natural gas it is then followed by midstream which refers to the transportation of crude or refined... | |
is exploration and production e p upstream | yes exploration and production e p is considered part of the upstream phase which is the initial part of the oil and gas process that consists of exploration drilling and extraction the bottom linefinding and extracting oil and natural gas from the earth s surface is a deeply controversial and complex process that requ... | |
what is exponential growth | exponential growth is a pattern of data that shows greater increases with passing time creating the curve of an exponential function the formula for exponential growth is v s x 1 r t the starting value is s r is the interest rate and t is the number of periods that have elapsed the formula calculates v which is the cur... | |
what are examples of exponential growth | common examples of exponential growth in real life scenarios include the growth of cells the returns from compounding interest from an investment and the spread of a disease during a pandemic | |
is exponential growth the fastest type of growth | no in math exponential growth is not the fastest growth there are faster growth models such as factorial growth which uses a larger number for multiplying with every new repetition exponential growth uses the same number for every new repetition | |
what is the difference between linear growth and exponential growth | linear growth is growth that happens at the same rate of change every increase in x would bring about the same increase in y it is constant with exponential growth there is a constant multiplier so the growth rate is changing the bottom linecompounding is considered one of the great miracles of investing because money ... | |
what is an exponential moving average ema | an exponential moving average ema is a type of moving average ma that places a greater weight and significance on the most recent data points 1 the exponential moving average is also referred to as the exponentially weighted moving average an exponentially weighted moving average reacts more significantly to recent pri... | |
what does the ema tell you | the 12 and 26 day exponential moving averages emas are often the most quoted and analyzed short term averages the 12 and 26 day are used to create indicators like the moving average convergence divergence macd and the percentage price oscillator ppo 56 in general the 50 and 200 day emas are used as indicators for long ... | |
what is a good exponential moving average | the longer day emas i e 50 and 200 day tend to be used more by long term investors while short term investors tend to use 8 and 20 day emas | |
is exponential moving average better than simple moving average | the ema focused more on recent price moves which means it tends to respond more quickly to price changes than the sma 7 | |
how do you read exponential moving averages | investors tend to interpret a rising ema as a support to price action and a falling ema as a resistance with that interpretation investors look to buy when the price is near the rising ema and sell when the price is near the falling ema 8 | |
what is an export credit agency eca | an export credit agency offers trade finance and other services to facilitate domestic companies international exports most countries have ecas that provide loans loan guarantees and insurance to eliminate the uncertainty of exporting to other countries ecas support the domestic economy and employment by helping compan... | |
what is the role of exim in the united states | the export import bank of the united states exim is an independent executive branch agency backed by the full faith and credit of the u s whose mission is to support american jobs by supporting the export of u s goods and services | |
what is an export trading company | an export trading company is an independent company that provides support services for firms engaged in exporting this may include warehousing shipping insuring and billing on behalf of the client additionally export trading companies may help manufacturers find overseas buyers and provide them with other pertinent mar... | |
what is an export | exports are goods and services that are produced in one country and sold to buyers in another exports along with imports make up international trade instead of confining themselves within their geographical borders countries often intentionally seek external markets around the world for commerce achieving greater reven... | |
what is export policy | export policy refers to government legislation that dictates how what when and with whom a country exports goods export policy defines the tariffs customs requirements and limitations on international trade for each country | |
is it better to export goods than import goods | for each country this answer will be different in many cases it is better to import some goods and export others each country is often more proficient in manufacturing certain goods based on its climate citizen skillset or access to raw materials therefore it s arguably best for a company to manufacture and export what... | |
what are the largest u s exports | the u s s largest exports by value in 2023 were crude oil civilian aircraft refined petroleum oils petroleum gases and cars 6who is the world s largest exporter based on the most recent export information available 2022 china is the world s largest exporter followed by the united states germany the united kingdom and f... | |
exposure at default ead is the total value a bank is exposed to when a loan defaults using the internal ratings based irb approach financial institutions calculate their risk banks often use internal risk management default models to estimate respective ead systems outside of the banking industry ead is known as credit... | understanding exposure at defaultead is the predicted amount of loss a bank may be exposed to when a debtor defaults on a loan banks often calculate an ead value for each loan and then use these figures to determine their overall default risk ead is a dynamic number that changes as a borrower repays a lender there are ... | |
what is exposure at default | exposure at default is the predicted amount of loss a lender may incur if a debtor defaults on their loan it is the realized value of what the bank may lose if one of its borrowers is unable to satisfy their debt obligation | |
how do you calculate exposure at default | there are two main approaches to calculating exposure at default the foundation approach and the advanced approach the foundation approach is guided by regulators and is calculated by considering the asset forward valuation and commitments details the foundation approach does not consider the value of any guarantees co... | |
