You will be able to differentiate savings and investments. You will be able to classify the merits and demerits of Speculation. You will be able to infer the relation between time value and interest.
The document discusses various methods for valuing companies and estimating required returns. It covers sum-of-the-parts valuation, conglomerate discounts, characteristics of good valuation models, different return concepts such as holding period return and required returns, methods to estimate required returns including CAPM and multifactor models, and discount rates. It also discusses Porter's five forces framework and factors that influence industry competition and profitability.
This document discusses key concepts related to investment risk and returns. It defines investments, returns, and different types of returns including expected, required, actual, and market rates of return. It also discusses different types of risk like standalone and portfolio risk. Models for evaluating risk and return are covered, including the Capital Asset Pricing Model (CAPM) and Security Market Line (SML). The SML plots expected returns based on levels of systematic risk and can be used to identify overvalued and undervalued investments. Changes to the SML impact expected returns and the cost of capital for companies.
The document discusses various ways that people invest, including putting money into stocks, bonds, and mutual funds. It outlines reasons for investing such as financial goals, income, wealth, and retirement. Key aspects of investing covered include having a budget and savings plan, establishing investment goals, understanding returns, risks, and diversification. The document provides strategies for long-term investing like asset allocation, dollar cost averaging, and following golden rules of fundamentals.
We are a Quantitative investment group committed to revolutionize the fund management industry in the country. We are using pure quant technique to create a zero loss fund (the fund will always be positive) i.e; all of your losses (if any) will be insured.
Chap 18 risk management & capital budgetingArindam Khan
The document discusses key concepts related to risk and capital budgeting. It defines risk as the range of possible outcomes of a decision where the probabilities are known. Strategies are plans to achieve goals, while states of nature are future conditions that impact strategy success. Outcomes are gains/losses from strategy-state combinations. Capital budgeting refers to planning, raising funds, and allocating capital to projects expected to generate returns over multiple years. Projects are evaluated using techniques like payback period, IRR, and NPV to determine if they increase firm value.
1. Samsung Engineering has created employee empowerment programs like "You Are CEO" where employees discuss business ideas and one acts as CEO for 30 minutes. This gives employees a sense of ownership and insight into their ideas and concerns.
2. Financial analysis can provide leads for strategy formulation, like identifying the breakeven point from ratios. Management must converge strategy with financial realities based on models like core competence determination.
3. There are different approaches to valuing a firm or its assets, such as liquidation value, going concern value, book value, and market value. A firm's value comes from present and future cash flows discounted by the cost of capital.
The document discusses various methods for valuing companies and estimating required returns. It covers sum-of-the-parts valuation, conglomerate discounts, characteristics of good valuation models, different return concepts such as holding period return and required returns, methods to estimate required returns including CAPM and multifactor models, and discount rates. It also discusses Porter's five forces framework and factors that influence industry competition and profitability.
This document discusses key concepts related to investment risk and returns. It defines investments, returns, and different types of returns including expected, required, actual, and market rates of return. It also discusses different types of risk like standalone and portfolio risk. Models for evaluating risk and return are covered, including the Capital Asset Pricing Model (CAPM) and Security Market Line (SML). The SML plots expected returns based on levels of systematic risk and can be used to identify overvalued and undervalued investments. Changes to the SML impact expected returns and the cost of capital for companies.
The document discusses various ways that people invest, including putting money into stocks, bonds, and mutual funds. It outlines reasons for investing such as financial goals, income, wealth, and retirement. Key aspects of investing covered include having a budget and savings plan, establishing investment goals, understanding returns, risks, and diversification. The document provides strategies for long-term investing like asset allocation, dollar cost averaging, and following golden rules of fundamentals.
We are a Quantitative investment group committed to revolutionize the fund management industry in the country. We are using pure quant technique to create a zero loss fund (the fund will always be positive) i.e; all of your losses (if any) will be insured.
Chap 18 risk management & capital budgetingArindam Khan
The document discusses key concepts related to risk and capital budgeting. It defines risk as the range of possible outcomes of a decision where the probabilities are known. Strategies are plans to achieve goals, while states of nature are future conditions that impact strategy success. Outcomes are gains/losses from strategy-state combinations. Capital budgeting refers to planning, raising funds, and allocating capital to projects expected to generate returns over multiple years. Projects are evaluated using techniques like payback period, IRR, and NPV to determine if they increase firm value.
