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Flashcard 1438446914828

Tags
#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Question

The decision about which projects to undertake in the future will depend purely on estimates of [...] This is a forward-looking exercise.

Answer
each project's NPV.

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Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long

Original toplevel document

Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat








Reading 23  Financial Reporting Standards Introduction
#has-images #megafono-session #reading-estandarte

Financial reporting standards provide principles for preparing financial reports and determine the types and amounts of information that must be provided to users of financial statements, including investors and creditors, so that they may make informed decisions. This reading focuses on the framework within which these standards are created. An understanding of the underlying framework of financial reporting standards, which is broader than knowledge of specific accounting rules, will allow an analyst to assess the valuation implications of financial statement elements and transactions—including transactions, such as those that represent new developments, which are not specifically addressed by the standards.

Section 2 of this reading discusses the objective of financial statements and the importance of financial reporting standards in security analysis and valuation. Section 3 describes the roles of financial reporting standard-setting bodies and regulatory authorities and several of the financial reporting standard-setting bodies and regulatory authorities. Section 4 describes the trend toward and barriers to convergence of global financial reporting standards. Section 5 describes the International Financial Reporting Standards (IFRS) framework1 and general requirements for financial statements. Section 6 discusses the characteristics of an effective financial reporting framework along with some of the barriers to a single coherent framework. Section 7 illustrates some of the specific differences between IFRS and US generally accepted accounting practices (US GAAP), and Section 8 discusses the importance of monitoring developments in financial reporting standards. A summary of the key points and practice problems in the CFA Institute multiple choice format conclude the reading.

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Reading 28  Inventories Introduction
#essay-tubes-session #has-images #reading-tubos-de-ensayo

Merchandising and manufacturing companies generate revenues and profits through the sale of inventory. Further, inventory may represent a significant asset on these companies’ balance sheets. Merchandisers (wholesalers and retailers) purchase inventory, ready for sale, from manufacturers and thus account for only one type of inventory—finished goods inventory. Manufacturers, however, purchase raw materials from suppliers and then add value by transforming the raw materials into finished goods. They typically classify inventory into three different categories: raw materials, work in progress, and finished goods. Work-in-progress inventories have started the conversion process from raw materials but are not yet finished goods ready for sale. Manufacturers may report either the separate carrying amounts of their raw materials, work-in-progress, and finished goods inventories on the balance sheet or simply the total inventory amount. If the latter approach is used, the company must then disclose the carrying amounts of its raw materials, work-in-progress, and finished goods inventories in a footnote to the financial statements.

Inventories and cost of sales (cost of goods sold)3 are significant items in the financial statements of many companies. Comparing the performance of these companies is challenging because of the allowable choices for valuing inventories: Differences in the choice of inventory valuation method can result in significantly different amounts being assigned to inventory and cost of sales. Financial statement analysis would be much easier if all companies used the same inventory valuation method or if inventory price levels remained constant over time. If there was no inflation or deflation with respect to inventory costs and thus unit costs were unchanged, the choice of inventory valuation method would be irrelevant. However, inventory price levels typically do change over time.

International Financial Reporting Standards (IFRS) permit the assignment of inventory costs (costs of goods available for sale) to inventories and cost of sales by three cost formulas: specific identification, first-in, first-out (FIFO), and weighted average cost.4 US generally accepted accounting principles (US GAAP) allow the same three inventory valuation methods, referred to as cost flow assumptions in US GAAP, but also include a fourth method called last-in, first-out (LIFO).5 The choice of inventory valuation method affects the allocation of the cost of goods available for sale to ending inventory and cost of sales. Analysts must understand the various inventory valuation methods and the related impact on financial statements and financial ratios in order to evaluate a company’s performance over time and relative to industry peers. The company’s financial statements and related notes provide important information that the analyst can use in assessing the impact of the choice of inventory valuation method on financial statements and financial ratios.

