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
Words: 1823 - Pages: 8
WEEK 2 NPV, PBP, IRR, EAC( equivalent annual cash flow) NPV: If NPV>0, accept the project [which are expected to add value to the firm], otherwise don’t bother. Reminders Rule 1: Only cash flow is relevant Cash flow ≠ accounting income •In an income statement, profit is shown as it is earned rather than when the company and its customers get around to paying their bills. •Cash outflows are sorted into two categories: 1) current expenses, deducted when calculating income; and 2)
Words: 785 - Pages: 4
Chapter 11 Return and Risk: The Capital Asset Pricing Model (CAPM) Copyright © 2015 by the McGraw-Hill Education (Asia). All rights reserved. 11.1 Individual Securities The characteristics of individual securities that are of interest are the: Expected Return Variance and Standard Deviation Covariance and Correlation (to another security or index) 11-1 11.2 Expected Return, Variance, and Covariance Consider the following two risky asset world. There is a 1/3
Words: 2254 - Pages: 10
Variance of a portfolio of two assets: Equation of the Capital Allocation Line: σp2 = x2 σ12 (1-x)2 σ22 +2x(1-x)ρ1,2 σ1 σ2 E[rP] = rf +( E[r1]- rf) σP/ σ1 Weight of asset 1 in the minimum variance portfolio with 2 assets: x1min = σ2(σ2 – ρ1,2 σ1)/( σ12 + σ22 – 2ρ1,2σ1 σ2) a) If you dispose of many positively correlated assets (that is, Cov(ri ,rj)>0 for all couples of assets i and j), then by buying strictly positive amount of each asset, you can: Obtain a portfolio that is risk-free
Words: 441 - Pages: 2
week to get those things done that we need to. The assignments that I added to my portfolio were ones that I really liked to work on. It was great to experience a personal interview with an Olympic athlete, and having to find the time to work out an interview with someone whose time is so valuable was a wonderful way to learn about the interview process. I also added my collaborative assignment to my portfolio. This was a harder project to work on because I have never had to write a paper with
Words: 317 - Pages: 2
Tue & Thur 10:00-12:00 Course Information COURSE DESCRIPTION, INSTRUCTIONAL OBJECTIVES and STUDENT LEARNING OUTCOMES: In ENGL 101, students focus on the writing process, paying special attention to prewriting, writing, and revising strategies. The course also introduces elements of academic writing as well as the research process. This class prompts students to hone their critical reading and writing skills as they consider the rhetorical situations that shape all writing tasks. As a hybrid course
Words: 2055 - Pages: 9
standards and benchmarks for the 2011-12 school year. Students should accomplish these standards and benchmarks during his / her studies. The Language Arts curriculum has been broken down into six major strands: 1 = Reading Process 2 = Literary Analysis 3 = Writing Process 4 = Writing Applications 5 = Communication 6 = Information & Media Literacy Supplies: Notebook paper (College Ruled) Blue or Black ink pens (No other colors or metallic colors are allowed) Highlighters (4 different
Words: 1583 - Pages: 7
1st & 3rd (Jackson), 2nd & 3rd(Kitchens) ELA Goal: The goal of the English Language Arts class is to assist students in becoming better writers. This will be accomplished through hands on activities involving the steps of the writing process and review of the 4 areas of Language Arts: reading, writing, speaking, and listening. Grading Policy: Homework = 10% Tests/Essays/Projects = 40% Class Work/Quizzes = 50% All assignments will be graded within a timely manner.
Words: 876 - Pages: 4
For the past twenty years many quality improvement methodologies have been used, including international standardization 9000, Zero Effect, Six Sigma, Lean, Total Quality Management, Work-Out, Balanced Scorecard, Baldridge, Business Process Re-engineering, and Plan-Do-Check-Act. Team Orange initially discussed using Total Quality Management, also called TQM, as a methodology for success as it involves customers and stakeholders as well as requesting input from all employees as a means to constantly
Words: 929 - Pages: 4
understand and use. These can be any alphanumeric characters i.e. text, numbers, symbols. Information is data that have been shaped into a form that is meaningful and useful to human beings. Meaning that a firm to achieve its aims will need to process data into information. So data needs to be turned into meaningful information and presented in its most useful format. Therefore, data has to be processed within a context or form to give meaning “information”. Knowledge is the understanding of
Words: 497 - Pages: 2
