Minimum efficient scale
Minimum efficient scaleThe smallest output of a firm consistent with minimum average cost. In small countries, in some industries the level of demand in autarky is not sufficient to support minimum efficient scale.
Efficient marketEfficient market
A market in which, at a minimum, current price changes are independent of past price changes, or, more strongly, price reflects all (publicly) available information. Some believe foreign exchange markets to be efficient, which in turn implies that future exchange rates cannot profitably be predicted.
Regression coefficientRegression coefficient
Term yielded by regression analysis that indicates the sensitivity of the dependent variable to a particular independent variable. See: Parameter.
Gini CoefficientGini Coefficient
A measure of income inequality within a population, ranging from zero for complete equality, to one if one person has all the income. It is defined as the area between the Lorenz Curve and the diagonal, divided by the total area under the diagonal.
Information Coefficient (IC)Information Coefficient (IC)
The correlation between predicted and actual stock returns, sometimes used to measure the contribution of a financial analyst. An IC of 1.0 indicates a perfect linear relationship between predicted and actual returns, while an IC of 0.0 indicates no linear relationship.
Efficient market theoryEfficient market theory
The theory that claims that the current price of a share reflects everything that is known about the company and its future earnings potential, and that is it impossible to beat the market consistently.Efficient market theory suggests that the army of analysts and fund managers in the City whose job is to actively manage superior-performing portfolios are engaged in a futile exercise because everything they find out is rapidly transmitted around the market, and share prices instantly reflect the common knowledge. In other words, no one can get one up on anyone else. And the logical extension of this is that passive funds - tracker and index funds - are the best place to park your money, because their management costs are much lower and they are mathematically structured to match the performance of their chosen index.Plenty of people disagree with efficient market theory, and their ranks include people like Warren Buffett who has consistently produced returns of over 20% on his portfolio over a 30 year period.
Further SuggestionsEfficient capital market
Internally efficient market
Operationally efficient market
Efficient markets theory(EMT)
Coefficient of determination
Coefficient of Variation
Earnings response coefficient