...AUDIT RISK MODEL Audit Risk (AR): risk that auditor will opine (render an opinion) with an unqualified opinion when unknown to auditor, FS are materially misstated (ultimate risk) Inherent Risk (IR): risk that errors (or misstatements or deviations) will occur," clientcontrolled Control Risk (CR): risk that client's internal control system will fail to prevent/ detect/correct errors ... clientcontrolled Detection Risk (DRI_ risk that auditor's procedures will fail to detect errors ... auditorcontrolled AR IR * CR * OR Audit risk = inherent risk * control risk * detection risk Audit risk: always set priority at a low level (.0 1, 05, 10) Inherent risk: controlled by client ... function of type of business, degree of liquidity, complexity Control risk: controlled by client ... relates to effectiveness of client's control system in preventing, detecting, and correcting errors. Detection risk: controlled by auditor ... function of nature, timing, and extent of audit procedures applied ... allowable or acceptable Solution Set: (1) Detection risk = audit risk / (inherent risk * control risk) (2) Detection risk low ... the more evidence you have to collect (3) Detection risk high ... the less evidence you have to collect Audit Risk: risk that auditor issues unqualified opinion when statements are materially misstated, audit risk and detection risk exactly related. IR/CR and detection risk inversely...
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...to the wealth of individuals. Objectives In order to add value to the wealth of individuals, we will set a target of expected rate of return which would be equal to or above 8% at a certain level of risk. In this portfolio, we would consider the following assets in emerged areas: 1. Cash 2. Stocks 3. Bonds Methodology To pick the most suitable stocks for our portfolio, top-down approach will be used. That is, we will firstly analyze the economy of the country, the relative industry and the company situation accordingly, in order to choose the most suitable stocks. Hong Kong and The USA are the most preferred country for our portfolio. As Hong Kong is the area we most familiar, and The US is the country with the strongest economy recently, choosing these areas’ stocks would help reducing our exchange rate risk. Estimating volatility would be used to determine the risk. It can be calculated by: For our portfolio, United States Government Bonds (10 years) would be chosen. Bond yield would be used as the risk free rate. We would take Beta (β) of each individual stocks into the weighting of the portfolio, so that the volatility would be more localized and accurate. More different models like CAPM to find out relationship of expected return and risk, and other models will also be included for our...
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...Thesis in Applied Statistics for Banks and Insurances Credit Risk Models: Single Firm Default and Contagion Default Analysis Supervisor: P rof essor Fabrizio Cipollini Student: Marco Gambacciani Academic Year 2009/2010 Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Structural Models 1.1 Terminal Default . . . . . . . . . . . . 1.2 First Passage Models . . . . . . . . . . 1.2.1 The Black and Cox’s Model . . 1.2.2 Longstaff and Schwartz’s Model 1.2.3 Leland and Toft’s Model . . . . 1.2.4 Zhou’s Model . . . . . . . . . . 1.2.5 Random Threshold Model . . . 2 5 5 11 11 15 19 24 30 35 36 39 41 45 48 50 51 56 67 76 77 79 79 82 83 84 94 114 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Modelli reduced form 2.1 Approach With An Homogenous Poisson Process . . 2.2 Approach With a Non-Homogenous Poisson Process 2.3 Approach with a Cox’s Process . . . . . . . . . . . . 2.4 Bond and Spread Valuation . . . . . . . . . . . . . . Models For The Correlation Between Defaults 3.1 Bottom-Up Models . . . . . . . . . . . . . 3.1.1 Structural Apporach . . . . . . . . 3.1.2 Intensity Models Approaches . . . 3.1.3 Approaches with Copulas . . . . . 3.2 Top-Down Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....
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...Preface This paper is written under the assumption that the reader is aware of the basic risk premium evaluation models and theories such as the Modern Portfolio Theory and the Capital Asset Pricing Model. This article explains why there was a need for such evaluation mechanisms and why, in some way shape or form, these models were flawed and hence there was and is a need for a new mechanisms for evaluating risk premiums. Evolution of models to calculate Risk Premiums In the realm of corporate finance, investments, and valuations, the central pillar of all estimates is the risk premium associated with an asset class. Over the years, there have been many models that have been used to calculate the risk premium, each with its own assumptions and restrictions. First, let us understand why there is a need for a risk premium or for such models as a whole. When compared to the hypothetical risk free investment, each alternate investment asset has a degree of risk and an amount of return, to compensate for that risk, associated to it. There are two major factors that an investor takes into account before making an investment decision, risk aversion and macro-economic perception. In order to understand the genesis of the models and the underlying set of issues they solve and simultaneously have, let us consider a novice investor. The investor is looking at the US stock market and, for the sake of simplicity, wants to invest only in stocks. The primary question for the investor is...
