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Capital Allocation Between The Risky And The RiskFree Asset - Capital Allocation Between The Risky And The RiskFree Asset

Capital Allocation Between The Risky And The RiskFree Asset

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Capital Allocation Between the Risky Asset and the RiskFree Asset PowerPoint PPT Presentation

Capital Allocation Between the Risky Asset and the RiskFree Asset - Risky asset: stock (or a portfolio) Allocating ... Borrow at the Risk-Free Rate and invest in stock. Using 50% Leverage, ... F ) S = 8/22. E(rp) - rf = 8 ...

Risky asset: stock (or a portfolio) Allocating ... Borrow at the Risk-Free Rate and invest in stock. Using 50% Leverage, ... F ) S = 8/22. E(rp) - rf = 8 ...

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Capital Allocation Between the Risky Asset and the Riskfree Asset - Demonstrate how different degrees of risk aversion will affect allocations ... E(rc) = yE(rp) (1 - y)rf. rc = complete or combined portfolio. For example, y = .75 ...

Demonstrate how different degrees of risk aversion will affect allocations ... E(rc) = yE(rp) (1 - y)rf. rc = complete or combined portfolio. For example, y = .75 ...

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Session 4: Equity Risk Premiums Implied and Fundamentals PowerPoint PPT Presentation

Session 4: Equity Risk Premiums Implied and Fundamentals - Subtracting out the riskfree rate should yield an implied equity risk premium. ... premiums in other markets such as the bond market or even the real estate ...

Subtracting out the riskfree rate should yield an implied equity risk premium. ... premiums in other markets such as the bond market or even the real estate ...

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Corporate Finance CAPM Again PowerPoint PPT Presentation

Corporate Finance CAPM Again - What riskfree rate should we use? Time horizon (maturity) ... Often, monthly return ... In Japan, the TOPIX index and Nikkei 225 Index are often used as ...

What riskfree rate should we use? Time horizon (maturity) ... Often, monthly return ... In Japan, the TOPIX index and Nikkei 225 Index are often used as ...

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Asset Allocation PowerPoint PPT Presentation

Asset Allocation - The Sharpe ratio measures the tradeoff between risk and return for each portfolio. R = Expected Portfolio Return. Rf = Riskfree Rate.

The Sharpe ratio measures the tradeoff between risk and return for each portfolio. R = Expected Portfolio Return. Rf = Riskfree Rate.

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Chapter 10, With Riskfree Asset - We found the feasible set of risk-return pairs with two or more risky assets. The feasible set was either a line ... The risk-free rate is 7.6%. Potpourri Inc. ...

We found the feasible set of risk-return pairs with two or more risky assets. The feasible set was either a line ... The risk-free rate is 7.6%. Potpourri Inc. ...

Session 2: The Risk Free Rate PowerPoint PPT Presentation

Session 2: The Risk Free Rate - Session 2: The Risk Free Rate Aswath Damodaran The risk free rate is the starting point.. For both cost of equity and cost of debt To get to a cost of equity from any ...

Session 2: The Risk Free Rate Aswath Damodaran The risk free rate is the starting point.. For both cost of equity and cost of debt To get to a cost of equity from any ...

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Corporate Finance in a Day An Analysis of Grace Kennedy - The riskfree rate in Jamaica is much more difficult to estimate. The Bank of Jamaica lowered the one-year open market rate to 16.4% from 16.9% on ...

The riskfree rate in Jamaica is much more difficult to estimate. The Bank of Jamaica lowered the one-year open market rate to 16.4% from 16.9% on ...

The Cost of Capital for Foreign Investments - How Capital Budgeting can differ in an international context ... One implication of this is that the correct riskfree rate to use is a Treasury rate. ...

How Capital Budgeting can differ in an international context ... One implication of this is that the correct riskfree rate to use is a Treasury rate. ...

Chapter 10, With Riskfree Asset - What portfolios will they make? Page - 7. Econ 134A. Spring 05. Results/Implications: ... Borrowing can occur to obtain a return higher than the tangency portfolio ...

What portfolios will they make? Page - 7. Econ 134A. Spring 05. Results/Implications: ... Borrowing can occur to obtain a return higher than the tangency portfolio ...