1. Samsung Engineering has created employee empowerment programs like "You Are CEO" where employees discuss business ideas and one acts as CEO for 30 minutes. This gives employees a sense of ownership and insight into their ideas and concerns.
2. Financial analysis can provide leads for strategy formulation, like identifying the breakeven point from ratios. Management must converge strategy with financial realities based on models like core competence determination.
3. There are different approaches to valuing a firm or its assets, such as liquidation value, going concern value, book value, and market value. A firm's value comes from present and future cash flows discounted by the cost of capital.
The document discusses various concepts related to portfolio management and investments. It defines portfolio management as building and overseeing investments to meet long-term financial goals and risk tolerance. It also defines investment, investor, holding period return (HPR), holding period yield (HPY), arithmetic mean (AM) and geometric mean (GM) for calculating historical returns. It provides examples to calculate expected returns and discusses different types of risk like business, financial, liquidity and inflation risk.
The document describes the Empirical Premium Fund, which uses an options trading strategy to generate consistent returns regardless of market movements. The fund collects premiums from selling options and takes advantage of time decay to profit. It employs quantitative analysis and dynamic hedging algorithms to structure and adjust a diversified portfolio of option spreads. Investing in a 24-month "time placement" allows the fund to constantly adjust its option portfolio and realize over 100% return through the daily accrual of time premium. The fund is government regulated and aims to double investments in 2 years and return over 10x in 7 years.
This document discusses portfolio management and analysis. It begins by introducing the concepts of return and risk in investments and how they are measured. It then discusses different types of returns (realized vs expected, arithmetic vs geometric) and how to quantify predictions about returns using probabilities and variance. The document provides examples of calculating expected returns, variance, and the Sharpe ratio to evaluate different investment portfolios. It emphasizes that riskier assets require a risk premium to compensate for higher risk. Overall, the document provides an overview of key concepts for analyzing the return and risk of investment portfolios.
This document discusses concepts related to risk and return analysis in finance. It defines key terms like return, expected return, risk measures including beta, standard deviation, and alpha. It also categorizes different types of risk and explores the relationship between risk and return. Methods for computing rates of return from market data and calculating variance and standard deviation of returns are presented.
Working capital refers to current assets like cash, accounts receivable, inventory, and marketable securities, minus current liabilities like accounts payable. Net working capital is calculated as current assets minus current liabilities, with a positive value indicating sufficient short-term resources and a negative value indicating a working capital deficit. Organizations establish policies for managing key elements of working capital like cash, receivables, inventory, and payables to maintain adequate liquidity and efficiency in the working capital cycle.
This is the fifth presentation for the University of New England Graduate School of Business course GSB711 Managerial Finance, offered by Dr Subba Reddy Yarram. This presentation examines risk, return and the Capital Asset Pricing Model (CAPM).
Fears in business operations are known as risks. They mainly affect external and international
relations and other business relations. In the event where operational risks are prominent, the
viability of a business in the future deteriorates and is a complete failure or crippling of the entire
business system. Risk aversion also takes into consideration proper analysis of future prospect of
a specific business before even making an ideal analysis of future prospect of a specific business
before engaging in capital investment
- See more at: http://www.customwritingservice.org/blog/risks-and-returns/
what do you want to do is you can do, if only you are willing to do....right? business it not only for our own selves, but also for everybody good also.
The document discusses risk and return in investments. It defines risk as the possibility of loss or variability in returns. It notes that risk and return are positively correlated, so higher risk investments like stocks generally offer higher returns than lower risk ones like bonds. It identifies two main components of risk: systematic risk that affects the overall market and unsystematic risk that is specific to a particular company. Common types of systematic risk include market risk, interest rate risk and inflation risk, while business and financial risk are examples of unsystematic risk. The document also provides examples of how to calculate expected returns, standard deviation of returns as a risk measure, and real rates of return adjusted for inflation.
The document provides an overview of mutual funds, including what they are, how net asset value is calculated, common types of mutual funds, expenses and fees associated with mutual funds, and factors to consider when purchasing and selling mutual funds. It discusses key mutual fund concepts such as returns, risks, performance, and strategies for mutual fund investment.
