Principles of Banking and Finance: Single Cashflow 1. Present Value (PV) * the value on a given date of a payment or series of payments made at other times (past or future) * Discounting from the future * Value at t=0 on a given time line (“t” is the period‚ ranging from 0 to n where “n” being the last period). * Net Present Value (NPV): PV after deducting all the costs 2. Future Value (FV) * The amount to which a specific sum and /or series of payments will grow on a given
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1 1 Introduction Finance is being said to be the domain of the perfect rationale. The rationality then creates an environment called “efficient markets”‚ where maximization of utility takes place and all actors act in this sense – earn more. The classical rationality argues that economical expectation derives the best forecasts as “price (at any time) fully reflect(s) available information on the market” (Fama‚ 1970)‚ which is the core assumption in the EMH. However observing
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PhD Programme by Research (Full Time) – International ENTRANCE FEES (ONCE IN DURATION OF STUDY) Orientation Alumni Registration Student Identification card Medical check-up English and Arabic Placement Test TOTAL ENTRANCE FEES International Ex-IIUM* RM 120 30 60 210.00 International Ex-IIUM** RM 120 30 60 50.00***/75.00**** 260.00***/285.00**** International Direct – Full Time RM 120 100 30 60 50.00***/75.00**** 200.00***** 560.00***/585.00**** * Ex-IIUM student who enrolls for postgraduate within
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1.1 Identify the following characteristics of the debt issuance: I) Principal amount offered to the public SGD100 million II) Interest rate 3.8% per annum III) Payment arrears Semi-annual IV) Number of years the debt will be active 10 years 1.2 Calculate the following financial ratios: I) Current ratio Current Asset / Current Liabilities 1816593 / 365758 = 4.97 ii) Quick ratio Current assets – Inventory (0) / current liabilities
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Behavioral Finance and Herd behavior National Taiwan University‚ department of Finance‚ Group 6‚ Oct 30‚ 2012. BEHAVIORAL FINANCE AND HERD BEHAVIOR INTRODUCTION There are various types of irrational behaviors of investors‚ among which we are highly interested in why people tend to follow what others do rather than believe in his or her own judgment. The phenomenon is called herd behavior. Some investors claim‚ “We know there is herd mentality‚ so we need to be in the group.” HYPOTHESIS
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Introduction Traditional finance‚ market and price models assume markets are rational‚ it’s further assumed that this rationality is reflected in the intrinsic value of the security. The whole concept of traditional finance revolves around assumption people are ‘rational’ be it efficient market hypothesis‚ Bayes Theory‚ or what Markowitz said. But how often do we use into these theories in real world‚ how many people actually use Bayes Theorem to really update probabilities based on new information
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retirement account. She made her first such saving deposit into this fund on her 34th birthday. Dominique has also retired and wants to figure out how much money she has in her retirement account for her retired life. You are Dominique’s friend who knows finance. How much is Dominique’s savings worth today given that the fund has earned an annual return of 3.5%? (Enter just the number in dollars without the $ sign or a comma and round off decimals.) Answer for Question 3 You entered: Your Answer Score Explanation
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A Survey of Behavioral Finance Nicholas Barberis and Richard Thaler In this handbook‚ Barberis and Thaler define the differences between traditional finance and behavioral finance. Traditional finance is rational.Rationality means two things; correct Bayesian Updating and choises consistent with expected utility. On the other hand behavioral finance assumes that market is not fully rational and analyzes the facts when the some of the princibles are loosen up. This
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Design an Investment Strategy using Behavioral Finance Concepts Introduction Traditional economic and finance literature assumes that investors approach risk and return rationally. However‚ in real life‚ the emotions drive investors to make many fundamental missteps during investment. After study Behavioral Finance this year‚ I understand how people actually make decisions and ways in which they tend to deviate from full rationality. Understanding of these biases can help me to avoid some
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undervalued stock. A good example would be when the economy goes into a recession. There was no possible way to predict that the economy would take a down turn so fast. On the other side of the fence is the behaviorist group of economists. The behavioral finance concept is based on rational theories. The thought process is that people behave rationally and predictably. Richard Thaler‚ a member of the “behaviorist”school of economic thought changed this vision. He expressed concern that people tend
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