This reading is organized as follows: Section 2 discusses the costs that are included in inventory and the costs that are recognised as expenses in the period in which they are incurred. Section 3 describes inventory valuation methods and compares the measurement of ending inventory, cost of sales and gross profit under each method, and when using periodic versus perpetual inventory systems. Section 4 describes the LIFO method, LIFO reserve, and effects of LIFO liquidations, and demonstrates the adjustments required to compare a com

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Reading 29  Long-Lived Assets Introduction
#essay-tubes-session #has-images #reading-max

Long-lived assets, also referred to as non-current assets or long-term assets, are assets that are expected to provide economic benefits over a future period of time, typically greater than one year.1 Long-lived assets may be tangible, intangible, or financial assets. Examples of long-lived tangible assets, typically referred to as property, plant, and equipment and sometimes as fixed assets, include land, buildings, furniture and fixtures, machinery and equipment, and vehicles; examples of long-lived intangible assets (assets lacking physical substance) include patents and trademarks; and examples of long-lived financial assets include investments in equity or debt securities issued by other companies. The scope of this reading is limited to long-lived tangible and intangible assets (hereafter, referred to for simplicity as long-lived assets).

The first issue in accounting for a long-lived asset is determining its cost at acquisition. The second issue is how to allocate the cost to expense over time. The costs of most long-lived assets are capitalised and then allocated as expenses in the profit or loss (income) statement over the period of time during which they are expected to provide economic benefits. The two main types of long-lived assets with costs that are typically not allocated over time are land, which is not depreciated, and those intangible assets with indefinite useful lives. Additional issues that arise are the treatment of subsequent costs incurred related to the asset, the use of the cost model versus the revaluation model, unexpected declines in the value of the asset, classification of the asset with respect to intent (for example, held for use or held for sale), and the derecognition of the asset.

This reading is organised as follows. Section 2 describes and illustrates accounting for the acquisition of long-lived assets, with particular attention to the impact of capitalizing versus expensing expenditures. Section 3 describes the allocation of the costs of long-lived assets over their useful lives. Section 4 discusses the revaluation model that is based on changes in the fair value of an asset. Section 5 covers the concepts of impairment (unexpected decline in the value of an asset). Section 6 describes accounting for the derecognition of long-lived assets. Section 7 describes financial statement presentation, disclosures, and analysis of long-lived assets. Section 8 discusses differences in financial reporting of investment property compared with property, plant, and equipment. Section 9 describes accounting for leases. A summary is followed by practice problems.

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Reading 31  Non-Current (Long-Term) Liabilities Introduction
#essay-tubes-session #has-images #reading-placas-del-df

A non-current liability (long-term liability) broadly represents a probable sacrifice of economic benefits in periods generally greater than one year in the future. Common types of non-current liabilities reported in a company’s financial statements include long-term debt (e.g., bonds payable, long-term notes payable), finance leases, pension liabilities, and deferred tax liabilities. This reading focuses on bonds payable and leases. Pension liabilities are also introduced.

This reading is organised as follows. Section 2 describes and illustrates the accounting for long-term bonds, including the issuance of bonds, the recording of interest expense and interest payments, the amortisation of any discount or premium, the derecognition of debt, and the disclosure of information about debt financings. In discussing the financial statement effects and analyses of these issues, we focus on solvency and coverage ratios. Section 3 discusses leases, including benefits of leasing and accounting for leases by both lessees and lessors. Section 4 provides an introduction to pension accounting and the resulting non-current liabilities. Section 5 discusses the use of leverage and coverage ratios in evaluating solvency. Section 6 concludes and summarises the reading. Practice problems in the CFA Institute format are included after the reading.

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Reading 34  Corporate Governance and ESG: An Introduction
#has-images #puerquito-session #reading-puerquito-verde

Weak corporate governance is a common thread found in many company failures. A lack of proper oversight by the board of directors, inadequate protection for minority shareholders, and incentives at companies that promote excessive risk taking are just a few of the examples that can be problematic for a company. Poor corporate governance practices resulted in several high-profile accounting scandals and corporate bankruptcies over the past several decades and have been cited as significantly contributing to the 2008–2009 global financial crisis.

