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The Incremental Capital-Output Ratio (ICOR) is the ratio of investment to growth which is equal to the reciprocal of the marginal product of capital. The higher the ICOR, the lower the productivity of capital or the marginal efficiency of capital. The ICOR can be thought of as a measure of the inefficiency with which capital is used. In most ...
Example of the optimal Kelly betting fraction, versus expected return of other fractional bets. In probability theory, the Kelly criterion (or Kelly strategy or Kelly bet) is a formula for sizing a sequence of bets by maximizing the long-term expected value of the logarithm of wealth, which is equivalent to maximizing the long-term expected geometric growth rate.
Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time liabilities and other risks such as credit risk, operational risk etc. In the most simple formulation, a bank's capital is the "cushion" for potential losses, and protects the bank's depositors and other lenders.
Risk-weighted asset (also referred to as RWA) is a bank's assets or off-balance-sheet exposures, weighted according to risk. [1] This sort of asset calculation is used in determining the capital requirement or Capital Adequacy Ratio (CAR) for a financial institution.
An example capital allocation line. As illustrated by the article, the slope dictates the amount of return that comes with a certain level of risk. Capital allocation line (CAL) is a graph created by investors to measure the risk of risky and risk-free assets. The graph displays the return to be made by taking on a certain level of risk.
For example, a company’s current ratio may appear to be good, when in fact it has fallen over time, indicating a deteriorating financial condition. But a too-high current ratio may indicate that ...
The elasticity of substitution is the change in the ratio of the use of two goods with respect to the ratio of their marginal values or prices. The most common application is to the ratio of capital (K) and labor (L) used with respect to the ratio of their marginal products M P K {\displaystyle MP_{K}} and M P L {\displaystyle MP_{L}} or of the ...
A capital recovery factor is the ratio of a constant annuity to the present value of receiving that annuity for a given length of time. Using an interest rate i, the capital recovery factor is: = (+) (+) where is the number of annuities received. [1]