what does exposure on a loan mean | exposure is the maximum potential loss a lender may incur if the borrower defaults it s a risk measurement technique to assess the position of the lender the characteristics of the borrower and the possibility of loss exposure is a natural part of lending in return for being exposed to risk lenders charge interest to b... | |
how can i reduce my credit exposure | if you re a lender and want to reduce your credit exposure consider the types of loans you re offering and who you are loaning to riskier longer term loans will increase your credit exposure as there is often a greater chance of default to minimize your exposure at default consider shorter term loans loans substantiate... | |
what is an express warranty | an express warranty is an agreement by a seller to provide repairs or a replacement for a faulty product component or service within a specified time period after it was purchased buyers rely on these promises or guarantees and sometimes purchase items because of them | |
how an express warranty works | a warranty is an assurance that an item will live up to the promises of the seller under the magnuson moss warranty act passed by congress in 1975 a company that provides a written express warranty is subject to federal guidelines and must comply with the act 1 the act provides consumer protections in the case that a c... | |
how the product functions and looks when it is received can dramatically differ from what the customer envisioned while browsing online the inclusion of an express warranty gives them some sense of surety that issues with the purchase will be rectified in some manner | for example if a consumer buys a business jacket online but when it arrives the item is the wrong size wrong color or is missing buttons an express warranty might entitle the consumer to a refund or replacement in such cases the online seller is usually responsible for footing the bill for any additional shipping charg... | |
what is expropriation | expropriation is the act of a government claiming privately owned property against the wishes of the owners ostensibly to be used for the benefit of the overall public in the united states properties are most often expropriated in order to build highways railroads airports or other infrastructure projects the property ... | |
when payment of just compensation is delayed the owner is entitled to receive interest on the amount of the late payment | a federal supreme court decision in the early 2000s and subsequent reactions to the decision have shaped the ability of governments to seize property under eminent domain for the sole reason of increasing tax revenue kelo v city of new london 545 u s 469 2005 affirmed the authority of new london conn to take non blight... | |
what is extended trading | extended trading is conducted by electronic networks either before or after the regular trading hours of the listing exchange such as the new york stock exchange nyse the u s stock exchanges are open from 9 30 a m to 4 00 p m est 1pre market stock trading in the united states commonly runs between 4 00 a m and 9 30 a m... | |
when can investors benefit from extended trading | the ability to trade during extended hours can allow investors and traders to react instantly to the news which comes out when the exchange is closed if a company reports poor earnings the stock will likely drop and the trader can exit their position sooner rather than wait for the exchange to open | |
where can investors trade during extended trading hours | extended trading may take place on alternative trading systems operated by broker dealers exchanges and other trading centers however all markets are not available for extended hours of trading 1 | |
what is an unlinked market and the risk during extended trading | extended hours trading systems are not linked and the price of a stock displayed on one trading system may not reflect the price of the same stock displayed on another trading system 1the bottom lineextended trading on the exchanges occurs on electronic marketplaces outside of the official trading hours stock exchanges... | |
what is external debt | external debt is the portion of a country s debt that is borrowed from foreign lenders including commercial banks governments or international financial institutions these loans including interest must usually be paid in the currency in which the loan was made to earn the needed currency the borrowing country may sell ... | |
what are external debt and internal debt | external debt is the portion of a country s debt that is borrowed from foreign lenders internal debt is the opposite referring to the portion of a country s debt incurred within its borders | |
what are the types of external debt | external debt is money borrowed by a government or corporation from a foreign source it can include | |
what are the effects of external debt | high levels of external debt can be risky especially for developing economies among other things it could increase the risk of default and being in another country s pocket ruin credit ratings leave little funds to invest and spur growth and expose the borrower to exchange rate risk the bottom linelike any form of debt... | |
what are external economies of scale | in economics economies of scale dictate that the more units a business produces the less it costs to produce each unit external economies of scale describe the same phenomenon except as applied to an entire industry rather than within a single company for example if a city creates a better transportation network to ser... | |
what is the difference between external and internal economies of scale | internal and external economies of scale both refer to downward pressure on production costs the central difference between the two concepts is that internal economies of scale are specific to a single company whereas external economies of scale apply across an industry | |
what are economies of scale internationally | just as economies of scale can exist on a municpal state or national level they can also manifest on an international level consider the rise of air travel as more consumer choose to fly internationally demand spurs the creation of new routes and more flight options this may open up new revenue paths for airlines simul... | |