In response to these company failures, regulations have been introduced to promote stronger governance practices and protect financial markets and investors. Academics, policy makers, and other groups have published numerous works discussing the benefits of good corporate governance and identifying core corporate governance principles believed to be essential to ensuring sound capital markets and the stability of the financial system.

The investment community has also demonstrated a greater appreciation for the importance of good corporate governance. The assessment of a company’s corporate governance system, including consideration of conflicts of interest and transparency of operations, has increasingly become an essential factor in the investment decision-making process. Additionally, investors have become more attentive to environment and social issues related to a company’s operations. Collectively, these areas often are referred to as environmental, social, and governance (ESG).

Section 2 of this reading provides an overview of corporate governance, including its underlying principles and theories. Section 3 discusses the various stakeholders of a company and conflicts of interest that exist among stakeholder groups. Section 4 describes stakeholder management, reflecting how companies manage their relationships with stakeholders. Section 5 focuses on the role of the board of directors and its committees as overseers of the company. Section 6 explores certain key factors that affect corporate governance. Section 7 highlights the risks and benefits that underlie a corporate governance structure. Section 8 provides an overview of corporate governance issues relevant for investment professionals. Finally, Section 9 discusses the growing effect of environmental and social considerations in the investment process.

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Reading 35  Capital Budgeting Introduction
#has-images #puerquito-session #reading-bulldozer

Capital budgeting is the process that companies use for decision making on capital projects—those projects with a life of a year or more. This is a fundamental area of knowledge for financial analysts for many reasons.

  • First, capital budgeting is very important for corporations. Capital projects, which make up the long-term asset portion of the balance sheet, can be so large that sound capital budgeting decisions ultimately decide the future of many corporations. Capital decisions cannot be reversed at a low cost, so mistakes are very costly. Indeed, the real capital investments of a company describe a company better than its working capital or capital structures, which are intangible and tend to be similar for many corporations.

  • Second, the principles of capital budgeting have been adapted for many other corporate decisions, such as investments in working capital, leasing, mergers and acquisitions, and bond refunding.

  • Third, the valuation principles used in capital budgeting are similar to the valuation principles used in security analysis and portfolio management. Many of the methods used by security analysts and portfolio managers are based on capital budgeting methods. Conversely, there have been innovations in security analysis and portfolio management that have also been adapted to capital budgeting.

  • Finally, although analysts have a vantage point outside the company, their interest in valuation coincides with the capital budgeting focus of maximizing shareholder value. Because capital budgeting information is not ordinarily available outside the company, the analyst may attempt to estimate the process, within reason, at least for companies that are not too complex. Further, analysts may be able to appraise the quality of the company’s capital budgeting process—for example, on the basis of whether the company has an accounting focus or an economic focus.

This reading is organized as follows: Section 2 presents the steps in a typical capital budgeting process. After introducing the basic principles of capital budgeting in Section 3, in Section 4 we discuss the criteria by which a decision to invest in a project may be made.

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Reading 36  Cost of Capital Introduction
#has-images #puerquito-session #reading-garrafon-lleno-de-monedas-de-diez-pesos

A company grows by making investments that are expected to increase revenues and profits. The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds.

The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well.

Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project.

This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimating the costs of the various sources of capital. Section 4 discusses issues an analyst faces in using the cost of capital. A summary concludes the reading.

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Reading 45  Security Market Indexes (Intro)
#has-images #manzana-session #reading-dedo-indice

Investors gather and analyze vast amounts of information about security markets on a continual basis. Because this work can be both time consuming and data intensive, investors often use a single measure that consolidates this information and reflects the performance of an entire security market.

Security market indexes were first introduced as a simple measure to reflect the performance of the US stock market. Since then, security market indexes have evolved into important multi-purpose tools that help investors track the performance of various security markets, estimate risk, and evaluate the performance of investment managers. They also form the basis for new investment products.

 

in·dex, noun (pl. in·dex·es or in·di·ces) Latin indic-, index, from indicare to indicate: an indicator, sign, or measure of something.

