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Finance & Business

Anything related to finance, business, accounting, audit, investments, risk management, financial measures, taxes, economics, management and others


Synthetic Long Put

A Synthetic Long Put strategy is a position where a short stock position is combined with a long call option position.

Unlike the synthetic long call position, the synthetic long put strategy is a bearish strategy with limited risk. The investor expects the price of stocks to go down for a long time hoping to make profit on the decline, but he or she still wants to curtail the risk in case his expectation won't realize and the stocks go up. The investor would recoup the loss on the short stock from the long call in this case.

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Law of One Price

The Law of One Price says that identical goods should sell for the same price in two separate markets. This assumes no transportation costs and no differential taxes applied in the two markets.

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Predatory Pricing

In general, predatory pricing refers to anti-competitive activities taken by a company that is dominant in the market to protect its market share from new or existing competitors. Predatory pricing involves temporarily pricing a product low enough to end a competitive threat.

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Earnings per Share (EPS)

The Earnings Per Share (EPS) financial measure captures the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share (EPS) serves as an indicator of a company's profitability.

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Price/Earnings Ratio (P/E Ratio)

The Price/Earnings Ratio, also Price-to-Earnings Ratio, or shortly the P/E ratio, is a valuation metric of a company's current share price compared to its per-share earnings. The P/E ratio looks at the relationship between the stock price and the company’s earnings.

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Price Elasticity

Price elasticity, as it relates to economics, is a measure of the responsiveness of demand or supply to a change in price. Elasticity is a measure of responsiveness.

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Consumer Price Index (CPI)

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services. It is the most commonly reported measure of the consumer price levels.

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Game Theory

Game Theory, or Theory of Games, is a branch of mathematical and economic analysis developed to study decision making in conflict situations. Game theory analyzes strategic interactions in which the outcome of one's choices depends upon the choices of others.

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Gross Domestic Product (GDP)

Gross Domestic Product (GDP) is the broadest measure of performance of an economy. It is defined as the output of goods and services produced by labor and property located in a country.

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Liquidity Trap

Liquidity trap is a situation in which prevailing interest rates are low and savings rates are high. Liquidity trap makes monetary policy ineffective.

Liquidity trap also means that bank cash-holdings are rising and banks cannot find sufficient number of qualified borrowers even at extraordinary low rates of interest.

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