LIBOR or whatever the floating rate rises.

Zero on the initiation date.

This is a result of the principal of no-arbitrage.

EV = Enterprise Value

EV = Market Value of Common Equity, Preferred Shares & Debt – Cash & Cash Equivalents & Short Term Investments like marketable securities

EVA = Economic Value Added

EVA = EBIT(1-tax) – $WACC

$WACC = WACC * Invested Capital

MVA = Market Value Added

MVA = Market Value of total Capital – Book Value of Capital

Capital = Debt plus Equity basically L + SE

[(Current Assets – Cash and Equivalents)@t – (Current Liabilities – Notes Payable and Current Portion of Long Term Debt)@t] – [(Current Assets – Cash and Equivalents)@t-1 – (Current Liabilities – Notes Payable and Current Portion of Long Term Debt)@t-1]

A lower significance level ⇒ greater confidence interval ⇒ higher absolute VAR

For VAR we only care about the lower tail of the distribution.

5% VAR ⇒ 90% Confidence Interval ⇒ 1.65 standard deviations below expected return

2.5% VAR ⇒ 95% Confidence Interval ⇒ 1.96 standard deviations below expected return

.5% VAR ⇒ 99% Confidence Interval ⇒ 2.58 standard deviations below expected return

…multicollinearity is not a problem.

Also not whether R^2 is high and whether the F-statistic is significant.

If everything is high/significant you’re good, there is likely no multicollinearity.

The observation that P/E ratios tend to be high on depressed EPS at the bottom of a business cycle and tend to be low on unusually high EPS at the top of a business cycle.

Therefor of particular relevance to cyclical stock evaluation.

…the parent’s currency is the functional currency.

Thus the Temporal Method is used.