Factor


 

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Factor

1. primary factor. 2. Sometimes refers to any input to production.



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Multifactor model

Multifactor model

A model with more than two factors. In the context of trade theory this is likely to mean a Heckscher-Ohlin Model with more than two factors.


Pool factor

Pool factor

The outstanding principal balance divided by the original principal balance with the result expressed as a decimal. Pool factors are published monthly by the Bond Buyer newspaper for Ginnie Mae, Fannie Mae, and Freddie Mac (Federal Home Loan Mortgage Corporation) MBSs.


Specific factors model

Specific factors model

A model in which some or all factors are specific factors. The most common version is the Ricardo-Viner Model, with one specific factor (often capital or land) in each industry plus another factor (often labor) that is mobile between them. But an extreme form of the model, the Cairnes-Haberler Model, has all factors specific.


Price earnings growth factor

Price earnings growth factor

The PEG of a company is calculated by dividing its prospective P/E ratio by the estimated future growth rate in earnings per share of the company. So to calculate a PEG, you first need to calculate its P/E ratio.P/E = current share price divided by earnings per shareA company with a share price of 100p and earnings per share of 5p has a P/E ratio of 100/5 = 20.By itself the P/E ratio is a useful ratio because it shows how many times the current earnings the shares cost - in a sense, how many years you would have to wait to get your money back if the company paid out all its earnings to shareholders. But the limitation of the P/E ratio is that it looks at historical information and does not relate the price of the shares to its future performance. The PEG ratio builds in that extra layer of sophistication.Using the example of the same company, imagine that the consensus brokers' forecast for its future earnings growth rate is 15%.PEG = P/E divided by estimated future growth rateFor this company, the PEG would be 20 divided by 15 = 1.33.According to Jim Slater, the investor who popularised the use of PEG's as a stock share selection tool, a share with a PEG of 1 or lower is attractive. Put simply, the lower the PEG, the less you are being asked to pay for estimated future earnings. Jim Slater did not recommend use of the PEG as the only criteria of share selection. There are plenty of other fundamental checks that have to be made too.Note that the estimated future earnings are a critical part of the PEG calculation, and that if the forecasts made by brokers are wide of the mark, the PEG ratio will be unreliable. Because of this danger, most advocated of PEG's recommend using consensus forecasts, rather than the forecasts of any single broker/analyst.


Factor endowment

Factor endowment

The quantity of a primary factor present in a country. See endowment.


Further Suggestions

Common factor
Factor intensity reversal
Factor market
Footloose factor
Amortization factor
Factor movement
Specific factor
One factor APT
Factor scarcity
Factor share
Primary factor
Factor of production
Factor proportions
Factor Proportions Model
Factor-price space
International factor movement
V Vacancy Factor
Factor content pattern of trade
Discount factor
Total factor productivity
factoring
Factor price frontier
Abundant factor
Factor space
Reported factor


 
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