Convergence of asset prices and income they generate
What is convergence and divergence in economics?
Divergence generally means two things are moving apart while convergence implies that two forces are moving together. In the world of economics, finance, and trading, divergence and convergence are terms used to describe the directional relationship of two trends, prices, or indicators.
What is convergence in finance?
Convergence is the movement in the price of a futures contract toward the spot or cash price of the underlying commodity over time. The price of the futures contract and the spot price will be roughly equal on the delivery date.
What is convergence strategy?
Convergence trade is a trading strategy consisting of two positions: buying one asset forward—i.e., for delivery in future (going long the asset)—and selling a similar asset forward (going short the asset) for a higher price, in the expectation that by the time the assets must be delivered, the prices will have become …
What is convergence in globalization?
According to the convergence thesis, global integration of product and financial markets leads to homogenization – i.e., a reduction in dispersion or variation – among national economies. Product market integration is thought to generate convergence via two mechanisms.
What is price convergence?
Price convergence shows the degree to which prices for goods and services in European Union Member States have moved together, or converged, and is an important indicator of the success of the internal market. In contrast, price divergence shows the degree to which prices have moved apart.
What is income convergence?
Economic convergence refers to the process in which relatively poorer countries (or regions) grow faster than relatively richer ones, thereby allowing the former to catch up with the latter.
Why is price convergence good?
Benefits of price convergence
To the extent that the euro reduced transaction costs, uncertainty, and search and informational costs associated with purchasing the same good in different geographies, it improved economic efficiency. Price convergence would be a natural manifestation of these reduced frictions.
What does convergence mean in business?
I like to settle on this definition for Business Convergence: Convergence is the act of working together to create a unified whole to achieve a set purpose. Within a Converged business, every department and individual working within the organisation works harmoniously to fulfil the same goal(s).
What is convergence in economic growth?
When countries with lower levels of GDP per capita catch up to countries with higher levels of GDP per capita, the process is called convergence. Convergence can occur even when both high- and low-income countries increase investment in physical and human capital with the objective of growing GDP.
What is the purpose of convergence?
The simple concept of convergence allows multiple tasks to be performed on a single device, which effectively conserves space and power. For example, rather than carrying separate devices – like a cell phone, camera and digital organizer – each technology converges on a single device, or smartphone.
What is meant by the term convergence?
Definition of convergence
1 : the act of converging and especially moving toward union or uniformity the convergence of the three rivers especially : coordinated movement of the two eyes so that the image of a single point is formed on corresponding retinal areas.
What are the different types of convergence?
There are four types of convergence that we will discuss in this section:
- Convergence in distribution,
- Convergence in probability,
- Convergence in mean,
- Almost sure convergence.
What are the five types of convergence?
The five major elements of media convergence—the technological, the industrial, the social, the textual, and the political—are discussed below.
What are the components of convergence?
There are four inputs, or stimulus components, to the vergence system that summate nonlinearly to produce the aggregate response: disparity (fusional) vergence due to retinal disparity, accommodative vergence due to retinal blur, proximal vergence due to apparent target nearness, and tonic vergence due to baseline …