Investment appraisal is a means of assessing whether an investment project is worthwhile. It involves analyzing factors such as payback period, accounting rate of return, internal rate of return, profitability index, and net present value. Net present value discounts future cash flows to account for the time value of money and allows comparison of investments. Firms use these techniques to evaluate potential investments and determine which projects to pursue.
This document provides an overview of financial modeling techniques for equity markets that incorporate higher moments like skew and kurtosis. It discusses commonly used portfolio constraints, downside risk measures, and approaches to optimize portfolios based on higher moments. Specifically, it explores using expansions of utility functions and polynomial goal programming to maximize expected return, skewness and minimize variance, kurtosis. It also notes challenges in accurately estimating higher moments and describes an approach by Malevergne and Sornette to model multivariate distributions based on transforming returns into standard normal variables.
- The equity premium puzzle refers to the historically large difference between average returns on stocks versus short-term bonds, which standard economic models cannot fully explain.
- Mehra and Prescott found the average equity premium from 1889-1978 was 6% annually, much higher than models predicted.
- Benartzi and Thaler proposed that investors evaluate returns over short periods (myopic loss aversion) rather than long-term, which helps explain the high equity premium demanded for stocks.
The document provides an overview of key concepts related to expected returns, risk, and the security market line. It defines expected returns and how they differ from realized returns. It also discusses diversification and how it relates to systematic and unsystematic risk. The security market line models the relationship between risk and return, with the slope representing the market risk premium. The capital asset pricing model uses an asset's beta to determine its expected return based on the risk-free rate and market risk premium.
Mf0010 & security analysis and portfolio management (1)smumbahelp
This document provides information about getting fully solved assignments from an assignment help service. It lists an email address and phone number to contact the service, and provides details of 6 sample assignments covering topics like investment process, financial derivatives, risk factors, intrinsic value analysis, technical analysis, and arbitrage pricing theory. Students are instructed to send their semester and specialization to the email address to get solved assignments.
This document provides an overview of how to analyze an equity mutual fund fact sheet. It discusses the key components of a fact sheet including the manager's review and outlook, fund details, performance metrics, portfolio allocation, risk statistics, and more. It also explains how to interpret various data points like NAV, AUM, expense ratio, portfolio turnover, volatility measures like standard deviation and beta, and the Sharpe ratio for evaluating fund performance and risk. The document aims to equip investors with the tools to properly analyze a fund's fact sheet and make informed investment decisions.
The document provides guidance on investment analysis and project selection. It discusses measuring risk and return, using hurdle rates that account for risk, and choosing projects that provide returns above the hurdle rate. The capital asset pricing model is introduced as a method to estimate expected returns based on beta and the risk premium. Diversification and the market portfolio concept are also covered.
This document discusses corporate and functional objectives and strategies. It explains that corporate objectives guide the goals of the whole organization, while functional objectives guide each business area based on corporate objectives. Several financial objectives are then outlined, including cash flow targets and cost minimization. Common financial statements like the balance sheet and income statement are explained. Ratio analysis is introduced as a way to measure business performance through ratios like profitability, liquidity, efficiency, gearing, and shareholder returns. The document concludes with a discussion of investment appraisal techniques like payback period, average rate of return, and net present value.
Ch5 Portfolio Theory -Risk and ReturnLiang (Kevin) Guo.docxketurahhazelhurst
Ch5 Portfolio Theory -Risk and Return
Liang (Kevin) Guo
Learning Objectives
Be able to calculate ex post and ex ante risk and return statistical measures, such as holding period return, average returns, expected returns, and standard deviation.
Understand the difference between time-weighted and dollar-weighted returns, geometric and arithmetic averages.
Be able to construct portfolios of different risk levels, given information about risk free rates and returns on risky assets.
Be able to explain the CML theory.
Table of Contents
5.1 Rates of Return
5.2 Risk and Risk Premiums
5.3 Inflation and Real Rates of Return
5.4 Asset Allocation Across Risky and Risk Free Portfolios
5.5 Passive Strategies and The Capital Market Line (CML)
5.1 Rates of Return
Considering one-single period investment: regardless of the length of the period.
Holding period return (HPR): measuring Ex-Post (Past) Returns over one-single period.