Session 2: The Risk Free Rate - Session 2: The Risk Free Rate Aswath Damodaran The risk free rate is the starting point.. For both cost of equity and cost of debt To get to a cost of equity from any ...

Session 2: The Risk Free Rate Aswath Damodaran The risk free rate is the starting point.. For both cost of equity and cost of debt To get to a cost of equity from any ...

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Intrinsic Valuation in a Relative Valuation World. - Number of years 5 years Forever after year 5. Riskfree rate = T.Bond Rate = 6 ... 21. PE Ratios and Length of High Growth: 25% growth for n years; 8 ...

Number of years 5 years Forever after year 5. Riskfree rate = T.Bond Rate = 6 ... 21. PE Ratios and Length of High Growth: 25% growth for n years; 8 ...

How does leverage affect shareholders PowerPoint PPT Presentation

How does leverage affect shareholders - Title: Slide 1 Author: AH Last modified by: Alan Huang Created Date: 8/31/2006 9:01:50 PM Document presentation format: On-screen Show Company: UW Other titles

Title: Slide 1 Author: AH Last modified by: Alan Huang Created Date: 8/31/2006 9:01:50 PM Document presentation format: On-screen Show Company: UW Other titles

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The Investment Principle: Risk and Return Models PowerPoint PPT Presentation

The Investment Principle: Risk and Return Models - You cannot swing upon a rope that is attached only to your own belt.

You cannot swing upon a rope that is attached only to your own belt.

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Asset Allocation - Asset Allocation Week 4 Asset Allocation: The Fundamental Question How do you allocate your assets amongst different assets? There are literally thousands of assets ...

Asset Allocation Week 4 Asset Allocation: The Fundamental Question How do you allocate your assets amongst different assets? There are literally thousands of assets ...

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The Security Market Line (SML) aka The Capital Asset Pricing Model (CAPM) PowerPoint PPT Presentation

The Security Market Line (SML) aka The Capital Asset Pricing Model (CAPM) - The Security Market Line (SML) aka. The Capital Asset Pricing ... Expected Return on Stock A ... only if revealing that information to all investors would ...

The Security Market Line (SML) aka. The Capital Asset Pricing ... Expected Return on Stock A ... only if revealing that information to all investors would ...

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Equity Instruments: Part I Discounted Cash Flow Valuation PowerPoint PPT Presentation

Equity Instruments: Part I Discounted Cash Flow Valuation - Equity Instruments: Part I Discounted Cash Flow Valuation B40.3331 Aswath Damodaran

Equity Instruments: Part I Discounted Cash Flow Valuation B40.3331 Aswath Damodaran

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Implied equity risk Premium Principles PowerPoint PPT Presentation

Implied equity risk Premium Principles - Principles & mechANICS The core idea Watch what I pay, not what I say The price that investors pay for risky assets is the key indicator of their desired risk premium ...

Principles & mechANICS The core idea Watch what I pay, not what I say The price that investors pay for risky assets is the key indicator of their desired risk premium ...

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Asset Allocation - Asset Allocation Week 4 Asset Allocation: The Fundamental Question How do you allocate your assets amongst different assets? There are literally thousands of assets ...

Asset Allocation Week 4 Asset Allocation: The Fundamental Question How do you allocate your assets amongst different assets? There are literally thousands of assets ...

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Picking the Right Projects: Investment Analysis PowerPoint PPT Presentation

Picking the Right Projects: Investment Analysis - Title: Corporate Finance Author: Aswath Damodaran Last modified by: Aswath Damodaran Created Date: 4/17/1998 5:34:42 PM Document presentation format

Title: Corporate Finance Author: Aswath Damodaran Last modified by: Aswath Damodaran Created Date: 4/17/1998 5:34:42 PM Document presentation format

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The Investment Principle: Estimating Hurdle Rates PowerPoint PPT Presentation

The Investment Principle: Estimating Hurdle Rates - Disney has a positive Jensen s alpha of 0.60% a year between 1999 and 2003. This can be viewed as a sign that management in the firm did a good job, ...

Disney has a positive Jensen s alpha of 0.60% a year between 1999 and 2003. This can be viewed as a sign that management in the firm did a good job, ...

