between different variables in relation to one year returns within the superannuation industry. | Contents 1.0 Introduction 2 2.0 Outliers 3 3.0 Historical Analysis 4 4.0 Current Data (One Variable Analysis 5 5.0 Bivariate and Trivariate Analysis 6 5.1 Impact of Investment Strategy on One Year Returns 6 5.2 Impact of Three Year Returns on One Year Returns 8 5.3 Impact of Investment Strategy and Three Year Returns on One Year Returns 10 6.0 Conclusion 11 7.0 Appendix 12
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Text Problem Sets A1. (Bond valuation) A $1‚000 face value bond has a remaining maturity of 10 years and a required return of 9%. The bond’s coupon rate is 7.4%. What is the fair value of this bond? Number of years (N) = 10‚ future value (FV) = 1000‚ interest rate (I/YR) = 9 0.074 * 1000 = 74 = PMT or annual payment‚ I then pressed CPT on my financial calculator to compute the price of the bond and then pressed PV or present value. The fair value of the bond is $897.32. Using Cash Flow of
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installments of Rs. 1‚50‚000 for six years. What is the rate of interest to the firm? Ans. Particulars Cost of Machinery Down Payment Financed Repayment in equal installment Total paid interest Rate of interest Rate of interest per annum Interest cost Ref a Yr 0 800‚000.00 b c=a-b d=6*150‚ 000 150‚000.00 650‚000.00 900‚000.00 e=d-c 250‚000.00 f=e/c g=f/6 38.46% 6.41% h 21 250‚000.00 Principal i=d-h Outstanding Year wise j interest rate Rate of interest k 1 650‚000.00 650‚000.00 Yr 1 Yr 2
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new product cash expenses depreciation expenses Income before taxes Income tax at marginal rate Net income Net annual cash flow for years shown 3‚170‚000 2‚400‚000 380‚000 390‚000 124‚800 265‚200 645‚200 2 Year two Net Cash Flow with NO depreciation Expected annual sales of new product Expected annual costs of new product cash expenses depreciation expenses Income before taxes Income tax at marginal rate Net income Net annual cash flow for years shown 3‚170‚000 2‚400‚000 380‚000 770‚000 246‚400
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the expected return on the capital asset • [pic]is the risk-free rate of interest such as interest arising from government bonds • [pic] (the beta) is the sensitivity of the expected excess asset returns to the expected excess market returns‚ or also [pic]‚ • [pic]is the expected return of the market • [pic]is sometimes known as the market premium or risk premium (the difference between the expected market rate of return and the risk-free rate of return). To measure
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hurdle rate to measure its economic profit and NPV. It is used to measure value creation‚ and providing information on each unit’s performance for investors. Teletech’s current practice of “one size fits all” hurdle rate is not the best practice because each division has its own risks and nature of operations. Therefore‚ each division’s profitability should be compared to that division’s own WACC. 2. See attachment 3. According to Rick Phillip’s graph‚ having a single hurdle rate leads to
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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 of Return on the bonds 6 6. Conclusion 7. Appendices 6.1 Appendix 1 – after tax rate of return on bonds
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Parity Strategy Outperform? Robert M. Anderson∗ University of California at Berkeley Stephen W. Bianchi† University of California at Berkeley Lisa R. Goldberg‡ MSCI and University of California at Berkeley November 10‚ 2011§ Abstract We gauge the return-generating potential and risk inherent in four investment strategies: value weighted‚ fixed mix‚ and levered and unlevered risk parity‚ over an 85-year horizon. There are three essential conclusions from our study. First‚ even over periods lasting
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Finance Final Study Guide FIN 331 – Moser – Study Guide for Exam 1 – Spring 2011 Important Concepts * Forms of Business Organization * Proprietorship- an unincorporated business owned by one individual * Partnership- legal arrangement between two or more people who decide to do business together * Advantages * Ease of formation * Subject to few regulations * No corporate income taxes * Disadvantages * Limited life
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to that part of profits of a company which is distributed by the company among its shareholders. It is the reward of the shareholders for investments made by them in the shares of the company. The investors are interested in earning the maximum return on their investments and to maximize their wealth. A company‚ on the other hand‚ needs to provide funds to finance its long-term growth. If a company pays out as dividend most of what it earns‚ then for business requirements and further expansion
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