Risk and Return: Portfolio Theory and Asset Pricing Models Portfolio Theory Capital Asset Pricing Model (CAPM) Efficient frontier Capital Market Line (CML) Security Market Line (SML) Beta calculation Arbitrage pricing theory Fama-French 3-factor model Portfolio Theory • Suppose Asset A has an expected return of 10 percent and a standard deviation of 20 percent. Asset B has an expected return of 16 percent and a standard deviation of 40 percent. If the correlation between A and B is 0.6
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Risk Pooling Risk pooling concept is explained in the case study considering the examples of two warehouses located in Massachusetts and New Jersey. When we inherit Centralized Distribution System (single warehouse for distribution) we can see the benefits of risk pooling‚ provided there is a negative correlation in the demands for different products in the market. When the demand for two different products varies‚ we have the inventory to support the demand for a product which is high and so we
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Types of Meetings There are several types of meetings‚ including formal‚ semi-formal and informal. A Formal Meeting Formal meetings follow set meeting procedures that are not always used for informal meetings. The following three types of meetings are formal: • Annual General Meetings • Extraordinary General Meetings • Board Meetings They all have: • An Agenda • A Notice of Meeting • Motions are put‚ discussed and voted on following certain rules • Proposers and Seconders of motions
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Introduction This paper specifically tries to distinguish between shareholder and stakeholder in business context. Firstly‚ there will be analysed main ideas of stakeholder theory‚ main principles of it. Secondly‚ the importance and characteristics of stakeholder interdependence will be shown. Thirdly‚ clear identification of main stakeholder groups and relationship between those groups will be outlined. In order‚ to distinguish shareholders from other stakeholders there will be paragraph analysing identity
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rebuild itself both politically and economically. Unfortunately‚ the United States economy was very unstable; therefore‚ the stock market crashed in October of 1929. Many people were investing their income and savings into speculative ventures and even borrowing money from brokers and banks in order to pay for the stock in cash. The stock market crash caused financial turmoil which resulted in many businesses closing and countless layoffs. With so many people unemployed or underemployed‚ businesses continued
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investment instrument and its degree of risk. 4. The larger the variance of returns‚ everything else remaining constant‚ the greater the dispersion of expectations and the higher the risk. 5. The nominal risk free rate of interest is a function of: the real risk free rate and the rate of inflation. 6. The ability to sell an asset quickly at a fair price is associated with: Liquidity risk 7. What will happen to the security market line (SML) if the following events occur‚ other things constant:
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learned how to identify the marine fish stock assessment. The fish stock assessment is a scientific analysis that tries to describe the past of current situation of a fish stock. The main objective of a fish stock assessment is to make sure that the data inputs are accurate and made in a timely matter. The results that are presented to the marine resource management are critical because it ensures how to keep sustainable fisheries‚ healthy ecosystems‚ and to have productive communities. The three inputs
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TYPES OF INVESTMENT FOREIGN DIRECT INVESTMENT: Foreign direct investment includes "mergers and acquisitions‚ building new facilities‚ reinvesting profits earned from overseas operations and intra company loans. Foreign direct investment refers just to build new facilities. FDI is defined as the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor. FDI is the sum of equity
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Demutualization has generally involved conversion of an exchange from a not-for-profit member-owned organization to a for-profit shareholder owned corporation. Most broadly stated‚ a regulator of a DE must balance the profit motives of the stock exchange with the greater goal of investor protection. Toronto Stock Exchange 1. Background to the TSX’s Demutualization The Toronto Stock Exchange was formed in 1852 as a mutual member-owned‚ not-for profit corporation. Members of the exchange were brokerage
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companies into one‚ wherein the merging entities lose their identities. No fresh investment is made through this process. Howeverof shares takes place between the entities involved in such a process. Generally‚ the company that survives is the buyer which retains its identity and the seller company is extinguished. A merger can also be defined as an amalgamation if all assets and liabilities of one company are transferred to the transferee company in consideration of payment in the form of equity shares
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