...Return Fraud in a Customer Service Based Culture Keeping the Profit Submitted By Karie K. Schwartz Capella University 4 April, 2015 Return Fraud in a Customer Service Based Culture How does a retail corporation protect themselves from losing millions in organized return fraud but still encourage faith and trust in their return customers? Return fraud is a costly problem for Retailers. When met with necessary preventative and latent measures to recoup the financial losses, the company can procure lost income. Unfortunately, these measures are potentially discouraging to loyal customers and future sales. TYPES OF RETURN FRAUD Return Fraud is returning items for cash or credit in a store with the intent to steal money from a company. Stolen goods sold by boosters to fencers (Turner, 2010), “returned without a receipt, borrowing” or “wardrobing” (Grannis, 2014) merchandise for a few days with the intent to return the items is fraud. Using fake receipts to return old household items or fake coupons for reduced prices during a previous purchase to later return items full price for cash or credit elsewhere is losing companies 10.9 billion to return fraud in 2014. (Grannis, 2014). Return fraud is stealing and stealing means a financial loss. WHAT RETAILERS CAN DO Necessary recoupment measures can be initiated in many companies as they are seeing opportunity to regain the revenue they are losing. Preventative: By investing in monitoring and surveillance equipment...
Words: 672 - Pages: 3
...RISK AND RETURN Risk is existing in every business decision. For Eg: Selection of an asset for production department, developing a new product etc., Therefore decision maker has to asses the risk and return before taking any financial decision. To do so finance manager must learn to assess risk and return. Risk can be measured in different ways. Before going to learn the computation and return it is require understanding the followings: 1. Cash Flows: financial assets are expected to generate cash flows and risk of Financial assets assessed in terms of the variations of its expected cash inflows. 2. Risk can be measured either on stand alone basis or in a portfolio context 3. Classification of risk: the risk of assets is divided into two parts. a. Diversifiable Risk b. Market Risk. Diversifiable risk is a company’s’ specific risk and can be completely eliminated through diversification. On the other hand market risk arises from market movements and which cannot be eliminated through diversification. 4. Investors are Risk Averse: (unwilling/opposed) Generally investors are risk averse. It does not mean that investors do not buy risk assets, they buy risk assets, when they promise extra return for bearing extra risk. Risky investments provide relatively high return. Risk: Risk is the chance of financi8al loss or the variability of returns associated with a given assets. Assets that are having higher chances of loss ar viewed as more risky...
Words: 496 - Pages: 2
...Answers to Warm-Up Exercises E8-1. Total annual return Answer: ($0 $12,000 $10,000) $10,000 $2,000 $10,000 20% Logistics, Inc. doubled the annual rate of return predicted by the analyst. The negative net income is irrelevant to the problem. E8-2. Expected return Answer: Analyst 1 2 3 4 Total Probability 0.35 0.05 0.20 0.40 1.00 Return 5% 5% 10% 3% Expected return Weighted Value 1.75% 0.25% 2.0% 1.2% 4.70% E8-3. Comparing the risk of two investments Answer: CV1 0.10 0.15 0.6667 CV2 0.05 0.12 0.4167 Based solely on standard deviations, Investment 2 has lower risk than Investment 1. Based on coefficients of variation, Investment 2 is still less risky than Investment 1. Since the two investments have different expected returns, using the coefficient of variation to assess risk is better than simply comparing standard deviations because the coefficient of variation considers the relative size of the expected returns of each investment. E8-4. Computing the expected return of a portfolio Answer: rp (0.45 0.038) (0.4 0.123) (0.15 0.174) (0.0171) (0.0492) (0.0261 0.0924 9.24% The portfolio is expected to have a return of approximately 9.2%. E8-5. Calculating a portfolio beta Answer: Beta (0.20 1.15) (0.10 0.85) (0.15 1.60) (0.20 1.35) (0.35 1.85) 0.2300 0.0850 0.2400 0.2700 0.6475 1.4725 E8-6. Calculating the required rate of return Answer: a. Required return 0.05 1.8 (0.10 0.05) 0.05 0.09 0.14 b. Required return 0.05 1.8 (0.13 0.05) 0.05 0.144 0.194 c. Although the risk-free...
