Search results
Results from the WOW.Com Content Network
Real options valuation, also often termed real options analysis, [1] (ROV or ROA) applies option valuation techniques to capital budgeting decisions. [2] A real option itself, is the right—but not the obligation—to undertake certain business initiatives, such as deferring, abandoning, expanding, staging, or contracting a capital investment project. [3]
the firm's investment decision is independent of the consumption preferences of the owner; the investment decision is independent of the financing decision. the value of a capital project (investment) is independent of the mix of methods – equity, debt, and/or cash – used to finance the project. Fisher showed the above as follows:
In macroeconomics, investment "consists of the additions to the nation's capital stock of buildings, equipment, software, and inventories during a year" [1] or, alternatively, investment spending — "spending on productive physical capital such as machinery and construction of buildings, and on changes to inventories — as part of total spending" on goods and services per year.
Free cash flow measures the cash a company generates which is available to its debt and equity investors, after allowing for reinvestment in working capital and capital expenditure. High and rising free cash flow, therefore, tend to make a company more attractive to investors. The debt-to-equity ratio is an indicator of capital structure.
Investment decisions are made by investors and investment managers. These decision are made based on the finding of analysis tools based on data available about the companies. [1] Investors commonly perform investment analysis by making use of fundamental analysis, technical analysis and gut feel. Investment decisions are often supported by ...
Financial economics studies how rational investors would apply decision theory to investment management.The subject is thus built on the foundations of microeconomics and derives several key results for the application of decision making under uncertainty to the financial markets.
Hansen emphasized the role of the accelerator effect in business cycles, showing that fluctuations in investment are a significant driver of economic fluctuations. He proposed that investment decisions are not just influenced by current income or demand levels but are also sensitive to changes in the rate of income growth. [4]
A macroeconomic model is an analytical tool designed to describe the operation of the problems of economy of a country or a region. These models are usually designed to examine the comparative statics and dynamics of aggregate quantities such as the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the level of prices.