Mean Reverting – What Is Mean Reversion? Mean reverting, reverting to the mean, or mean reversion are all phrases used to describe a statistical theory that is employed in finance. It implies that asset price volatility and historical returns will ultimately revert to the dataset’s long-run mean or average level. […]
Economics
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What Are Switching Costs? Switching costs are the barriers encountered when changing brands, services, or vendors. They include financial, effort, and time-based costs. Switching costs generally refer to what a consumer incurs as a result of changing brands, suppliers, or products. The most obvious switching costs are monetary in nature. However, […]
What Is In-House Financing? In-house financing occurs when a company offers a loan to a client in order for them to acquire its goods or services. In-house financing reduces the firm’s dependency on the banking sector to provide monies to the client in order for the transaction to be completed. […]
What Is the Shapley Value? The Shapley value is a concept drawn from cooperative game theory. It is used to assign a value to a player’s participation which corresponds to the eventual result of the game. Assigning value includes equitably allocating both advantages and costs among the numerous individuals in […]
What Is a Trimmed Mean? A trimmed mean is a form of averaging in which a specified fraction of the greatest and smallest values are removed before computing the mean. The trimmed mean is calculated after deleting the given outlier data using a conventional arithmetic averaging algorithm. The use of […]
What Is Agency Theory? Agency Theory describes how to effectively manage partnerships in which a principal specifies which job to undertake while an agent actually does it. In general, agency theory is used to understand and address problems in the connection between corporate owners and their agents. That connection is […]