Outline the similarities and differences between the Single Index Model (SIM) and the Capital Asset Pricing Model (CAPM). Justify which of the two models makes a better assessment of return of a security (25 marks). To reduce a firm’s specific risk or residual risk a portfolio should have negative covariance or rather it should have no variance at all, for large portfolios however calculating variance requires greater and sophisticated computing power. As such, Index models greatly decrease the computations needed to calculate the optimum portfolio. The use of such Index models also eliminates illogical or rather absurd results.
Only the internally available data has been used to estimate the demand for next period. The adjustments in the demand forecast can be made according to the following to reduce the chances of stock outs or over stocking: Market Condition: If the market is in recession the demand can be expected to be on the lower side whereas in case of boom condition, demand will definitely be much higher. Competitors: The strategies of the competitors over the past periods should be analysed in depth and should be used to fine tune the forecast for next
SPORT OBERMEYER, Ltd. EMBA – SEPT 15 – ENG-BL – S2 TEAM A 1. Using the sample data given in Exhibit 10, make a recommendation for how many units of each style Wally Obermeyer should order during the initial phase of production. Assume that all ten styles in the sample problem are made in Hong Kong, and that Obermeyer 's initial production commitment must be at least 10,000 units. (Ignore price differences among styles in your initial analysis.) In order to minimize the company’s risk of overstock due to inaccurate demand forecast in the first production phase, it would be recommended to order the minimum batch, i.e.
The advantages of the RFPP Farrington(2000) argues that the risk factor prevention paradigm is a simple approach to identifying the key risk factors for offending and implements prevention methods which are created to counteract them. This approach not only identifies variables to target but it identifies individuals in need of an intervention programme also. Farrington highlights the key advantage of the paradigm which bridges the apparent gap between academic research and practical policy making. What makes it even more attractive to practitioners is that it is easy to understand and communicate and it is accepted. He continues by arguing that risk factors and intervention plans are based on empirical research instead of theories and it avoids difficult theoretical questions about which risk factors have causal effects.
Whenever such is the case with a weapon of influence, we can feel assured that the principle involved has notable power in directing human action. In the instance of the scarcity principle, that power comes from two major sources. The first is familiar. Like the other weapons of influence, the scarcity principle makes us feel weak for shortcuts. The weakness is, as before, an enlightened one.
After determining the market price of the common stocks (UAA = $29.05, UA = $25.17) and dividing them by the diluted earnings per share (UAA = $0.45, UA = $0.71), the price-earnings ratios could be calculated. UAA has a price-earnings ratio of 64.55 and UA has a price-earnings ratio of 35.45. In terms of the P-E ratio, the lower the number, the better. UA has a slightly negative P-E ratio and UAA has a very negative ratio. " A low P-E might indicate a number of negative factors, including, but not limited to projected lower earnings.
As big data things continue to grow in this modern era, today we can learn how to predict or assume anything that will happen in the future with data from the past. This studies known as Predictive Analytics. Predictive analytics combine methods from machine learning, data mining and statistics to find meaning or pattern from a huge volume of data. Tom H Davenport, a senior advisor at Deloitte Analytics has broken down three primer models on doing predictive analytics: the data, statistics, and assumptions. The first model is by using data.
We understand the Blaine is a conservative company that doesn’t like to raise debt, but we believe that raising the right amount of debt will help drive value to the company and investors. As mentioned in our analysis, we believe it’s best to use $50 million of cash, $50 million of marketable securities, and raising $40 million of debt to repurchase shares. This means we can repurchase a total $140 million in shares. We recommend a 15% repurchase premium, which would set the repurchase price at $18.70. With that, we will be able to buy back approximately 7.5 million shares, or 1/8th of the total outstanding shares.
The idea that one’s own issues take priority over the other sides’ and can therefore lead to a result in the negotiations which are less satisfactory for both sides. When one’s own issues are most important there can be a miscommunication and it can lead to one overestimating or underestimating the importance of issues based on the importance to them. The other theory is one called the ‘Fixed-Pie Belief’, the assumption that if one side gains it is at the other sides’ expense. These are the theories which the authors hope to answer with the aid of this
The MPB is higher than the MSB and the difference between the two is the negative externality. From a social point of view the MSC should be equal to the MSB (decrease in consumption), reaching an optimum equilibrium in which there is no negative externalities. Moreover we can see the welfare loss provoked by the overconsumption of fast food. The government wants to solve this market failure situation by applying an Ad valorem indirect tax of a 2% on junk food that would provoke a decrease in the consumption. The tax is an extra cost for suppliers and so they will decide to decrease the amount of junk food supplied moving the supply curve to the left.