discount factor
41Bellman equation — A Bellman equation (also known as a dynamic programming equation), named after its discoverer, Richard Bellman, is a necessary condition for optimality associated with the mathematical optimization method known as dynamic programming. It writes… …
42Tacit collusion — occurs when cartels are illegal or overt collusion is absent. Put another way, two firms agree to play a certain strategy without explicitly saying so . This is also known as price leadership, as firms may stay within the law but still tacitly… …
43Discounted maximum loss — is the present value of the worst case scenario for a financial portfolio. An investor must consider all possible alternatives for the value of his investment. How he weights the different alternatives is a matter of preference. One might require …
44Coase conjecture — The Coase conjecture, developed first by Ronald Coase, is an argument in monopoly theory. The conjecture sets up a situation in which a monopolist sells a durable good to a market where resale is impossible and faces consumers who all have… …
45Pacman conjecture — The Pacman Conjecture holds that durable goods monopolists have complete market power and so can exercise perfect price discrimination thus extracting the total surplus [Coase versus Pacman: Who Eats Whom in the Durable Goods Monopoly?Author(s):… …
46Borrowing Base — The amount of money a lender will loan to a company based on the value of the collateral the company pledges. The borrowing base is usually determined by a method called margining, where the lender determines a discount factor that is multiplied… …
47Stock valuation — There are several methods used to value companies and their stocks. They attempt to give an estimate of their fair value, by using fundamental economic criteria. This theoretical valuation has to be perfected with market criteria, as the final… …
48Credit default swap — If the reference bond performs without default, the protection buyer pays quarterly payments to the seller until maturity …
49Risk-neutral measure — In mathematical finance, a risk neutral measure, is a prototypical case of an equivalent martingale measure. It is heavily used in the pricing of financial derivatives due to the fundamental theorem of asset pricing, which implies that in a… …
50Repeated game — In game theory, a repeated game (or iterated game) is an extensive form game which consists in some number of repetitions of some base game (called a stage game). The stage game is usually one of the well studied 2 person games. It captures the… …