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Equity Instruments: Part I Discounted Cash Flow Valuation - Equity Instruments: Part I Discounted Cash Flow Valuation B40.3331 Aswath Damodaran

Equity Instruments: Part I Discounted Cash Flow Valuation B40.3331 Aswath Damodaran

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Equity Instruments: Part I Discounted Cash Flow Valuation - Equity Instruments: Part I Discounted Cash Flow Valuation B40.3331 Aswath Damodaran

Equity Instruments: Part I Discounted Cash Flow Valuation B40.3331 Aswath Damodaran

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Risk Tests - Risk Tests Historical Premiums The historical risk premium is the difference between the realized annual return from investing in stocks and the realized annual ...

Risk Tests Historical Premiums The historical risk premium is the difference between the realized annual return from investing in stocks and the realized annual ...

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Session 4: Equity Risk Premiums Implied and Fundamentals - Unlike a bond, stocks have infinite lives. ... Notice two historical phenomena: (1) Equity risk premiums spiked in the 1970s as inflation increased in the US (2) ...

Unlike a bond, stocks have infinite lives. ... Notice two historical phenomena: (1) Equity risk premiums spiked in the 1970s as inflation increased in the US (2) ...

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Picking the Right Projects: Investment Analysis - 3. The model does not work well - If the model is right, ... How well or badly did your stock do, relative to the market, during the period of the regression? ...

3. The model does not work well - If the model is right, ... How well or badly did your stock do, relative to the market, during the period of the regression? ...

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Managing Risk: A Governance Perspective PowerPoint PPT Presentation

Managing Risk: A Governance Perspective - A Governance Perspective Aswath Damodaran A good way to show the effects of sensitivity analysis is with a graph and a good graph tells a story.

A Governance Perspective Aswath Damodaran A good way to show the effects of sensitivity analysis is with a graph and a good graph tells a story.

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Danger and Opportunity: Risk: What is it, how do we measure it and what do we do about it? PowerPoint PPT Presentation

Danger and Opportunity: Risk: What is it, how do we measure it and what do we do about it? - Danger and Opportunity: Risk: What is it, how do we measure it and what do we do about it? Aswath Damodaran

Danger and Opportunity: Risk: What is it, how do we measure it and what do we do about it? Aswath Damodaran

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Today - Today Options Option pricing Applications: Currency risk and convertible bonds Reading Brealey, Myers, and Allen: Chapter 20, 21

Today Options Option pricing Applications: Currency risk and convertible bonds Reading Brealey, Myers, and Allen: Chapter 20, 21

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Managing Risk: A Governance Perspective - Managing Risk: A Governance Perspective Aswath Damodaran

Managing Risk: A Governance Perspective Aswath Damodaran

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Danger and Opportunity: Risk: What is it, how do we measure it and what do we do about it? - Danger and Opportunity: Risk: What is it, how do we measure it and what do we do about it? Aswath Damodaran

Danger and Opportunity: Risk: What is it, how do we measure it and what do we do about it? Aswath Damodaran

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Picking the Right Projects: Investment Analysis - First Principles Invest in projects that yield a return greater than the minimum acceptable hurdle rate. The hurdle rate should be higher for riskier projects and ...

First Principles Invest in projects that yield a return greater than the minimum acceptable hurdle rate. The hurdle rate should be higher for riskier projects and ...

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Estimating the risk free rate PowerPoint PPT Presentation

Estimating the risk free rate - Aswath Damodaran Estimating the risk ... Government Bond spread The 2020 Brazil bond, denominated in US dollars, has a spread of 0.74% over the US treasury bond rate.

Aswath Damodaran Estimating the risk ... Government Bond spread The 2020 Brazil bond, denominated in US dollars, has a spread of 0.74% over the US treasury bond rate.

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The%20Investment%20Principle:%20Risk%20and%20Return%20Models PowerPoint PPT Presentation

The%20Investment%20Principle:%20Risk%20and%20Return%20Models - As examples, Project-specific Risk: Disney s new Hong Kong theme park: ... Hong Kong and Tokyo. As the dollar strengthens or weakens, Disney will feel its effects.

