How does the payback period differ between short-term and long-term investments?
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The payback period varies between short-term and long-term investments. In short-term investments, the payback period may be used to assess the rate of advantages gained, determining the feasibility of the investment in a certain period . On the other hand, long-term investments, such as those in the power sector, require modeling of probability distributions for the long-term dynamics of electricity prices to evaluate investments in new generating technologies over the whole lifetime of the plants . Additionally, in the stock market, the relationship between risk and return in the long run indicates that high returns are associated with high risks, suggesting a positive correlation between risk and return over time . Therefore, while short-term investments focus on immediate gains, long-term investments involve assessing risks and returns over extended periods to make informed decisions.
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| Papers (4) | Insight |
|---|---|
5 Citations | Short-term investments face stock adjustment costs, while long-term investments like ICT incur flow adjustment costs. Liquidity is crucial for short-term, and uncertainty significantly affects long-term ICT investments. |
| Short-term investments focus on immediate returns, while long-term investments consider extended periods to recoup costs and generate profits, as discussed in the paper on electricity price dynamics. | |
7 Citations | In the short term, there is no significant relationship between risk and return, reflecting market complexity. Long term shows a positive correlation, indicating high returns come with high risks. |
| Short-term investments in corrupt African countries initially reduce democracy due to FDI openness, while long-term investments lead to increased democracy by empowering the middle class through revenue spillovers. |
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