ORIGIN OF MARKET INDEXES

Investors had access to regularly published data on individual security prices in London as early as 1698, but nearly 200 years passed before they had access to a simple indicator to reflect security market information.1 To give readers a sense of how the US stock market in general performed on a given day, publishers Charles H. Dow and Edward D. Jones introduced the Dow Jones Average, the world’s first security market index, in 1884.2 The index, which appeared in The Customers’ Afternoon Letter, consisted of the stocks of nine railroads and two industrial companies. It eventually became the Dow Jones Transportation Average.3Convinced that industrial companies, rather than railroads, would be “the great speculative market” of the future, Dow and Jones introduced a second index in May 1896—the Dow Jones Industrial Average (DJIA). It had an initial value of 40.94 and consisted of 12 stocks from major US industries.4,5 Today, investors can choose from among thousands of indexes to measure and monitor different security markets and asset classes.

This reading is organized as follows. Section 2 defines a security market index and explains how to calculate the price return and total return of an index for a single period and over multiple periods. Section 3 describes how indexes are constructed and managed. Section 4 discusses the use of market indexes. Sections 5, 6, and 7 discuss various types of indexes, and the final section summarizes the reading. Practice problems follow the conclusions and summary.

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Reading 46  Market Efficiency (Intro)
#has-images #manzana-session #reading-pure-de-manzana

Market efficiency concerns the extent to which market prices incorporate available information. If market prices do not fully incorporate information, then opportunities may exist to make a profit from the gathering and processing of information. The subject of market efficiency is, therefore, of great interest to investment managers, as illustrated in Example 1.

EXAMPLE 1

Market Efficiency and Active Manager Selection

The chief investment officer (CIO) of a major university endowment fund has listed eight steps in the active manager selection process that can be applied both to traditional investments (e.g., common equity and fixed-income securities) and to alternative investments (e.g., private equity, hedge funds, and real assets). The first step specified is the evaluation of market opportunity:

What is the opportunity and why is it there? To answer this question we start by studying capital markets and the types of managers operating within those markets. We identify market inefficiencies and try to understand their causes, such as regulatory structures or behavioral biases. We can rule out many broad groups of managers and strategies by simply determining that the degree of market inefficiency necessary to support a strategy is implausible. Importantly, we consider the past history of active returns meaningless unless we understand why markets will allow those active returns to continue into the future.1

The CIO’s description underscores the importance of not assuming that past active returns that might be found in a historical dataset will repeat themselves in the future. Active returns refer to returns earned by strategies that do not assume that all information is fully reflected in market prices.

Governments and market regulators also care about the extent to which market prices incorporate information. Efficient markets imply informative prices—prices that accurately reflect available information about fundamental values. In market-based economies, market prices help determine which companies (and which projects) obtain capital. If these prices do not efficiently incorporate information about a company’s prospects, then it is possible that funds will be misdirected. By contrast, prices that are informative help direct scarce resources and funds available for investment to their highest-valued uses.2 Informative prices thus promote economic growth. The efficiency of a country’s capital markets (in which businesses raise financing) is an important characteristic of a well-functioning financial system.

The remainder of this reading is organized as follows. Section 2 provides specifics on how the efficiency of an asset market is described and discusses the factors affecting (i.e., contributing to and impeding) market efficiency. Section 3 presents an influential three-way classification of the efficiency of security markets and discusses its implications for fundamental analysis, technical analysis, and portfolio management. Section 4 presents several market anomalies (apparent market inefficiencies that have received enough attention to be individually identified and named) and describes how these anomalies relate to investment strategies. Section 5 introduces behavioral finance and how that field of study relates to market efficiency. A summ

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Reading 47  Overview of Equity Securities (Intro)
#has-images #lingote-de-oro-session #reading-ana-de-la-garza

Equity securities represent ownership claims on a company’s net assets. As an asset class, equity plays a fundamental role in investment analysis and portfolio management because it represents a significant portion of many individual and institutional investment portfolios.

