Topic 2 Explain why comparing the G.D.P. of various nations might not tell you which nation is better off. Use information from the World Bank website to support your answers. In your explanation refer to the limitations of using G.D.P. as a measure of economic welfare and where possible‚ refer to the countries in your table above. Due to the very complex methods used in estimating gross domestic product and the sheer enormity of the task‚ gross domestic product is very necessarily a less than
Premium Gross domestic product Quality of life Economic growth
1. Why did Unilever’s decentralized organizational structure make sense from the 1950’s through the 1970’s? Why did this structure start to create problems for the company in the 1980’s? Because then there was almost no competition in the markets Unilever was targeting‚ they mostly maintained the largest market share and there was probably not so much international influence from other multinationals. The structure began to create problems for the company because influencing other multinationals
Premium Unilever Palm oil Soap
company will require additional long-term capital financing. Long-term financing involves debt or equity instruments with greater than one-year maturities‚ and the cost of this long-term capital can be calculated using either the Capital Asset Pricing (CAPM) or Discounted Cash Flows (DCFM) Model. The organization will have to compare and contrast the Capital Asset Pricing Model with the Discounted Cash Flows Model. The skill of comparing and contrasting financial options will help evaluate
Premium Stock Discounted cash flow Stock market
FAO: DIRECTORS‚ NATURALLY FRESH PLC CONTENTS Page(s) 1. Introduction 3 2. Required Rate of Return on Equity 3 3. Beta 3 4. Capital Asset Pricing Model 4 5.1 Limitations of CAPM 4 5.2 The APT Model 4 5.3 The Three-Factor Model 4 5.4 Required Rate of Return using APT or Three-Factor 5 Model 5. Bonds 5 6.5 How bond prices are determined 5 6.6 The Rate
Premium Net present value Rate of return Time value of money
The purpose of this QCS is to help you review the material on tests of the CAPM and other multifactor models and to illustrate the frequently used two-pass regression approach to testing asset pricing models such as the CAPM and other multi-factor models. As you have seen in the lectures the procedure involves running two regressions. In the first step a time-series regression to calculate factor loadings or betas and in the second step a cross-sectional regression of returns on loadings. This QCS
Premium Statistics Investment Regression analysis
Model…………………………………………. 6 1. Advantages of CAPM…………………………………………………………………...6
Premium Investment
Pricing Model (CAPM) and Gordon’s Growth Model. The results of the estimation indicate that the dividend payments will continuous increasing in the future‚ the return on the company’s assets is reasonable and its share price is expected to rise. In addition‚ recommendations associated with the investment decision will be provided to the public investors regarding to the risks in the market by comparing with companies within the same industry. However‚ there are still a number of limitations of the report
Premium Stock market Dividend yield Investment
Strategies QUESTION 1 a) Distinguish between systematic and unsystematic risk. as the only relevant risk and why? b) In the context of the Capital Asset Pricing Model how would you define beta? How are betas determined and where can they be obtained? limitations of betas? c) What information does beta give to a financial manager? What are the Which is often regarded QUESTION 2 a) What is the time value of money? flows? b) What factors need to be taken into account when choosing an appropriate discount
Premium Net present value Rate of return
term debt‚ because short term debt is considered as part of working capital. - Error in value of equity JC used the book value of $3‚494.50. We should use market value (current stock)‚ which is more accurate. - Error in CAPM Calculations JC considered 20-year US Treasury bonds as risk free‚ which is not consistent with the company’s cash flow duration
Premium Weighted average cost of capital Stock Stock market
Calculating covariance Case study Calculating systematic and idiosyncratic risks Investment strategies Required return Reward-to-risk ratio Today 3 Asset pricing models: what and why The Capital Asset Pricing Model (CAPM) Assumptions The claim Implications The economic mechanism The reality check Applications Extensions Asset Pricing 4 Central issue: what is the “fair” or “required” return of a risky asset? Sarah Wolfe of BMC Macro
Premium