financial theories

Financial theories are frameworks that help explain how money works in markets and economies. For example, the Efficient Market Hypothesis suggests that stock prices reflect all available information, making it hard to consistently outperform the market. Another theory, the Time Value of Money, states that a dollar today is worth more than a dollar in the future due to its potential earning capacity. These theories guide investors and economists in understanding market behavior, making informed decisions, and predicting financial trends. They are foundational to finance, influencing investment strategies, corporate finance, and economic policy.