HPR = [PS - PB + CF] / PB
where
PS = Sale price (or P1)
PB = Buy price ($ you put up) (or P0)
CF = Cash flow during holding period ( Such as dividend, interest)
Example: You put up $50 at the beginning of the year for an investment. The value of the investment grows 4% and you earn a dividend of $3.50. What is your HPR?
Annualizing HPRs
Annualize a holding period return: translate it into percentage per year.
(1) Without compounding (Simple or APR):
HPRann = HPR/n
(2) With compounding: EAR
HPRann = [(1+HPR)1/n ]-1
where n = number of years held
Annualizing HPRs for holding periods of greater than one year
Example: Suppose you buy one share of a stock today for $45 and you hold it for two years and sell it for $52. You also received $8 in dividends at the end of the two years. What is the annual rate of return with and without compounding?
HPR =
(1) Annualized w/out compounding
(2) The annualized HPR assuming annual compounding is (n =2 ):
(
Annualizing HPRs for holding periods of less than one year
Example: Suppose you buy one share of a stock today for $45 and you hold it for 3 months and sell it for $52. You also received $8 in dividends at the end of the two years. What is the annual rate of return with and without compounding?
HPR =
(1) Annualized w/out compounding
(2) The annualized HPR assuming annual compounding is (n =0.25 ):
Investment Returns over multiple periods
The holding period return (HPR) is a simple measure of investment return over a single period.
But how to measure the performance of a mutual fund over the last ten-year period?
Several measures to find the average investment return for a time series of returns .
(a) Arithmetic average return (simple Time-weighted average)
(b) Geometric average return (Geometric time-weighted average)
(c) Dollar-weighted return
(a) Arithmetic Average Return (AAR)
(a) Arithmetic average (simple Time-weighted average)
Arithmetic means are the sum of ...
The E-Way Bill revolutionizes logistics by digitizing the documentation of goods transport, ensuring transparency, tax compliance, and streamlined processes. This mandatory, electronic system reduces delays, enhances accountability, and combats tax evasion, benefiting businesses and authorities alike. Embrace the E-Way Bill for efficient, reliable transportation operations.
World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4
World economy charts case
World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4study presented by a Big 4
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The document discusses various concepts related to portfolio management and investments. It defines portfolio management as building and overseeing investments to meet long-term financial goals and risk tolerance. It also defines investment, investor, holding period return (HPR), holding period yield (HPY), arithmetic mean (AM) and geometric mean (GM) for calculating historical returns. It provides examples to calculate expected returns and discusses different types of risk like business, financial, liquidity and inflation risk.
The document describes the Empirical Premium Fund, which uses an options trading strategy to generate consistent returns regardless of market movements. The fund collects premiums from selling options and takes advantage of time decay to profit. It employs quantitative analysis and dynamic hedging algorithms to structure and adjust a diversified portfolio of option spreads. Investing in a 24-month "time placement" allows the fund to constantly adjust its option portfolio and realize over 100% return through the daily accrual of time premium. The fund is government regulated and aims to double investments in 2 years and return over 10x in 7 years.
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This is the fifth presentation for the University of New England Graduate School of Business course GSB711 Managerial Finance, offered by Dr Subba Reddy Yarram. This presentation examines risk, return and the Capital Asset Pricing Model (CAPM).
Fears in business operations are known as risks. They mainly affect external and international
relations and other business relations. In the event where operational risks are prominent, the
viability of a business in the future deteriorates and is a complete failure or crippling of the entire
business system. Risk aversion also takes into consideration proper analysis of future prospect of
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The document discusses risk and return in investments. It defines risk as the possibility of loss or variability in returns. It notes that risk and return are positively correlated, so higher risk investments like stocks generally offer higher returns than lower risk ones like bonds. It identifies two main components of risk: systematic risk that affects the overall market and unsystematic risk that is specific to a particular company. Common types of systematic risk include market risk, interest rate risk and inflation risk, while business and financial risk are examples of unsystematic risk. The document also provides examples of how to calculate expected returns, standard deviation of returns as a risk measure, and real rates of return adjusted for inflation.
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- The equity premium puzzle refers to the historically large difference between average returns on stocks versus short-term bonds, which standard economic models cannot fully explain.
- Mehra and Prescott found the average equity premium from 1889-1978 was 6% annually, much higher than models predicted.