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...Thesis for the Degree of Master of...? INCORPORATING LIQUIDITY RISK INTO VAR MODEL TO IMPROVE RISK MANAGEMENT AND APPLYING THE LIQUIDITY ADJUSTED VALUE AT RISK MODEL ON VIETNAMESE STOCK MARKET Student: Ten truong: Ten khoa hoc: September, 2012 INCORPORATING LIQUIDITY RISK INTO VAR MODEL TO IMPROVE RISK MANAGEMENT AND APPLYING THE LIQUIDITY ADJUSTED VALUE AT RISK MODEL ON VIETNAMESE STOCK MARKET by student Avised by Ten giao su Submitted to Ten khoa of Ten truong in the partial fulfilment of the requirements for the degree of Master of ...? Dissertation Committee ...Ten thanh vien hoi dong ABSTRACT In this paper, based on Bangia et. al (1999) Liquidity Adjusted Value at Risk, an explanation and demonstration for the importance of integrate liquidity risk component into Value at Risk Model are presented. The component is considered to be resulted from the exogenous liquidity risk, indeed, the bid-ask spread of a stock or a portfolio. This research is conducted from the analysis of an estimation of Value at Risk (VaR) and Liquidity adjusted Value at Risk for two portfolios containing stocks that are currently trading on Vietnamese Stock Market. After applying the Bangia Model to calculate, the backtesting will be executed to check the accuracy level of the results. The difference between the results of two portfolios, according to separate approaches will be the evidence to reach the conclusion of the research. Table of Contents List of...
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...practices from the literature to create the risk-need-responsivity model. This model has been extensively revised and refined over several years by many different researchers: Andrews and Bonta's (2007) original work, later research Andrews, Bonta, & Wormith, (2011), Dowden & Andrews, (1999a,b, 2000, 2003) to enhance its application. The model is limited, however, as its main focus essentially deals with treating the criminogenic needs or dynamic factors of offenders, thereby restraining sex offenders’ engagement in...
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...Evaluate of the Merton Model for credit risk analysis The KMV-Merton model proposed by Robert Merton(1974)is an application of classic option pricing theory and as a logical extension of the Black-Scholes(1973)option pricing framework.Merton’s approach assess the credit risk of a firm by characterizing the firm’s equity as a call option on the underling value of the firm with a strike price equal to the face value of the firm’s debt and a time-to-maturity of T.By put-call parity,the value of the firm’s debt is equal to the value of a risk-free discount bond minus the value of a put option written on the firm with a strike price equal to the face value of debt and a time-to-maturity of T. To some extent,our calculated probability of default is reasonable.In fact,dynamics of default probability comes mostly from the dynamics of the equity values.KMV model can always quickly reflect deterioration in credit quality.Normally, changes in EDF tend to anticipate at least one year earlier than the downgrading of the issuer by rating agencies such as S&P’s and Moody’s.It recognizes that the market value of debt is unobservable and thus use equity to infer debt value. The calculated probability of default is more related to the firm’s characteristics than credit rating approach and thus more sensitive to change in the quality of obligors.Because stock price information is predictive and highly responsive, the use of market information to compute credit risk can gain more accurate...
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...1. MACRO ENVIRONMENT Social Forces Two publicly controversial issues in the modelling industry are slenderness and racial exclusion. Models do much more than promote the sale of fashion. The model look promotes and distributes ideas about how women and men should look. Models “do gender” professionally in ways that connect with social positions such as race, ethnicity and class, and there are many critiques of fashion models and their gendered and racial meanings. Modelling succeeds on the criticism of the female body and the gap between promoted beauty ideals and reality. As women gain political and social ground, beauty ideals are held to higher extremes of slenderness and perfection. Another social force for clients is they face uncertainty of changing consumer desires as they are highlighting the importance of healthy lifestyles and body types. Demographics For fashion models age is a very strong factor in the selection process. Models are usually discovered between the ages of 12 to 20 by agents or scouts. High fashion modeling agencies often demand height and body shape requirements and have strong preferences for standards. With cultural diversification of the Western world, ethnic diversity is becoming an important factor for all people in the modeling industry. Moreover, various races and backgrounds are becoming progressively noticeable. Anita Norris needs to be aware of the changing demographic trends in the modeling industry Technological Factors...
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...NAME: _______________________________________ CASE 8: Research In Motion: Managing Explosive Growth 1. BACKGROUND INFORMATION |Timeframe |Country(s) Involved |Key Individuals & Titles |Company Type & Size | | | | | | 2. BRIEF SUMMARY OF CASE SITUATION |Business or Industry Description |Particular Company Situation | 3. INDUSTRY AND COMPETITIVE ANALYSIS |Dominant Economic Characteristics |Strategic Group MAP | | | | | | | | | | | | | | ...
