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45 relations: A priori and a posteriori, Arbitrage, Asset pricing, Beta (finance), Capital asset pricing model, Cost of capital, Discounting, Earnings response coefficient, Economist, Efficient-market hypothesis, Empirical evidence, Exchange rate, Expected return, Factor analysis, Fama–French three-factor model, Finance, Fundamental theorem of asset pricing, Gross national product, Inflation, Invertible matrix, Investment Analysts Society of Southern Africa, Kellogg School of Management at Northwestern University, Linear regression, Linearity, Long (finance), Massachusetts Institute of Technology, Modern portfolio theory, NYSE Composite, PDF, Perfect competition, Post-modern portfolio theory, Rational pricing, Richard Roll, Risk factor (finance), Risk premium, Risk-free interest rate, Roll's critique, Ross School of Business, S&P 500 Index, Short (finance), Stephen Ross (economist), Theory, Value investing, Yale School of Management, Yield curve.
A priori and a posteriori
The Latin phrases a priori ("from the earlier") and a posteriori ("from the latter") are philosophical terms of art popularized by Immanuel Kant's Critique of Pure Reason (first published in 1781, second edition in 1787), one of the most influential works in the history of philosophy.
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Arbitrage
In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices.
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Asset pricing
In financial economics, asset pricing refers to a formal treatment and development of two main pricing principles, outlined below.
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Beta (finance)
In finance, the beta (β or beta coefficient) of an investment indicates whether the investment is more or less volatile than the market as a whole.
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Capital asset pricing model
In finance, the capital asset pricing model (CAPM) is a model used to determine a theoretically appropriate required rate of return of an asset, to make decisions about adding assets to a well-diversified portfolio.
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Cost of capital
In economics and accounting, the cost of capital is the cost of a company's funds (both debt and equity), or, from an investor's point of view "the required rate of return on a portfolio company's existing securities".
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Discounting
Discounting is a financial mechanism in which a debtor obtains the right to delay payments to a creditor, for a defined period of time, in exchange for a charge or fee.
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Earnings response coefficient
In financial economics and accounting, the earnings response coefficient, or ERC, is the estimated relationship between equity returns and the unexpected portion of (i.e., new information in) companies' earnings announcements.
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Economist
An economist is a practitioner in the social science discipline of economics.
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Efficient-market hypothesis
The efficient-market hypothesis (EMH) is a theory in financial economics that states that asset prices fully reflect all available information.
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Empirical evidence
Empirical evidence, also known as sensory experience, is the information received by means of the senses, particularly by observation and documentation of patterns and behavior through experimentation.
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Exchange rate
In finance, an exchange rate is the rate at which one currency will be exchanged for another.
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Expected return
The expected return (or expected gain) on a financial investment is the expected value of its return (of the profit on the investment).
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Factor analysis
Factor analysis is a statistical method used to describe variability among observed, correlated variables in terms of a potentially lower number of unobserved variables called factors.
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Fama–French three-factor model
In asset pricing and portfolio management the Fama–French three-factor model is a model designed by Eugene Fama and Kenneth French to describe stock returns.
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Finance
Finance is a field that is concerned with the allocation (investment) of assets and liabilities (known as elements of the balance statement) over space and time, often under conditions of risk or uncertainty.
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Fundamental theorem of asset pricing
The fundamental theorems of asset pricing (also: of arbitrage, of finance) provide necessary and sufficient conditions for a market to be arbitrage free and for a market to be complete.
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Gross national product
Gross national product (GNP) is the market value of all the goods and services produced in one year by labor and property supplied by the citizens of a country.
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Inflation
In economics, inflation is a sustained increase in price level of goods and services in an economy over a period of time.
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Invertible matrix
In linear algebra, an n-by-n square matrix A is called invertible (also nonsingular or nondegenerate) if there exists an n-by-n square matrix B such that where In denotes the n-by-n identity matrix and the multiplication used is ordinary matrix multiplication.