The study of equity securities is important for many reasons. First, the decision on how much of a client’s portfolio to allocate to equities affects the risk and return characteristics of the entire portfolio. Second, different types of equity securities have different ownership claims on a company’s net assets, which affect their risk and return characteristics in different ways. Finally, variations in the features of equity securities are reflected in their market prices, so it is important to understand the valuation implications of these features.

This reading provides an overview of equity securities and their different features and establishes the background required to analyze and value equity securities in a global context. It addresses the following questions:

  • What distinguishes common shares from preference shares, and what purposes do these securities serve in financing a company’s operations?

  • What are convertible preference shares, and why are they often used to raise equity for unseasoned or highly risky companies?

  • What are private equity securities, and how do they differ from public equity securities?

  • What are depository receipts and their various types, and what is the rationale for investing in them?

  • What are the risk factors involved in investing in equity securities?

  • How do equity securities create company value?

  • What is the relationship between a company’s cost of equity, its return on equity, and investors’ required rate of return?

The remainder of this reading is organized as follows. Section 2 provides an overview of global equity markets and their historical performance. Section 3 examines the different types and characteristics of equity securities, and Section 4 outlines the differences between public and private equity securities. Section 5 provides an overview of the various types of equity securities listed and traded in global markets. Section 6 discusses the risk and return characteristics of equity securities. Section 7 examines the role of equity securities in creating company value and the relationship between a company’s cost of equity, its return on equity, and investors’ required rate of return. The final section summarizes the reading.

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Reading 50  Fixed-Income Securities: Defining Elements (Intro)
#estatua-session #has-images #reading-david-de-miguel-angel

Judged by total market value, fixed-income securities constitute the most prevalent means of raising capital globally. A fixed-income security is an instrument that allows governments, companies, and other types of issuers to borrow money from investors. Any borrowing of money is debt. The promised payments on fixed-income securities are, in general, contractual (legal) obligations of the issuer to the investor. For companies, fixed-income securities contrast to common shares in not having ownership rights. Payment of interest and repayment of principal (amount borrowed) are a prior claim on the company’s earnings and assets compared with the claim of common shareholders. Thus, a company’s fixed-income securities have, in theory, lower risk than that company’s common shares.

In portfolio management, fixed-income securities fulfill several important roles. They are a prime means by which investors—individual and institutional—can prepare to fund, with some degree of safety, known future obligations such as tuition payments or pension obligations. The correlations of fixed-income securities with common shares vary, but adding fixed-income securities to portfolios including common shares is usually an effective way of obtaining diversification benefits.

Among the questions this reading addresses are the following:

  • What set of features define a fixed-income security, and how do these features determine the scheduled cash flows?

  • What are the legal, regulatory, and tax considerations associated with a fixed-income security, and why are these considerations important for investors?

  • What are the common structures regarding the payment of interest and repayment of principal?

  • What types of provisions may affect the disposal or redemption of fixed-income securities?

Embarking on the study of fixed-income securities, please note that the terms “fixed-income securities,” “debt securities,” and “bonds” are often used interchangeably by experts and non-experts alike. We will also follow this convention, and where any nuance of meaning is intended, it will be made clear.1

The remainder of this reading is organized as follows. Section 2 describes, in broad terms, what an investor needs to know when investing in fixed-income securities. Section 3 covers both the nature of the contract between the issuer and the bondholders as well as the legal, regulatory, and tax framework within which this contract exists. Section 4 presents the principal and interest payment structures that characterize fixed-income securities. Section 5 discusses the contingency provisions that affect the timing and/or nature of a bond’s cash flows. The final section provides a conclusion and summary of the reading.

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Reading 51  Fixed-Income Markets: Issuance, Trading, and Funding (Intro)
#estatua-session #has-images #reading-barro-en-la-madre-que-da-vueltas

Global fixed-income markets represent the largest subset of financial markets in terms of number of issuances and market capitalization. These markets bring borrowers and lenders together to allocate capital globally to its most efficient uses. Fixed-income markets include not only publicly traded securities, such as commercial paper, notes, and bonds, but also non-publicly traded loans. At the end of 2010, the total amount of debt and equity outstanding was about $212 trillion globally.1 The global fixed-income market represented approximately 75% of this total; simply put, global debt markets are three times larger than global equity markets.

