Investment Management
Investment Management
Investment Management
Fichier Détails
| Cartes-fiches | 89 |
|---|---|
| Langue | English |
| Catégorie | Finances |
| Niveau | Université |
| Crée / Actualisé | 03.04.2018 / 04.06.2022 |
| Lien de web |
https://card2brain.ch/box/20180403_investment_management
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A Bond is a long-term asset or long-term debt.
A zero coupon Bond makes no periodic interest payments.
Bonds that pay a coupont into perpetuity (use perpetuity formula)
The YTM is the discounts rate that equates the Price of the bond to ist Present value.
Bond price = face value (sold at par); bond price < face value (discounte bodn); bond price > face value (premium bond)
A Common stock is a security that represents ownership in a corporation, which gives to Shareholders cash flow rights and voting rights.
Preferred stocks ususally carry no voting rights, but carry a dividend and may have priority over common stocks in the payment of dividends.
Primary markets: Firms sell new shares; Secondary market: Second hand shares from each other (Exchange); OTC: By a network of dealers
Ratio of the earnings of the company which are re-invested.
The minimum value for the stock price under which the marekt price can never fall.
Under the LPS, the stock becomes attractive as a takeover target.
Income earned per dolar deployed in the firm
Income earned per dollar of long-term capital invested in the firm
Net income realized by shareholders per dollar invested in the firm. Key determinant of earnings growth and profitability.
Measures the likelihood of bankruptcy.
Ability of the firm to pay off current liabilities by liquidating ist current assets (and avoid insolvency in the sjort run)
Better than current ratios as it has not inventories which is nor readiy convertible into cash.
Is better than quick ratio as receivables are less liquid than cash.
The opportunit cost of capital is the rate of return on investments in the same class of risk.
Sum of the returns in each state multiplied by the proibability of the state occuring.
Measures exactly how much the possible outcomes vary from the expected value.
They dislike risk,so between investments giving the same expected return they prefer the one with the lower standard deviation.
Return above the risk free rate.
Symmetry of the distribution. Positively skewed: sd overestimates risk.
Degree of fat tails. Greater than 3 then the probability mass in the tails of the distribution is higher than predicted by the normal distribution.
is the loss corresponding to the lowest 5% of the entire return distribution.
also called conditional tail expectation (CTE) because it is conditioned on being the left tail of the distribution.
Similar to usual standard deviation, but uses only negative devidations from the risk free return, thus, addressing the asymmetry on returns issue.
The ratio of average excess returns to LPSD.
Deiversifiable risk or non-systematic risk. Unique to erach company.
Non-diversifiable risk or systematic risk. Cannot be eliminated regardless of how much we diversify.
It is measured by the beta. The beta of the portfolio is the weigthed average of the betas of the stock included in it.
The total risk is set up by diversifiable risk and marekt risk.
Risk averse investors have a concave utility function.
It is equal to the expected return.
A > 0: Investor is risk averse; A = 0: Investor is risk neutral; A < 0: Investor is a risk lover.
He will choose the optimal portfolio on the CAL taht maximizes his Utility.
If the risky asset is an index.
We choose the Optimal complete portfilio by mixing the optimal risky portfolio with the risk free rate.
They are called afficient portfolios.