Words: 5293 - Pages: 22
...Rate of Return In some situations, you know the cost of an investment opportunity and the expected cash flows from it, but you do not know the rate of return. The rate of return on the investment opportunity is the rate at which the present value of the benefits exactly offsets the cost. For example, suppose you have an investment opportunity that requires a $1000 investment today and will have a $2000 payoff in six years. This would appear on a time- line as: 0126 ... Given: Solve for: N I/Y PV 10 7 0 60,000 PMT 4343 FV $1000 $2000 One way to analyze this investment is to ask the question: What interest rate, r, would you need so that the present value of what you get is exactly equal to the present value of what you give up? 2000 1000 = 11 + r26 Rearranging this calculation gives the following: 1000*11+r26 =2000 That is, r is the interest rate you would need to earn on your $1000 to have a future value of $2000 in six years. We can solve for r as follows: 1 1 + r = a2000b6 = 1.1225 1000 Or, r = 0.1225. This rate is the rate of return of this investment opportunity. Making this investment is like earning 12.25% per year on your money for six years. When there are just two cash flows, as in the preceding example, it is straightforward to compute the rate of return. Consider the general case in which you invest an amount P today, and receive FV in N years: P * 11 + r2N = FV 1 + r = 1FV/P21/N That is, we take the total return of the investment...
Words: 953 - Pages: 4
...absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The quick brown fox jumped up the wall. The absolute return is highly regarded over relative return. The...
Words: 1515 - Pages: 7
...Chapter 1 Return Calculations In this Chapter we cover asset return calculations with an emphasis on equity returns. Section 1.1 covers basic time value of money calculations. Section 1.2 covers asset return calculations, including both simple and continuously compounded returns. Section 1.3 illustrates asset return calculations using R. Updated: June 23, 2011 1.1 The Time Value of Money This section reviews basic time value of money calculations. The concepts of future value, present value and the compounding of interest are dened and discussed. 1.1.1 Future value, present value and simple interest. Consider an amount $ invested for years at a simple interest rate of per annum (where is expressed as a decimal). If compounding takes place only at the end of the year the future value after years is: = $ (1 + ) × · · · × (1 + ) = $ · (1 + ) (1.1) Over the rst year, $ grows to $ (1+ ) = $ +$ × which represents the initial principle $ plus the payment of simple interest $ × for the year. Over the second year, the new principle $ (1+ ) grows to $ (1+ )(1+ ) = $ (1 + )2 and so on. 1 2 CHAPTER 1 RETURN CALCULATIONS Example 1 Future value with simple interest. Consider putting $1000 in an interest checking account that pays a simple annual percentage rate of 3% The future value after = 1 5 and 10 years is, respectively, 1 5 10 = $1000 · (1 03)1 = $1030 = $1000 · (1 03)5 = $1159 27 = $1000 · (1 03)10 = $1343 92 Over the rst year, $30 in interest...
Words: 7466 - Pages: 30
...Chapter 5 Risk and Return 5.1 RATES OF RETURN McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. Learning objectives Use data on the past performance of stocks and bonds to characterize the risk and return features of these investments Determine the expected return and risk of portfolios that are constructed by combining risky assets with risk-free investment in Treasury bills Evaluate the performance of a passive strategy McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. Holding Period Return The holding period return (HPR)(보유기간수익률) Depends on the increase (or decrease) in the price of the share over the investment period as well as on any dividend income. Rate of return over a given investment period McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. Example 5.1 Suppose you are considering investing some of your money, now all invested in a bank account, in a stock market index fund. The price of a share in the fund is currently $100, and your time horizon is one year. You expect the cash dividend during the year to be $4, so your expected dividend yield is 4%. Your HPR will depend on the price one year from now. Suppose your best guess is that it will be $110 per share. The your capital gain will be $10 (110-100), so your capital gains yield is $10/$100=.10 or 10%. The total holding period rate of return is the sum of the dividend...
Words: 3506 - Pages: 15
...Diminishing returns is an evaluation of the end result of a repeated activity, one of the factors being observed must be fixed and the other variable. The fixed factor is usually the thing that is benefiting from the investment. The variable factor is the thing that the investment funds are spent on to use on the fixed variable in improving it. The activity that involves the fixed and variable factors must be repetitive. For example, think about a car. As it is used, the car will require repairs to improve its performance. However, at some point the car will be too old to really be improved by the repairs. The fixes will only serve to keep the car functioning, not improved. This is diminishing returns. Each additional investment will bring less and less of an improvement until you are simply paying to keep the car functioning. In Studying, the fixed factor would be to make a passing grade and move on to the next classes without failure. The variable factor would be studying and meeting the requirements of the class to make a passing grade. A lot of activity plays into the variable factor. Because we are in an online learning environment we are required to have computers that contain the software, and the counterparts needed to complete assignments. We must have the resources to study with to include books and online material and last we must put time into studying. The Diminishing return would be if computers were no good and we had to constantly struggle with getting assignments...