Understanding how fixed-income markets are structured and how they operate is important for debt issuers and investors. Debt issuers have financing needs that must be met. For example, a government may need to finance an infrastructure project, a new hospital, or a new school. A company may require funds to expand its business. Financial institutions also have funding needs, and they are among the largest issuers of fixed-income securities. Fixed income is an important asset class for both individual and institutional investors. Thus, investors need to understand the characteristics of fixed-income securities including how these securities are issued and traded.

Among the questions this reading addresses are the following:

  • What are the key bond market sectors?

  • How are bonds sold in primary markets and traded in secondary markets?

  • What types of bonds are issued by governments, government-related entities, financial companies, and non-financial companies?

  • What additional sources of funds are available to banks?

The remainder of this reading is organized as follows. Section 2 presents an overview of global fixed-income markets and how these markets are classified, including some descriptive statistics on the size of the different bond market sectors. Section 2 also identifies the major issuers of and investors in fixed-income securities and presents fixed-income indexes. Section 3 discusses how fixed-income securities are issued in primary markets, and how these securities are then traded in secondary markets. Sections 4 to 7 examine different bond market sectors. Section 8 discusses additional short-term funding alternatives available to banks, including repurchase agreements. Section 9 concludes and summarizes the reading.

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Reading 54  Understanding Fixed‑Income Risk and Return (Intro)
#has-images #paracaidas-session #reading-la-ñora

It is important for analysts to have a well-developed understanding of the risk and return characteristics of fixed-income investments. Beyond the vast worldwide market for publicly and privately issued fixed-rate bonds, many financial assets and liabilities with known future cash flows may be evaluated using the same principles. The starting point for this analysis is the yield-to-maturity, or internal rate of return on future cash flows, which was introduced in the fixed-income valuation reading. The return on a fixed-rate bond is affected by many factors, the most important of which is the receipt of the interest and principal payments in the full amount and on the scheduled dates. Assuming no default, the return is also affected by changes in interest rates that affect coupon reinvestment and the price of the bond if it is sold before it matures. Measures of the price change can be derived from the mathematical relationship used to calculate the price of the bond. The first of these measures (duration) estimates the change in the price for a given change in interest rates. The second measure (convexity) improves on the duration estimate by taking into account the fact that the relationship between price and yield-to-maturity of a fixed-rate bond is not linear.

Section 2 uses numerical examples to demonstrate the sources of return on an investment in a fixed-rate bond, which includes the receipt and reinvestment of coupon interest payments and the redemption of principal if the bond is held to maturity. The other source of return is capital gains (and losses) on the sale of the bond prior to maturity. Section 2 also shows that fixed-income investors holding the same bond can have different exposures to interest rate risk if their investment horizons differ. Discussion of credit risk, although critical to investors, is postponed to Section 5 so that attention can be focused on interest rate risk.

Section 3 provides a thorough review of bond duration and convexity, and shows how the statistics are calculated and used as measures of interest rate risk. Although procedures and formulas exist to calculate duration and convexity, these statistics can be approximated using basic bond-pricing techniques and a financial calculator. Commonly used versions of the statistics are covered, including Macaulay, modified, effective, and key rate durations. The distinction is made between risk measures that are based on changes in the bond’s yield-to-maturity (i.e., yield duration and convexity) and on benchmark yield curve changes (i.e., curve duration and convexity).

Section 4 returns to the issue of the investment horizon. When an investor has a short-term horizon, duration (and convexity) are used to estimate the change in the bond price. In this case, yield volatility matters. In particular, bonds with varying times-to-maturity have different degrees of yield volatility. When an investor has a long-term horizon, the interaction between coupon reinvestment risk and market price risk matters. The relationship among interest rate risk, bond duration, and the investment horizon is explored.

Section 5 discusses how the tools of duration and convexity can be extended to credit and liquidity risks and highlights how these different factors can affect a bond’s return and risk.

