To compare economic productivity and standards of living between countries, economists use an analysis metric called the Purchasing Power Parity that allows them to compare different countries’ currencies through a “basket of goods” approach. The Purchasing Power Parity (PPP) theory is a long-held belief that the exchange rate between two currencies should be the same … Continue reading Theory of Purchasing Power Parity
In order to choose securities to buy, usually, investors conduct a lot of research and do a lot of analysis and calculus to find the best options. But ‘best options’ don’t always mean the same thing for all investors. Different theories and models try to suggest the best paradigms to follow by investors for higher … Continue reading The Greater Fool Theory:
Benjamin Graham, an American-British economist, professor, and investor. Born on May 9, 1894, in London, UK a died in 1976 in France at the age of 81 tears old. In 1949 he published “The intelligent investor” one of his most successful works that made him inspire a lot of people worldwide with his philosophy of … Continue reading “The Intelligent Investor” by Benjamin Graham
Warren Edward Buffett, born on August 30, 1930, in Omaha, USA, is an American businessman and investor who managed to amass a personal fortune of more than $60 billion. This man is considered by many as the most successful investor the stock market has ever known and he is taken as a true role model … Continue reading Warren Buffett’s investment strategy.
The term “Efficient Market” was used for the first time by the American economist Eugene Fama(1939-) in his famous article published in 1970 “Efficient Capital Market: a review of theory and empirical works”.The main idea behind this theory is that it is impossible for investors to outperform the market by looking for undervalued stocks or … Continue reading The efficient market hypothesis
The international monetary system (IMS): a set of practices, rules and institutions aimed at organizing and monitoring monetary exchanges and financial flows between countries. This system of is generally defined as international payments and exchange rates between national currencies allows transactions between countries. Through history the world has known different monetary systems, one of the … Continue reading Bretton Woods international monetary system.
Commercial banks liquidity, a measure of the cash and other assets banks have available to pay bills and meet short-term business and financial obligations, is not stable. It varies according to different factors: bank liquidity factors. In fact, the factors of bank liquidity are the set of events that affect banks’ liquidity and constrain them … Continue reading Factors affecting bank liquidity.
Monetary creation consists of increasing the quantity of money held by non-financial agents (NFA). Indeed, within the economy the quantity of money in circulation is not stable. Its variation has significant meaning. When we observe in a given period a positive variation of the monetary aggregate we speak of money creation. It is the putting … Continue reading Mechanisms of monetary creation.
Money as it appears today comes in various forms and fulfills different functions in order to facilitate our daily economic transactions. Money can be defined by the functions it performs. It fulfills three essential functions, it is at the same time a unit of account, a medium of exchange and a store of value. … Continue reading Functions of money.
Financial reporting: practices that help summarize the financial information of the company and provide a honest and transparent view of its financial situation and performance to the stakeholders.Stakeholders include owners, managers, employees, investors, institutions and government who need the valuable information offered by financial reports about investments, credit extensions, cash flow in… to be able … Continue reading Financial reporting.