STOCK OPTIONS - AN EFFECTIVE COMPENSATION METHOD Stock Options have become the greatest form of remuneration for big names in organizations across the United States (Hall‚ 2000). The senior executives‚ who are given this option‚ can buy shares of the company at what Hall (2000) describes as the “exercise price”. They could be given “at the money”‚ “out of the money” or “in the money” price (Hall‚ 2000). Stock Options are helpful in motivating the holders to perform for the benefit of the company
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FIN 527 Alternative Investments | Private Equity | Project 1. | | Wei Chen‚ Ye Zhang | | | Part 1. Performance Measurement for Private Equity a) Summary statistics for venture capital and buyout returns: Histograms of returns: The return distribution of venture capital has a kurtosis of 23.25 and a skewness of 3.63‚ which means it is leptokurtic and skews to the right. It is not close to normal distribution. Mainly due to the high returns in late 1990s during the
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FINS2624 PORTFOLIO MANAGEMENT Week 6 CAPM: The covariance of an assets returns with the market and the required return of the asset. Assumptions: * Investors are price takers * Investors have identical investment horizons * Perfect capital markets * Investors are rational mean-variance optimizers β: Measures how much risk an asset contributes in the market portfolio. * β > 1 asset contributes more risk than the average asset * β < 1 asset contributes less risk
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Along with generating the highest return‚ our portfolio had the highest risk. Compared to the 3.6 percent standard deviation of returns on our portfolio‚ the VFINX Index (1.87%)‚ the NASDAQ 100 (2.54%)‚ and the VHGEX Index (1.60%) all show less volatility (Exhibit 2 shows the standard deviations of the 4 portfolios; for graphical evidence see Exhibit 3). The fact that we bore the highest risk makes sense given the stocks we chose. When compared to the Vanguard S&P 500 benchmark beta of 1‚
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Hedge in Response to Tax Incentives? The Journal of Finance‚ Vol. 57‚ No. 2. ‚ pp. 815-839. GrahmJ.R.‚ & SmithJr.C.W.‚. (1999). Tax incentives to hedge. “Journal of Finance‚ 54”‚ pp. 2241-2262. Jalali-Naini‚ A. R.‚ & Manesh‚ M. K. (Jun‚ 2006). Price volatility‚ hedging and variable risk premium in the crude oil market. OPEC review‚ 2006‚ vol. 30‚ issue 2 . Kahl‚ K. H. (August‚ 1983). Determination of the Recommended Hedging Ratio. American Journal of Agricultural Economics‚ Vol. 65‚ No. 3. ‚ pp. 603-605
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performance necessary to know exactly what the strategy is intended measurement is essential to determine the effectiveness to accomplish. While this may appear to be self-evident‚ of a chosen strategy. If a company’s marketing department volatility experienced in the foreign exchange markets over the past the process of determining a company’s FX hedging designs a new advertising campaign‚ the impact of that couple of years has highlighted the need for large and small businesses
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A REVIEW OF STUDIES CONDUCTED ON THE WEAK FORM OF THE EFFICIENT MARKET HYPOTHESIS ON EMERGING CAPITAL MARKETS Surabhi Kothiyal (2009B3A8360P) Vishnukaant Pitty (2009A4PS340P) 1 CONTENTS PAGE NO. 1. Introduction 3 2. On Emerging Markets … 5 3. Empirical Methods 8 3.1. Non-Parametric Tests 8 3.1.1. Kolmogrov Smirnov Goodness of Fit Test 9 3.1.2. Runs Test 9 3.2. Parametric Tests 10 3.2.1. Auto-Correlation Test 10 3.2.2. ADF (Augmented
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CHAPTER 1 QUESTION: IDENTIFY AND EXPLAIN TEN (10) MACROECONOMIC VARIABLES AFFECTING A NAMED BUSINESS ENVIRONMENT. HOW CAN THESE BE REGULATED? INTRODUCTION In today’s world‚ no business operates in isolation without interacting with the environment where it operates. Irrespective of the nature of business whether public or private organization; manufacturing; service industry; local or international firm‚ its operations are inhibited by the environment in which it operates. During 2003-2007
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Background Pine Street Capital is a market-neutral hedge fund in the technology field and is facing market risk and has to decide which way to use in order to hedge the risk. It can either use short selling of NASDAQ or options hedging strategy. Each strategy has its own advantage in different economic conditions. As the fund has just gone through a volatile period in NASDAQ’s history‚ PSC has to choose between two choices. Choice 1: Continuing to hedge market risk by short selling Choice 2:
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investors could achieve through simple portfolio diversification. This belief springs from the fact that one of the firms holds secret proprietary processes that are unknown to public investors. These processes will dampen the volatility of earnings. Analysts believe that this volatility reduction equates to a reduction in the asset beta of the new company (formed by merging two existing entities) by 0.10 from a simple
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