IR = annualized residual return / annualized residual risk = α/ɯ
risk aversion of investor = λ
Value Added = α – (λ * ɯ^2)
Maximum Value Added = IR^2 / 4λ
at Optimal Level of Risk = ɯ* = IR/2λ
POST = FV / (1+r)^n
PRE = POST – INV
Required Fraction of Ownership = INV/POST
Investor Shares = Founder Shares (f/(1-f))
Stock Price Per Share = INV / Investor Shares
Purchasing Power Parity holds at any time and therefore an expansionary monetary policy results in an increase in inflation and a depreciation of the home currency.
A restrictive monetary policy leads to appreciation of the domestic currency in the short term and a slow depreciation toward the long-term PPP value.
An expansionary monetary policy leads to depreciation of the domestic currency in the short term and a slow appreciation toward the long-term PPP value.
Focuses on the long-term implications of sustained fiscal policy (deficit or surplus) on currency values.
When the government runs a fiscal deficit, it borrows money from investors. Under the portfolio balance approach, sustained fiscal deficits will lead to eventual depreciation of the home currency.
Under U.S. GAAP assumed long-run rate of return on plan assets is used to smooth the volatility that would be caused by using actual returns.
Under IFRS expected rate of return on plan assets is implicitly equal to the discount rate used for computing PBO.
The research report must be updated, redistributed to all clients then revised recommendations can be publicly discussed by analysts.
No, you must managed funds to the investment policy statement. Some clients investment objectives may not allow a diversified portfolio.
Return on capital employed is a financial ratio that measures profitability.
ROEC = EBIT / Capital Employed
Capital Employed = Shareholder’s Equity + Debt OR Total Assets – Current Liabilities