Economics Archives

The Efficient Market Hypothesis: Beating the Market

What is the Efficient Market Hypothesis? Is it possible to beat the market? What are the three forms of the Efficient Market Hypothesis? According to the Efficient Market Hypothesis, all share prices reflect all available information. As a result, it’s not possible for anyone (without inside information) to determine whether a stock is valued correctly. There are three forms of the Efficient Market Hypothesis, with each coming to a different conclusion about the efficiency of the market. Learn more about this hypothesis below.

Types of Bonds in Finance: 6 You Should Know About

What are the six different types of bonds in finance? What tips can help you buy the right ones? According to economist Burton Malkiel, bonds are worth including as part of a well-diversified portfolio. There are six main types of bonds in finance you should be aware of, and understanding the difference will help you to buy the right ones for you. Keep reading for an overview of the different types of bonds in finance.

The Benefits of Diversification: Optimize Your Portfolio

What are the benefits of diversification in a portfolio? Why does this minimize your risk? A diversified portfolio is one that features holdings in a variety of industries, countries, and asset classes. The idea is that when your holdings in one industry, country, or asset suffer, your holdings in other industries, countries, and assets will offset your losses. Find out the main benefits of diversification and how you can create a diversified portfolio below.

The Role of Banks in the Economy: Explained

How to be Rich and Successful: 3 Steps to Follow

What purpose do banks serve? How do banks contribute to the greater good of economic agents (firms and consumers)? Banks serve a number of important roles in an economy. First, banks guard money and provide businesses with credits for large investments which allow businesses to operate on a large scale, driving down costs and standards of living. Of course, banks also lend to individual consumers to finance their purchases, which fuels the demand for goods and services. In this article, we’ll discuss the role of banks in the economy and how they are regulated.

The Dot-Com Bubble: What Went Wrong?

What was the dot-com bubble? Why did this economic bubble burst? The dot-com bubble was an economic bubble beginning in the late 1990s, caused by speculation and optimism about the rise of the internet. Although many “dot-com” companies had no earnings, shares prices were excessively high. Eventually, the “dot-com” bubble burst, with disastrous consequences for many companies. Learn about the dot-com bubble below.

How to Find the Rate of Return on Investments

Do you want to know how to find the rate of return on investments? What effective formula can help you predict the rate of return efficiently? Market projections in the short run—a month, or even a year, from the present—are generally a fool’s errand, but, by knowing which variables to examine, it is possible to make relatively accurate projections of long-term return on investment. Understanding how to find the rate of return will help you to make wiser choices when investing. Keep reading to find out how to find the rate of return on investments.

Markowitz’s Theory Explained (Modern Portfolio Theory)

What is Markowitz’s theory about investment portfolios? How can diversification of stocks reduce risk? Harry Markowitz’s theory (Modern Portfolio Theory) suggests that the diversification of a stock portfolio can reduce risk. It asserts that a diversified portfolio—one that features holdings in a variety of industries and countries—is more likely to be profitable than a homogenous one. Find out more about Markowitz’s theory below.

Why Socioeconomic Status and Depression Are Linked

What is the relationship between socioeconomic status and depression? Why are highly unequal societies more likely to have higher rates of depression? Socioeconomic status and depression are intertwined because an individual with a low or threatened social status is more likely to feel depressed. This problem is particularly acute in highly unequal societies. Those at the lower rung of the ladder are depressed because of their status, while high-status people feel depressed from the thought of falling down the ladder. Read more about the relationship between socioeconomic status and depression.

The Top 3 Benefits of International Trade

What are the benefits of international trade? How does foreign trade affect the internal job sector? International trade allows scarce global resources to go towards their most valuable uses. This may mean a loss of jobs in one sector with the creation of jobs in another, but the economy is overall more efficient and the population at large benefits. In this article, we’ll look at the three primary benefits of international trade: absolute advantage, comparative advantage, and economies of scale.

Does Technical Analysis Work? Here’s Why It Doesn’t

What is the best method for predicting the movement of stock prices? Does technical analysis work? Technical analysis uses the past movements of stock prices to predict future prices. For example, if a stock has risen over the course of a day or several days, a technical analysis will show confidence in the stock. Technical analysts argue that stock prices tend to follow trends, meaning they can sometimes be susceptible to the irrational optimism of other investors. Does technical analysis work? Find out below.