As examples, Project-specific Risk: Disney s new Hong Kong theme park: ... Hong Kong and Tokyo. As the dollar strengthens or weakens, Disney will feel its effects.

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Valuation - Aswath Damodaran First Principles Invest in projects that yield a return greater than the minimum acceptable hurdle rate. The hurdle rate should be higher for riskier ...

Aswath Damodaran First Principles Invest in projects that yield a return greater than the minimum acceptable hurdle rate. The hurdle rate should be higher for riskier ...

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Session 7: Defining and estimating the cost of debt PowerPoint PPT Presentation

Session 7: Defining and estimating the cost of debt - Title: Session 6: Estimating cost of debt, debt ratios and cost of capital Author: Aswath Damodaran Last modified by: Aswath Damodaran Created Date

Title: Session 6: Estimating cost of debt, debt ratios and cost of capital Author: Aswath Damodaran Last modified by: Aswath Damodaran Created Date

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Kumar Share Brokers Limited PowerPoint PPT Presentation

Kumar Share Brokers Limited - Kumar Share Brokers Limited is involved in various types of services like stock brokers, equity trading, derivative trading, commodity brokers, online share trading, mutual funds etc

Kumar Share Brokers Limited is involved in various types of services like stock brokers, equity trading, derivative trading, commodity brokers, online share trading, mutual funds etc

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Kumar Share Brokers Limited (1) PowerPoint PPT Presentation

Kumar Share Brokers Limited (1) - Kumar Share Brokers Limited is a leading retail financial service provider company in India. Kumar Share Brokers Limited is involved in various types of services like stock brokers, equity trading, derivative trading, commodity brokers, online share trading, mutual funds etc.

Kumar Share Brokers Limited is a leading retail financial service provider company in India. Kumar Share Brokers Limited is involved in various types of services like stock brokers, equity trading, derivative trading, commodity brokers, online share trading, mutual funds etc.

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The Investment Principle: Estimating Hurdle Rates - ... coupon government bond matching the time horizon of the cash flow being analyzed. ... How do you bring your beta down? Should you focus your attention on ...

... coupon government bond matching the time horizon of the cash flow being analyzed. ... How do you bring your beta down? Should you focus your attention on ...

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Portfolio Theory A Review PowerPoint PPT Presentation

Portfolio Theory A Review - Declining Marginal Utility and Risk Aversion U' = U/ W 0, U'' = 2U/ W20 : ... APT (Arbitrage Pricing Theory) embraces multiple systematic risk factors, e.g. ...

Declining Marginal Utility and Risk Aversion U' = U/ W 0, U'' = 2U/ W20 : ... APT (Arbitrage Pricing Theory) embraces multiple systematic risk factors, e.g. ...

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Picking the Right Projects: Investment Analysis - The unlevered beta for Disney can then be estimated:(using a marginal tax rate of 36%) = Current Beta / (1 + (1 - tax rate) (Average Debt/Equity)) = 1.40 / ...

The unlevered beta for Disney can then be estimated:(using a marginal tax rate of 36%) = Current Beta / (1 + (1 - tax rate) (Average Debt/Equity)) = 1.40 / ...

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Session 8: Weights and Cost of Capital Dynamics PowerPoint PPT Presentation

Session 8: Weights and Cost of Capital Dynamics - Session 8: Weights and Cost of Capital Dynamics Weights for Cost of Capital Calculation The weights used in the cost of capital computation should be market values.

Session 8: Weights and Cost of Capital Dynamics Weights for Cost of Capital Calculation The weights used in the cost of capital computation should be market values.

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Managerial Finance PowerPoint PPT Presentation

Managerial Finance - Managerial Finance FINA 4330 The Capital Asset Pricing Model (CAPM) Lecture 15 * * Simplifying Assumptions Individuals can trade securities without regard to fees ...

Managerial Finance FINA 4330 The Capital Asset Pricing Model (CAPM) Lecture 15 * * Simplifying Assumptions Individuals can trade securities without regard to fees ...

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Danger and Opportunity: Risk: What is it, how do we measure it and what do we do about it? - Risk: What is it, how do we measure it and what do we do about it? Aswath Damodaran This is the output from 10,000 simulations. I used Crystal Ball.

