Examples of Normalized variable in the following topics:
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- Beta is a normalized variable, which means that it is a ratio of two variances, so you have to compare the volatility of returns to the benchmark volatility.
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- The variables involved in understanding the time value of money in these investments are:
- With these variables, a single period investment could be calculated as follows:
- Normalizing expected returns in present value terms (or projecting future returns over multiple time periods of compounding interest) paints a clearer and more accurate picture of the actual worth of a given investment opportunity.
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- Normally, to compensate the bondholder for the time value of money, the price of a zero-coupon bond will always be less than its face value on any date before the maturity date.
- Floating rate notes (FRNs, floaters) have a variable coupon that is linked to a reference rate of interest, such as LIBOR or Euribor.
- The interest rate is normally lower than for fixed rate bonds with a comparable maturity.
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- The error is a random variable with a mean of zero conditional on the explanatory variables.
- The independent variables are measured with no error.
- In statistics, regression analysis includes many techniques for modeling and analyzing several variables, when the focus is on the relationship between a dependent variable and one or more independent variables.
- Most commonly, regression analysis estimates the conditional expectation of the dependent variable given the independent variables — that is, the average value of the dependent variable when the independent variables are fixed.
- Regression analysis shows the relationship between a dependent variable and one or more independent variables.
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- Variable production overheads are allocated to units produced based on actual use of production facilities.
- Fixed production overheads are often allocated based on normal capacities or expected production.
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- Term structure is a phrase used to describe how a given quantity or variable changes with time.
- This theory explains the predominance of the normal yield curve shape.
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- Corporate bonds normally have a par value of $1,000, but this amount can be much greater for government bonds.
- A bond's price fluctuates throughout its life in response to a number of variables, including interest rates and time to maturity.
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- We assume the random disturbance is distributed normally with a mean of zero with a fixed standard deviation.
- A random walk has an unique characteristic – the variable drifts in a particular direction before changing direction.
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- Furthermore, a growing economy creates higher incomes, and greater demands for normal goods, which are most products.
- We can use a trick to determine which variable becomes indeterminate.
- Consequently, one variable always moves in one direction while the other can increase and decrease, making it indeterminate.
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- This normally will include a full valuation and recommended tactics.
- Financial models are constructed by investment banks to capture the most important fixed and variable financial components that could influence the overall value of a company.
- These models, depending upon the proposed transaction, can be extremely complex with special variables being added for special areas (i.e., there are different financial factors to consider in different sectors, countries, and markets when predicting or measuring a company's value).