Words: 275 - Pages: 2
...Return On Investment is a percentage that is calculated based on investment and profits, for the rate of return on investment. The ROI is a value that measures the performance of an investment, to assess how efficient the spending is, by what we are doing or plan to do. There is a formula that gives us this calculated value based on the investment and profits. ROI = (profits – investment) / investment We have obtained the profit of an investment (or plan to get) minus the cost of investment. After that we divide by the cost of the investment and the result is the ROI. For example (simple), we have made an investment of 2000€ and we have obtained 6000€. Then the ROI would be equal to (6000 - 2000) / 2000 = 2 The value of the ROI is a rate so it is expressed as a percentage. We have a ROI of 2%. To know the percentage of profit on our investment we can multiply the ROI by 100. With an ROI of 2% we are actually earning 200% of the money invested. For each euro invested we are getting 2€ back. The ROI is a very simple parameter calculation to find out how positive an investment will be. How higher the values of the ROI how better. If we have a negative ROI it is because we are losing money. The ROI is the best manner to calculate investment results, especially to compare two potential investments. EXAMPLE: ROI of Adwords. (Google advertisement) The ROI can be used for any type of investment. For example, for an advertising investment we can calculate this rate with the...
Words: 426 - Pages: 2
...Aaron Davis Peter Lehman TA: Amanda Kehrberg FMS 100 10 December 2010 Batman Returns In my essay I will be talking about the representation of women and the female body for the film Batman Returns. I will be analyzing the films lead female character, Selina Kyle/Catwoman played by Michelle Pfeiffer, by giving specific examples from the film that categorizes her in this topic. The three main concepts that I will be focusing on in my essay are as followed: the good girl/bad girl dichotomy, beauty and the fragmentation of the female body, and saving and punishing women. “I am afraid we haven’t properly housebroken Miss Kyle.” At the Start of the movie, right away you get a sense of how women, in this case Selina, are treated in this movie. She is a prime example when it comes to the good girl/bad girl dichotomy concept. At the beginning, Selina is showcased as a very shy, timid woman who works long hours for her needy boss. Then when we get a glimpse in her apartment, you realize that Selina hasn’t grown up at all. Her whole apartment is painted pink along with a number of cats, stuffed toys, and doll houses. All of which is unusual for a grown woman like her to have in her apartment. However, when Selina transforms into Catwoman, she poetically destroys everything that she was on the inside and out with the help of black spray paint and a skin tight black leather cat suit. Becoming this new sexual, seductive, powerful woman who seeks to punish and hurt any man that comes...
Words: 625 - Pages: 3
...Report of CVS Pharmacy’s Excess Return I. company introduction CVS Pharmacy (styled as CVS) is an American pharmacy retailer and currently stands as the second largest pharmacy chain, in the United States, with more than 7,600 stores, and is the second largest US pharmacy based on total prescription revenue. II. Purpose To determine if there are excess returns on CVS’ stock. III. Time period of data Monthly Fama/French Benchmark Return(SMB, HML, Rm-Rf), Monthly risk-free rate and Monthly price of CVS from Oct 2005 to Oct 2015. IV. Test of the correlation The correlation matrix for the excess return variables (SMB, HML, Rcvs-Rf, Rm-Rf) | Rm-Rf | SMB | HML | Rcvs-Rf | Rm-Rf | 1 | | | | SMB | 0.394264 | 1 | | | HML | 0.424707 | 0.305891 | 1 | | Rcvs-Rf | 0.597283 | 0.305935 | 0.197747 | 1 | Analysis: V. Serial correlation tests Method: Durbin-Watson statistic Procedure: first, we use the formula DW=t=2Tεt-εt-12t=1Tεt2 to calculate the DW value. It is 2.2161. It is higher than 2.0 so we use (4-DW=1.7839) to compare with the criteria. Then we find that the critical values dl and du for 121 observations when there is one independent variable are 1.65 and 1.69. Because the DW statistic of 1.7839 for the regression is higher than du, we can’t reject the null hypothesis of no serial correlation. Conclusion: There is no serial correlation on the CAPM model. VI. CAPM model: Rcvs-Rf=α+β(Rm-Rf) 1. Model The Rcvs-Rf...