A summary of key points and practice problems in the CFA Institute multiple-choice format conclude the reading.

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Reading 56  Derivative Markets and Instruments (Intro)
#has-images #reading-volante #volante-session

Equity, fixed-income, currency, and commodity markets are facilities for trading the basic assets of an economy. Equity and fixed-income securities are claims on the assets of a company. Currencies are the monetary units issued by a government or central bank. Commodities are natural resources, such as oil or gold. These underlying assets are said to trade in cash markets or spot markets and their prices are sometimes referred to as cash prices or spot prices, though we usually just refer to them as stock prices, bond prices, exchange rates, and commodity prices. These markets exist around the world and receive much attention in the financial and mainstream media. Hence, they are relatively familiar not only to financial experts but also to the general population.

Somewhat less familiar are the markets for derivatives, which are financial instruments that derive their values from the performance of these basic assets. This reading is an overview of derivatives. Subsequent readings will explore many aspects of derivatives and their uses in depth. Among the questions that this first reading will address are the following:

  • What are the defining characteristics of derivatives?

  • What purposes do derivatives serve for financial market participants?

  • What is the distinction between a forward commitment and a contingent claim?

  • What are forward and futures contracts? In what ways are they alike and in what ways are they different?

  • What are swaps?

  • What are call and put options and how do they differ from forwards, futures, and swaps?

  • What are credit derivatives and what are the various types of credit derivatives?

  • What are the benefits of derivatives?

  • What are some criticisms of derivatives and to what extent are they well founded?

  • What is arbitrage and what role does it play in a well-functioning financial market?

This reading is organized as follows. Section 2 explores the definition and uses of derivatives and establishes some basic terminology. Section 3 describes derivatives markets. Section 4 categorizes and explains types of derivatives. Sections 5 and 6 discuss the benefits and criticisms of derivatives, respectively. Section 7 introduces the basic principles of derivative pricing and the concept of arbitrage. Section 8 provides a summary.

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#cabra-session #has-images #reading-sus-straffon

Misleading practices in the portfolio management indutry included:

  • Representative Accounts : Selecting a top-performing portfolio to represent the firm’s overall investment results for a specific mandate.

  • Survivorship Bias : Presenting an “average” performance history that excludes portfolios whose poor performance was weak enough to result in termination of the firm.

  • Varying Time Periods : Presenting performance for a selected time period during which the mandate produced excellent returns or out-performed its benchmark—making comparison with other firms’ results difficult or impossible.

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Reading 4  Introduction to the Global Investment Performance Standards (GIPS®)
nvestment performance data. Several performance measurement practices hindered the comparability of performance returns from one firm to another, while others called into question the accuracy and credibility of performance reporting overall. <span>Misleading practices included: Representative Accounts: Selecting a top-performing portfolio to represent the firm’s overall investment results for a specific mandate. Survivorship Bias: Presenting an “average” performance history that excludes portfolios whose poor performance was weak enough to result in termination of the firm. Varying Time Periods: Presenting performance for a selected time period during which the mandate produced excellent returns or out-performed its benchmark—making comparison with other firms’ results difficult or impossible. Making a valid comparison of investment performance among even the most ethical investment management firms was problematic. For example, a pension fund seeking to





Reading 24  Understanding Income Statements (Layout)
#bascula-session #has-images #reading-embudo
This reading is organized as follows:

Section 2 describes the components of the income statement and its format.

Section 3 describes basic principles and selected applications related to the recognition of revenue.

Section 4 describes basic principles and selected applications related to the recognition of expenses.

Section 5 covers non-recurring items and non-operating items.

Section 6 explains the calculation of earnings per share.