how do you achieve external economies of scale | external economies of scale can be achieved a number of different ways technological advancements may drive down production costs for an entire industry as can government support in the form of infrastructure investments or tax subsidies the bottom lineexternal economies of scale refer to the phenomenon in which produc... | |
what is an externality | an externality is a cost or benefit that is caused by one party but financially incurred or received by another externalities can be negative or positive a negative externality is the indirect imposition of a cost by one party onto another a positive externality on the other hand is when one party receives an indirect ... | |
how do externalities affect the economy | externalities may positively or negatively affect the economy although it is usually the latter externalities create situations where public policy or government intervention is needed to detract resources from one area to address the cost or exposure of another consider the example of an oil spill instead of those fun... | |
what is the most common type of externality | most externalities are negative as the production process often entails byproducts waste and other consequential outcomes that do not have further benefits this may be pollution garbage or negative implications for worker health many externalities are also related to the environment as the mechanical nature of manufact... | |
how can you identify an externality | companies must be mindful of their entire production process when assessing production externalities this includes not only implications of the final product but residual impacts of byproducts disposal of items not used and how antiquated equipment is handled this also includes projecting outcomes of items yet to occur... | |
how do economists measure externalities | economists use two measures to evaluate an externality first economists use a cost of damages approach to evaluate what the expense would be to rectify the externality as we may be seeing with greenhouse gas emissions some externalities may extend beyond the point of repair another method of measuring externalities is ... | |
what are production externalities | production externality refers to a side effect from an industrial operation such as a paper mill producing waste that is dumped into a river production externalities are usually unintended and their impacts are typically unrelated to and unsolicited by anyone they can have economic social or environmental side effects ... | |
what is an extraordinary general meeting | an extraordinary general meeting egm is a company shareholder meeting that s not its scheduled annual general meeting agm an egm is also called a special general meeting or emergency general meeting understanding an extraordinary general meeting egm in most cases the only time shareholders and executives meet is during... | |
what is an extraordinary item | extraordinary items consisted of gains or losses from events that were unusual and infrequent in nature that were separately classified presented and disclosed on companies financial statements extraordinary items were usually explained further in the notes to the financial statements companies showed an extraordinary ... | |
what is extrinsic value | extrinsic value measures the difference between the market price of an option called the premium and its intrinsic value extrinsic value is also the portion of the worth that has been assigned to an option by factors other than the underlying asset s price the opposite of extrinsic value is intrinsic value which is the... | |
what is the 1913 federal reserve act | the 1913 federal reserve act is legislation in the united states that created the federal reserve system 1 congress passed the federal reserve act to establish economic stability in the u s by introducing a central bank to oversee monetary policy the federal reserve is the culmination of several periods of economic tum... | |
what did the federal reserve act do | the federal reserve act created the federal reserve system after it was passed by congress in 1913 the fed was originally created to combat banking panics that were causing havoc on the u s banking system at the time 12 | |
does the federal reserve set interest rates | not directly the prime rate which is used by many lenders is based on the federal funds rate individual lenders use the prime rate as a base for how much to charge in interest but they typically add more as a way to make profit | |
how many federal reserve districts are there | there are 12 districts with alaska and hawaii included in district 12 13 | |
what are faang stocks | in finance faang is an acronym that refers to the stocks of five prominent american technology companies meta meta formerly known as facebook amazon amzn apple aapl netflix nflx and alphabet goog formerly known as google the term was popularized by jim cramer the television host of cnbc s mad money in 2013 who praised ... | |
what makes faang stocks so popular | the five stocks that make up the faang acronym meta meta amazon amzn apple aapl netflix nflx and alphabet goog are all well known brands among consumers but they are also famous for their remarkable growth in recent years with market capitalizations ranging from 276 41 billion in the case of netflix to 3 trillion in th... | |
are faang stocks overvalued | investors disagree about whether the faang stocks are overvalued their proponents will argue that their valuations are justified based on their fundamental strength as businesses but critics argue that even with impressive business performance the faang stocks prices have become so expensive that it may be difficult to... | |
are faang stocks hard to acquire | no the faang stocks are all easy to acquire in the sense that they are publicly traded companies with substantial daily trading volumes they are also routinely included in popular exchange traded funds etfs however investors who believe that the faang stocks may be overvalued would argue that they are difficult to acqu... | |
is microsoft a faang stock | no microsoft is not a faang stock which is why there is no m in the acronym faang stocks were meant to describe hot new high growth tech companies of the 2010s by then microsoft was already a mature older company | |
what is face value | face value is a financial term used to describe a security s nominal or dollar value as given by its issuer for bonds it s the amount paid to the holder at maturity the face value of bonds is often called par value or simply par 1for stocks the face value is the stock s original cost as listed on the certificate in rea... |
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