standard cap-weighted indexes. The true importance of the difference may have been best noted by Benjamin Graham: In the short run‚ the market is a voting machine‚ but in the long run‚ it is a weighing machine. T he capital asset pricing model (CAPM) says that the “market portfolio” is mean– variance optimal. Although the model is predicated on an array of assumptions‚ most of which are arguably not accurate‚ it leads to the conclusion that a passive investor/manager can do no better than
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Project finance Aditya Agarwal Sandeep Kaul Fuqua School of Business Contents The MM Proposition What is a Project? What is Project Finance? Project Structure Financing choices Real World Cases Project Finance: Valuation Issues The MM Proposition The MM Proposition “The Capital Structure is irrelevant as long as the firm’s investment decisions are taken as given” Then why do corporations: Set up independent companies to undertake mega projects and
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FINA 4104: Advanced Financial Management Professor Xuewen Liu Department of Finance‚ HKUST Spring 2013 Email: Xuewenliu@ust.hk Office hour: 13:30-14:30 Tuesday Assessment: Assignments (12%)‚ Midterm-exam (18%)‚ Projects and presentations (15%)‚ and Final exam (55%) Textbooks: 1. Corporate Finance‚ by J. Beck and P. DeMarzo‚ 2nd edition 2011‚ Pearson Education‚ Inc. Hereafter BD. 2. Financial Markets and Corporate Strategy‚ by M. Grinblatt and S. Titman‚ 2nd edition‚ 2002‚ Irwin McGraw
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loadings. The reward to the residual component in the return to a particular asset‚ unsystematic or idiosyncratic risk‚ can be made arbitrarily small simply by considering portfolios with an arbitrarily large number of assets. The basic point‚ however‚ is that the two theories capture two different sets of risks and address different aspects of the premium-awarding scheme for taking such risks. The CAPM‚ by its emphasis on efficient diversification in the context of a finite number of assets‚ neglects
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Dimensional Fund Advisors‚ 2002 1. What is DFA’s business strategy? What do you think of the firm? Are the DFA people really believe in efficient markets? Dimensional Fund Advisors (DFA) primarily focuses on the investment of small stock funds. DFA’s business strategies are as following: * DFA was dedicated to the principle that the stock market was efficient. * DFA believes the value of sound academic research. * DFA believes the ability of skilled traders to contribute to a fund’s
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1) DFA’s investment strategy is based on their belief in the principle that stock market is efficient. They attempt to match a broad-based‚ value-weighted small-stock index and position themselves in the market as a passive fund manager that still claimed to add value by capturing specific dimensions of risks identified by financial science. DFA’s investment strategy incorporates elements of both passive and active management. It is passive in the sense that like many other index managers‚ it
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Executive Summary We found the weighted average cost of capital for Marriott as a whole to be 9.68%. The divisions of Lodging‚ Contract Services and Restaurants had WACCs of 8.14%‚ 13.33%‚ and 9.63% respectively. The only variable between these divisions that remains consistent is the tax rate. Marriott has a target rate for each of the divisions’ capital structures‚ which affects their debt and equity betas. Also‚ there are stark differences between the betas in the segments‚ as well as the
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return. b. portfolio weight. c. portfolio risk. d. rate of return. e. investment value. SYSTEMATIC RISK 3. Risk that affects a large number of assets‚ each to a greater or lesser degree‚ is called _____ risk. a. idiosyncratic b. diversifiable c. systematic d. asset-specific e. total UNSYSTEMATIC RISK 4. Risk that affects at most a small number of assets is called _____ risk. a. portfolio b. undiversifiable c. market d. unsystematic
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CAPM Exam Prep | Project Management Institute http://www.pmi.org/Certification/Certified-Associate-in-Project-Management-CAPM/CAPM-Exam-Prep.aspx Successful CAPM candidates typically use multiple study aids — including courses‚ self-study and study groups — and will spend many hours to prepare‚ ... Certified Associate in Project Management (CAPM)‚ Online Study ... http://courses.telegraph.co.uk/courses/online-study/certified-associate-in-project-management-capm/149548/ Certified Associate in
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premium，SMBt means the return of market capitalization factor at time t，HMIt means the return of book—to—market factor at time t. β、si and hi are coefficient of the 3 factors. In the CAPM model‚ the only risk is market risk and is measured by β‚while in the Fama-French model we play much emphasis on idiosyncratic risk—the size of the company and the book—to—market ratio. This is true when the market is not effective. In addition‚ this result is evidenced by real data from Exhibit 6. First of all
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