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...comparison between model in the past and the present, and how models become more restraints than before. Also we will talk about the advantage of using models and how they can make our life much easy. Models have evolved since the beginning of the century. There are many kinds of models for almost any system or item that exist. Each model uses short, long, simple or complex mathematics formula it depends of which case the models solve. However the models that are used in these recent years are very complex and have many numerous computations which make the only one that can handle it is the computer. These kinds of models are usually use in a wide variety of tasks, such as prevision of the decision made, and an effective answer to everyday problems. During time, models start to be more restraints than before. These kinds of restraints should have value or weight to make a model compatible with the case that model solve. There are several constraints or restraints in each models, one of the most important one is budget of the project. In other words the more wherewithal, the more model accuracy. Mark P. McDonald ( December 8, 2010). To use complex mathematical formula in the models it requires an educated staffs with a good knowledge of model branch, which make the model more expensive and take more time to solve it, comparing with computer time and cost. However the need of special educated persons is strictly required to conclude if the models created by computer...
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...Abstract Model Paper Abstract models are decision making tools that aid in the identification and mitigation of certain risks (Argosy University, 2014). Different types of abstract models exist and can be utilized for various problems and risk mitigation strategies. This paper will present four specific abstract models: deterministic, probability, simulation and discipline specific modeling techniques. Additionally, the author will introduce an example problem for each type of abstract model presented. Deterministic Modeling Deterministic modeling are “precisely determined through known relationships among states and events, without any room for random variation” (Business Dictionary, 2014, para 4). In deterministic modeling, a certain given input will always generate the same output. An example would be a chemical reaction. When two hydrogen atoms attach to an oxygen atom, the known result produced is water (H2O). A deterministic model can be representated mathematically with the formula y = f (x). One can see real-life determinitic modeling in a retail scenario where y = amount paid and x = almount of the good. Physical and engineering industries are much more difficult to use detiministic modeling for risk mititagtion. For example, the amount of water (capacity) a dam can hold may seems like it could be solve through detministic modeling. Unfortunately, it is impossible to accurately calculate the physical and structural make up of the concrete used down...
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...name of Kate Dillon. Up until that point in her life, Dillon had been an anorexic model for seven years. She says, “I would try to sleep as late as I possibly could to avoid eating. The skinnier I got, the better they said I looked. But nothing was ever good enough.” Now a days, model agencies do not care how the model gets skinny and doesn’t ask questions, as long as she achieves the weight that they want her to be at. She says, “I received quite a compliment when a top editor at Fashion Bible Vogue told me I was looking my best ever. The only problem was the praise came after I had been vomiting for 10 days.” The pressure to be thin in a world that she lived in was almost too unbearable. At one point in the article, she tells the reporters,...
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...XRF Gold testers Density Testers Amit Sood Hi everyone... You can now chat with me Shaji what is the weight of Desktop 7200 Amit Sood 45kg Shaji 6900? Amit Sood discontinued model Shaji any model available wich is less than 15kg Amit Sood 6308 Shaji i couldn't find details in site of this model sorry it is there what is the weight Amit Sood 15kg weight Portable kind 6308 model Shaji what is the weight of Desktop 7200 Amit Sood 45kg Shaji 6900? Amit Sood discontinued model Shaji any model available wich is less than 15kg Amit Sood 6308 Shaji i couldn't find details in site of this model sorry it is there what is the weight Amit Sood 15kg weight Portable kind 6308 model Shaji oh thanks...sorry iwas on a con call Amit Sood its ok Shaji what is the approximate price of this model Amit Sood where do you want delivery of the unit Shaji cochin Amit Sood for 6308 4.35+tax Shaji both 6308 & 7200 Amit Sood EXF 6308 Portable kind 4.35 lac plus tax accuracy EXF 7200 Desktop Kind 4.50 lac plus tax Shaji ok, how about service and warrnty Amit Sood one year warranty those machines are ready to use software support only required Shaji onsite warranty? Amit Sood yes on site ...
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...S ANITA NORRIS MODEL MANAGEMENT w 9B10D013 Authorized for use only in the course BSAD 471 Strategic Management at St. Francis Xavier University taught by Brad Long from Jan 05, 2015 to Apr 17, 2015. Use outside these parameters is a copyright violation. Prashob Menon and Paul Lee wrote this case under the supervision of Professor John Haywood-Farmer solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors might have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 2010, Richard Ivey School of Business Foundation Version: (A) 2010-09-10 On March 17, 2010, Anita Norris, owner of Anita Norris Model Management (ANMM) of London, Ontario was contemplating the future of her business. In the two years since Norris started ANMM, the business had grown quickly through her efforts to pursue any revenue stream that presented...
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...the right hair, and covering nothing up but your crotch area. This interprets sexuality. The same goes for women. typical images for women are a big chest, a big behind, slim waist, long legs, skinny, oh and flawless. The stereotypes these advertisements perpetuate are that men are supposed to be taller, bigger, heartless, and tough. As for women, they have to be smaller, looked down upon, and even always being innocent. When it comes to race, a white boy has control over the white girl. But when it's a black boy and a white girl, the girl has the control. Go figure that race would have a part in advertisement. Another way race is involved in this is when it comes to colored women, they're seen as animals. They would dress up the colored models into an animal such as a tiger and have her pose as...
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