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Investment Analysts Society of Southern Africa
The Investment Analyst's Society of Southern Africa (IAS, IASSA) is the liaison body for the financial analyst profession in South Africa.
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Kellogg School of Management at Northwestern University
The Kellogg School of Management at Northwestern University (also known as The Kellogg School or Kellogg) is the business school of Northwestern University in Evanston, Illinois.
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Linear regression
In statistics, linear regression is a linear approach to modelling the relationship between a scalar response (or dependent variable) and one or more explanatory variables (or independent variables).
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Linearity
Linearity is the property of a mathematical relationship or function which means that it can be graphically represented as a straight line.
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Long (finance)
In finance, a long position in a financial instrument, means the holder of the position owns a positive amount of the instrument.
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Massachusetts Institute of Technology
The Massachusetts Institute of Technology (MIT) is a private research university located in Cambridge, Massachusetts, United States.
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Modern portfolio theory
Modern portfolio theory (MPT), or mean-variance analysis, is a mathematical framework for assembling a portfolio of assets such that the expected return is maximized for a given level of risk.
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NYSE Composite
The NYSE Composite (^NYA) is a stock market index covering all common stock listed on the New York Stock Exchange, including American depositary receipts, real estate investment trusts, tracking stocks, and foreign listings.
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The Portable Document Format (PDF) is a file format developed in the 1990s to present documents, including text formatting and images, in a manner independent of application software, hardware, and operating systems.
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Perfect competition
In economics, specifically general equilibrium theory, a perfect market is defined by several idealizing conditions, collectively called perfect competition.
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Post-modern portfolio theory
Post-modern portfolio theory (or PMPT) is an extension of the traditional modern portfolio theory ("MPT", which is an application of mean-variance analysis or "MVA").
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Rational pricing
Rational pricing is the assumption in financial economics that asset prices (and hence asset pricing models) will reflect the arbitrage-free price of the asset as any deviation from this price will be "arbitraged away".
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Richard Roll
Richard Roll (born October 31, 1939) is an American economist, best known for his work on portfolio theory and asset pricing, both theoretical and empirical.
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Risk factor (finance)
A risk factor is a concept in finance theory such as the CAPM, arbitrage pricing theory and other theories that use pricing kernels.
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Risk premium
For an individual, a risk premium is the minimum amount of money by which the expected return on a risky asset must exceed the known return on a risk-free asset in order to induce an individual to hold the risky asset rather than the risk-free asset.
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Risk-free interest rate
The risk-free interest rate is the rate of return of a hypothetical investment with no risk of financial loss, over a given period of time.
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Roll's critique
Roll's critique is a famous analysis of the validity of empirical tests of the capital asset pricing model (CAPM) by Richard Roll.
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Ross School of Business
The Stephen M. Ross School of Business (Ross) is the business school of the University of Michigan.
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S&P 500 Index
The Standard & Poor's 500, often abbreviated as the S&P 500, or just the S&P, is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ.
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Short (finance)
In finance, a short sale (also known as a short, shorting, or going short) is the sale of an asset (securities or other financial instrument) that the seller does not own.
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Stephen Ross (economist)
Stephen Alan "Steve" Ross (February 3, 1944 – March 3, 2017) was the inaugural Franco Modigliani Professor of Financial Economics at the MIT Sloan School of Management after a long career as the Sterling Professor of Economics and Finance at the Yale School of Management.
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Theory
A theory is a contemplative and rational type of abstract or generalizing thinking, or the results of such thinking.
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Value investing
Value investing is an investment paradigm which generally involves buying securities that appear underpriced by some form of fundamental analysis, though it has taken many forms since its inception.
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Yale School of Management
The Yale School of Management (also known as Yale SOM) is the graduate business school of Yale University and is located on Whitney Avenue in New Haven, Connecticut, United States.
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Yield curve
In finance, the yield curve is a curve showing several yields or interest rates across different contract lengths (2 month, 2 year, 20 year, etc....) for a similar debt contract.
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References
[1] https://en.wikipedia.org/wiki/Arbitrage_pricing_theory