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Ch5 Portfolio Theory -Risk and ReturnLiang (Kevin) Guo.docxketurahhazelhurst
Ch5 Portfolio Theory -Risk and Return
Liang (Kevin) Guo
Learning Objectives
Be able to calculate ex post and ex ante risk and return statistical measures, such as holding period return, average returns, expected returns, and standard deviation.
Understand the difference between time-weighted and dollar-weighted returns, geometric and arithmetic averages.
Be able to construct portfolios of different risk levels, given information about risk free rates and returns on risky assets.
Be able to explain the CML theory.
Table of Contents
5.1 Rates of Return
5.2 Risk and Risk Premiums
5.3 Inflation and Real Rates of Return
5.4 Asset Allocation Across Risky and Risk Free Portfolios
5.5 Passive Strategies and The Capital Market Line (CML)
5.1 Rates of Return
Considering one-single period investment: regardless of the length of the period.
Holding period return (HPR): measuring Ex-Post (Past) Returns over one-single period.
HPR = [PS - PB + CF] / PB
where
PS = Sale price (or P1)
PB = Buy price ($ you put up) (or P0)
CF = Cash flow during holding period ( Such as dividend, interest)
Example: You put up $50 at the beginning of the year for an investment. The value of the investment grows 4% and you earn a dividend of $3.50. What is your HPR?
Annualizing HPRs
Annualize a holding period return: translate it into percentage per year.
(1) Without compounding (Simple or APR):
HPRann = HPR/n
(2) With compounding: EAR
HPRann = [(1+HPR)1/n ]-1
where n = number of years held
Annualizing HPRs for holding periods of greater than one year
Example: Suppose you buy one share of a stock today for $45 and you hold it for two years and sell it for $52. You also received $8 in dividends at the end of the two years. What is the annual rate of return with and without compounding?
HPR =
(1) Annualized w/out compounding
(2) The annualized HPR assuming annual compounding is (n =2 ):
(
Annualizing HPRs for holding periods of less than one year
Example: Suppose you buy one share of a stock today for $45 and you hold it for 3 months and sell it for $52. You also received $8 in dividends at the end of the two years. What is the annual rate of return with and without compounding?
HPR =
(1) Annualized w/out compounding
(2) The annualized HPR assuming annual compounding is (n =0.25 ):
Investment Returns over multiple periods
The holding period return (HPR) is a simple measure of investment return over a single period.
But how to measure the performance of a mutual fund over the last ten-year period?
Several measures to find the average investment return for a time series of returns .
(a) Arithmetic average return (simple Time-weighted average)
(b) Geometric average return (Geometric time-weighted average)
(c) Dollar-weighted return
(a) Arithmetic Average Return (AAR)
(a) Arithmetic average (simple Time-weighted average)
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Cleades Robinson, a respected leader in Philadelphia's police force, is known for his diplomatic and tactful approach, fostering a strong community rapport.
MUTUAL FUNDS (ICICI Prudential Mutual Fund) BY JAMES RODRIGUESWilliamRodrigues148
Mutual funds are investment vehicles that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities. They are managed by professional portfolio managers or investment companies who make investment decisions on behalf of the fund's investors.
4. Objective
You will be able to differentiate savings and
investments
You will be able to classify the merits and demerits
of Speculation
You will be able to infer the relation between time
value and interest.
You will be able to apply and analyse the Future Value ,
Present value and Rate of Return.
5. Savings : the portion of disposable income not
spent on consumption.
Investments: employment of funds in financial or
real assets with an element of risk involved in
respect of return.
Speculations: investment of fund for a short term
to get some return. The speculators make use of the
fluctuations in the movement of price of an asset
and has high risk.
6. Formula:
Holding period return = (sale value of the price) - purchase price) + cash receive
------------------------------------------------------------------------------- x 100
Purchase price
Mr.surya purchases a company’s share for Rs.900 and sold it for Rs.1000 after a
period of one year. During the period he also received a dividend of Rs.35.
Find the return.
Return = (1000-900) + 35 135
----------------------- x 100 = --------------- x 100 = 15%
900 900
8. Systematic Investment Plan
SIP is the investment plan of a fixed amount in any in any of the financial
assets at a regular interval.
It is the simple and timingly investement stategy for accumulating wealthe
and capital appreciation.