Risk: What is it, how do we measure it and what do we do about it? Aswath Damodaran This is the output from 10,000 simulations. I used Crystal Ball.

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Portfolio Evaluation PowerPoint PPT Presentation

Portfolio Evaluation - Investment return measurement. conventional measurement theory ... It is a return equal across a multiperiod. ... Time-weighted return is important for money managers. ...

Investment return measurement. conventional measurement theory ... It is a return equal across a multiperiod. ... Time-weighted return is important for money managers. ...

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Risk%20and%20Return%20Models:%20Equity%20and%20Debt PowerPoint PPT Presentation

Risk%20and%20Return%20Models:%20Equity%20and%20Debt - Webster's dictionary, for instance, defines risk as 'exposing to danger or hazard' ... first symbol is the symbol for 'danger', while the second is the symbol ...

Webster's dictionary, for instance, defines risk as 'exposing to danger or hazard' ... first symbol is the symbol for 'danger', while the second is the symbol ...

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Asset Valuation PowerPoint PPT Presentation

Asset Valuation - Valuing the Home Depot's Equity ... equity: The Home Depot. P.V. ... Estimating The Home Depot's Bottom-up Beta. Average Beta of comparable firms = 0.93 ...

Valuing the Home Depot's Equity ... equity: The Home Depot. P.V. ... Estimating The Home Depot's Bottom-up Beta. Average Beta of comparable firms = 0.93 ...

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Discounted Cash Flow PowerPoint PPT Presentation

Discounted Cash Flow - Use risk-adjusted discount rates to value risky cash flows ... price to earnings ratio of 8 and you expect the same for your hotel in 10 years. ...

Use risk-adjusted discount rates to value risky cash flows ... price to earnings ratio of 8 and you expect the same for your hotel in 10 years. ...

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Predicting and Valuing Default - Predicting and Valuing Default

Predicting and Valuing Default

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Risk and Return Models: Equity and Debt PowerPoint PPT Presentation

Risk and Return Models: Equity and Debt - 1.12 7.00 23089.68 22899.06 24382.92 6.00 67.80 33109.11 $488.33. $244.12. 1.12 8.00 25763.77 26365.88 29946.02 7.00 75.70 46691.68 $616.80. $274.69.

1.12 7.00 23089.68 22899.06 24382.92 6.00 67.80 33109.11 $488.33. $244.12. 1.12 8.00 25763.77 26365.88 29946.02 7.00 75.70 46691.68 $616.80. $274.69.

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Review for Second Quiz PowerPoint PPT Presentation

Review for Second Quiz - Title: Firm vs Equity Valuation Author: Aswath Damodaran Last modified by: Aswath Damodaran Created Date: 3/9/1999 5:02:18 PM Document presentation format

Title: Firm vs Equity Valuation Author: Aswath Damodaran Last modified by: Aswath Damodaran Created Date: 3/9/1999 5:02:18 PM Document presentation format

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Equity Instruments PowerPoint PPT Presentation

Equity Instruments - B40.3331 Relative Valuation and Private Company Valuation Aswath Damodaran

B40.3331 Relative Valuation and Private Company Valuation Aswath Damodaran

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Real Option Valuation PowerPoint PPT Presentation

Real Option Valuation - Traditional courses in financial management state that an investment should be ... Converting this value to an infinite streamed investment then involves: ...

Traditional courses in financial management state that an investment should be ... Converting this value to an infinite streamed investment then involves: ...

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Risk and Return PowerPoint PPT Presentation

Risk and Return - Beta measures the non-diversifiable risk of a security i.e. ... Know your betas! The possible range for is - to The value of M is... The value of f is...

Beta measures the non-diversifiable risk of a security i.e. ... Know your betas! The possible range for is - to The value of M is... The value of f is...

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Utility-based asset pricing PowerPoint PPT Presentation

Utility-based asset pricing - mt,t j = intertemporal marginal rate of substitution between consumption at time ... One-period riskless rate is linear in expected consumption growth, with slope ...

mt,t j = intertemporal marginal rate of substitution between consumption at time ... One-period riskless rate is linear in expected consumption growth, with slope ...

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Riskfree PowerPoint PPT Presentations