Probir Banerjee has Published 469 Answers

What is meant by correlation?

Probir Banerjee

Probir Banerjee

Updated on 17-Sep-2021 08:57:21

Correlation is a term that is a measure of the power of a linear relationship within two quantitative variables (e.g., height, weight). There are mainly two types of correlation depending on the movement of the variables −Positive correlation – In a Positive correlation of two variables, both the variables move ... Read More

What is the equity capitalization rate?

Probir Banerjee

Probir Banerjee

Updated on 17-Sep-2021 08:56:20

The equity capitalization rate (ECR) is the capitalization rate that shows the relation between the income from the property in comparison to the equity of the investor. ECR is an important metric as it measures the real cash return at the time of acquisition, i.e., the investor’s money.Usually, the investor’s ... Read More

What is the significance of Price-Earnings (PE) ratio?

Probir Banerjee

Probir Banerjee

Updated on 17-Sep-2021 08:54:54

The PE ratio is the present price of the stock divided by the expressed earning per share of the stock. The PE of a stock is a subject to regular change. As the future retained earnings of a company are often found in the price of a stock, the PE ... Read More

Risk-averse Investors Vs Risk-neutral Investors

Probir Banerjee

Probir Banerjee

Updated on 17-Sep-2021 08:53:35

Investors can be categorized into several types based on their risk preferences. Risk preference is the intention of investors of taking risks. Usually, higher returns are associated with higher risk-taking capability, while lower risks yield lower returns. Risk-averse and risk-neutral investors are categories that divide investors into two types, considering ... Read More

What is supernormal growth of a stock?

Probir Banerjee

Probir Banerjee

Updated on 17-Sep-2021 08:52:33

In a supernormal growth phase, the stock price increases at a rapid pace. The period in which such anomaly occurs lasts beyond a year. After the supernormal growth, the share shows general properties and grows at a normal rate. Super annual growth is a common phenomenon, provided there is demand ... Read More

How to calculate the Variance of Returns?

Probir Banerjee

Probir Banerjee

Updated on 17-Sep-2021 08:51:05

What is Variance?Variance is a metric that is needed to estimate the squared deviation of any random variable from the mean value. In the portfolio theory, the variance of return is called the measure of risk inherent in a singular or in an asset of portfolios.In general, the higher the ... Read More

How are ordinary shares valued under no growth situation?

Probir Banerjee

Probir Banerjee

Updated on 17-Sep-2021 08:49:41

The present value (PV) of a stock with zero growth is derived by dividing dividends distributed per period by the required return in that certain period. The formula is not an exact or guaranteed approach for evaluating a stock’s value but is more of a theoretical approach.The PV of a ... Read More

How to calculate Expected Rate of Return(ERR)

Probir Banerjee

Probir Banerjee

Updated on 17-Sep-2021 08:48:26

An investment’s “expected return” is the total money one can expect to lose or gain on an investment with a foreseeable rate of return. Basically, it lets one know whether the investment would be profitable providing enough money or it will be a loss, costing the investors’ money. By extension, ... Read More

What are Ordinary Shares?

Probir Banerjee

Probir Banerjee

Updated on 17-Sep-2021 08:46:59

Ordinary shares, also known as common shares, are used to raise capital for businesses. They are equity stocks that provide voting rights to the shareholders. Usually, dividends on ordinary shares are distributed according to the discretion of the management of the company that issues these shares. The dividends are distributed ... Read More

Difference between Covariance and Correlation

Probir Banerjee

Probir Banerjee

Updated on 17-Sep-2021 08:45:47

Covariance is the mutual relationship between two variables regarding their variance. In statistics, the covariance formula is generally used to assess the relationship between the variables. It is essentially a measure of the variance according to a relationship between two variables. Covariance is computed in units and is measured by ... Read More

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