Variable

Variable

An element in a model. For example, in the model RS&P_t+1 = a + b Tbill _t + e_t, where RS&P_t+1 is the return on the S&P in month _t+1 and Tbill is the Tbill return at month _t, both RS&P and Tbill are "variables" because they change through time; i.e., they are not constant.

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Variable

Anything that does not have a set value. In basic algebra, a variable is often expressed as "x." Variables in economics and finance may be measures such as GDP, prices, or interest rates. Analysts use complicated equations to determine the value of some variables at the present time and even more complicated equations to predict their possible future values. See also: Regression.

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variable

Something, such as stock prices, earnings, dividend payments, interest rates, and gross domestic product, that has no fixed quantitative value. See also dependent variable, independent variable.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.