Words: 743 - Pages: 3
...Valuation, Risk, and Return Five years ago, Laissez-Faire Recliners issued $10,000,000 of corporate bonds with a 30-year maturity. The bonds have a coupon rate of 10.125%, pay interest semiannually, and have a par value of $1,000 per bond. The bonds are currently trading at a price of $879.625 per bond. A 25-year Treasury bond with a 6.825% coupon rate (paid semi-annual) and $1,000 par is currently selling for $975.42. In order to find the yield spread between the corporate bonds and the Treasury bonds we must first find the yields of both bonds. The yield is the amount of return an investor can expect to receive from a bond. The yield for the corporate bond (found using the yield formula in excel) is 11.57%. The yield for the Treasury bond is 7.04%. The yield spread is found by adding these two percentages and finding the average (dividing by 2), in this case the yield spread is 9.30%. If you are considering an investment in Laissez-Faire’s bonds (that will be held to maturity) and require an 11% rate of return you would not invest in these bonds. You would invest solely in the corporate bonds, however that is not an option, so you would bypass this option since the bond yield falls below this 11% required rate of return. If you are considering a purchase of Laissez-Faire’s preferred stock, with a current market price of $42, a par value of $50, and a dividend amounting to 10% of par, you must calculate the actual value of the stock. In this case it falls at $40, which...
Words: 733 - Pages: 3
...Lecture No. 25 Chapter 7 Contemporary Engineering Economics Copyright © 2010 Contemporary Engineering Economics, 5th edition, © 2010 Net Investment Test What it is: A process to determine whether or not a firm borrows money from a project during the investment period. How to test: A project is said to be a net investment when the project balances computed at the project’s i* values, PB(i*)n, are either less than or equal to zero throughout the life of the investment. Meaning: The investment is net in the sense that the firm does not overdraw on its return in any point and hence is not indebted to the project Contemporary Engineering Economics, 5th edition, © 2010 Pure versus Mixed Investment Pure Investment Mixed Investment Definition: An investment in Definition: An investment in which which a firm never borrows a firm borrows money from the money from the project. project during the investment period How to Determine: If the project passes the net How to determine: If a project fails investment test, it is a pure the net investment test, it is a investment. mixed investment. Relationship: A simple Relationship: If a project is a mixed investment is always a pure investment, it is a nonsimple investment. investment. (However, we can’t say that a nonsimple investment is also a mixed investment.) Contemporary Engineering Economics, 5th edition, © 2010 Example 7.6 Pure versus Mixed Investments Contemporary Engineering Economics...
Words: 682 - Pages: 3
...underreact to the release of firm-specific information. In detail, they compared the performance of stocks that have performed well in the past with those that have performed poorly, in 3-12 months’ time. Their theory is if stock prices either overreact or underreact to information consistently then profitable trading strategies that select stocks based on their past returns will exist. Previous studies in this area had shown that over a 3 to 5 year horizon, stocks that had performed poorly over the previous 3 to 5 years achieved higher returns than stocks that performed well over the same period. Their study covered the period from 1965 to 1989, involved ranking each company at the beginning of each month by its returns over the last ‘J’ months. Based on these rankings, ten equally weighted decile portfolios are constructed, with the portfolio comprised of those companies with the strongest historical returns and the portfolio with the lowest historical returns. The timeframes for both ‘J’ and ‘K’ horizons were 3, 6, 9 and 12 months. They constructed portfolios based on companies’ 3 month historical returns, and looked at their performance over the subsequent 3, 6, 9 and 12 months. The paper focused largely on the ‘zero cost’ portfolios, representing the difference in performance between the ‘winners’ and ‘losers’. It is important to note that momentum strategy appears to be temporary in nature. Over short time-frames of 3 to 12 months, past winners continues to...
Words: 487 - Pages: 2
...Risk & Return Analysis: Analyzing an equally weighted portfolio of investments in Amazon, Inc., Yahoo! Inc., and Direct TV stock compared to the S&P 500 Introduction: Every day, millions of investors spend countless hours following the stock market in the hopes of striking it rich. Making the right moves at the right moments is crucial when one looks to make large returns in the market. While luck affords many investors the opportunity to make lucrative returns in the stock market, this reward does not come without risk. In order to balance their returns and the amount of risk that they are exposed to, many investors create an investment portfolio as a means to mitigate risks in the market at the expense of foregoing potentially higher returns on their investment. To illustrate the effects that a diversified portfolio can have on the amount of risk an investor takes on as well as the returns that the investment generates, a sampling of three random stocks and the S&P 500 index was created to examine the effects that diversification has on investment risk. Investments: For this analysis, monthly stock data from December 1, 2009 – December 1, 2014 was compiled on three stocks and the S&P 500. The three investments chosen for the portfolio were Amazon.com Inc. (AMZN), Yahoo! Inc. (YHOO), and DirectTV. (DTV), and each represent 25% of the portfolio. In order to analyze the risks associated with each stock, a Risk-Free rate of interest must be established in order...
Words: 1815 - Pages: 8
