What is a Financial Contagion? A financial contagion represents the spread of a financial crisis from one entity or market to another. Financial contagions can occur within a single economy or can go beyond international borders. These usually include issues with currency exchange rates, stock prices, capital flows, etc. Financial …

There are many types of risks that are relevant to finance and the economy. Among these, systemic and systematic risk may be prevalent. However, due to similar names, most people confuse their meaning. However, both of them are different from each other. Therefore, it is crucial to understand them and …

Capital refers to the financial assets that a company or business owns. For companies, having capital is crucial in daily operations. Mostly, it comes in the form of funds and physical assets that companies use. Sometimes, however, it may also come in the form of a company’s workforce as human …

What is Gross Domestic Product? Gross Domestic Product (GDP) refers to the total value of all goods and services produced within a country. It confines these goods and services to a specific country’s borders within a particular period. Usually, a country’s GDP is an indicator of how well its economy …

What is Purchasing Power Parity? Purchase power parity refers to an economic theory used to compare the currencies of different countries. It does so by using a “basket of goods” approach. In other words, it compares several currencies by looking at the purchase price of those currencies for the purchase …

Monetary and fiscal policy are tools that can influence economic activity, whether it is to encourage or curb growth. Both fiscal and monetary policy can help stabilize the economy in times of a crisis or stimulate growth when the economy becomes stagnant. However, there are some differences between them. What …

What is Mean Reversion? In finance, mean reversion is a theory that suggests that asset price volatility and historical returns subsequently return to the long-run mean or average of the entire dataset. This movement in asset prices may depend on the economy, industry, or average return with a dataset. The …

What is a Time Series? A time-series represents a collection of observations obtained through repeated measurements. Usually, these are in successive order. Time series data can come from anywhere. As long as the data is quantifiable over time, it can be a part of a time series. Time series analysis …

In economics, there are two terms that closely relate to each other. These include inflation and money supply. The money supply in a country can have a direct effect on its rate of inflation. However, it is necessary to understand what each of these is before discussing their relationship. What …

What is a Real Estate Investment Trust? A real estate investment trust (REIT) is an investment fund or company that owns income-producing real estate. These trusts resemble mutual funds as they pool the capital of various investors. REITs are well-known for providing large dividends to investors with constant growth over …