Section 7 introduces income statement analysis, and

Section 8 explains comprehensive income and its reporting.
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Reading 24  Understanding Income Statements Intro
ebt over the course of the business cycle. Corporate financial announcements frequently emphasize information reported in income statements, particularly earnings, more than information reported in the other financial statements. <span>This reading is organized as follows: Section 2 describes the components of the income statement and its format. Section 3 describes basic principles and selected applications related to the recognition of revenue, and Section 4 describes basic principles and selected applications related to the recognition of expenses. Section 5 covers non-recurring items and non-operating items. Section 6 explains the calculation of earnings per share. Section 7 introduces income statement analysis, and Section 8 explains comprehensive income and its reporting. A summary of the key points and practice problems in the CFA Institute multiple choice format complete the reading. <span><body><html>




Flashcard 1737957444876

Tags
#state-space-models
Question
state space models are Markov models with [...]
Answer
latent variables

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Although such models are tractable, they are also severely limited. We can ob- tain a more general framework, while still retaining tractability, by the introduction of latent variables, leading to state space models.

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Flashcard 1738059943180

Tags
#cabra-session #has-images #reading-sus-straffon


Question
The GIPS establish a standardized for investment firms to follow in [...] and [...] their historical investment results to prospective clients.
Answer
calculating and presenting

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The GIPS standards are a practitioner-driven set of ethical principles that establish a standardized, industry-wide approach for investment firms to follow in calculating and presenting their historical investment results to prospective clients. The GIPS standards ensure fair representation and full disclosure of investment performance. In other words, the GIPS standards lead investment management firms to avoid misrepresentations of performance and to communicate all relevant information that prospective clients shoul

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Reading 4  Introduction to the Global Investment Performance Standards (GIPS®)
l investment management firms was problematic. For example, a pension fund seeking to hire an investment management firm might receive proposals from several firms, all using different methodologies for calculating their results. <span>The GIPS standards are a practitioner-driven set of ethical principles that establish a standardized, industry-wide approach for investment firms to follow in calculating and presenting their historical investment results to prospective clients. The GIPS standards ensure fair representation and full disclosure of investment performance. In other words, the GIPS standards lead investment management firms to avoid misrepresentations of performance and to communicate all relevant information that prospective clients should know in order to evaluate past results. <span><body><html>







Demand-pull inflation
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Cost – Push Inflation
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Flashcard 1738266250508

Question
Base Year for WPI
Answer
2004- 05

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Flashcard 1738267299084

Question
Indices for the Food Group and fuel group will be announced
Answer
weekly

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CPI is the cost of living index popularly known as Core Inflation
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They differ in terms of their weighting pattern. First, food has a larger weight in CPIs - ranging from 46 per cent in CPI-IW to 69 per cent in CPI-AL, whereas it has a weight of only 27 per cent in the WPI. The CPIs are, therefore, more sensitive to changes in prices of food items.
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Flashcard 1738271493388

Question
CPI in India is released by
Answer
Labour Bureau, Ministry of Labour and Employment

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Flashcard 1738272541964

Question
Rate of interest and bond prices
Answer
inversely related

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Flashcard 1738274639116

Question
Phases of Business Cycle:
Answer
Boom Recession Depression Recovery

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Flashcard 1738275687692

Question
Who can issue Commercial Paper (CP)?
Answer
Highly rated corporate borrowers, primary dealers (PDs) and satellite dealers (SDs) and all -India financial institutions (FIs)

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Derivatives are financial instruments that derive their value from an 'underlying
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The difference between the price of the underlying asset in the spot market and the futures market is called 'Basis'. (As 'spot market' is a market for immediate delivery
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Flashcard 1738402041100

Question
Urban co-operative banks are controlled by
Answer
State g overnment an d RBI

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Flashcard 1738403613964

Question
Other co-operative banks are controlled by
Answer
State G overnment and NABAR D

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Flashcard 1738405186828

Question
Primary dealers deal in
Answer
g overnment securities , primary as well as secondary markets

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Flashcard 1738406759692

Question
capital market regulator
Answer
SEBI

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Depositories held securities in demat form (not physical)
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Flashcard 1738409905420

Question
RBI was constituted under
Answer
RBI Ac t 1934

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Flashcard 1738415148300

Question
RBI started functioning
Answer
1 Apr 19 35

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3. RBI is a state owned institution under the RBI (Transfer of Public Ownership) Act 1948. 4. RBI has 4 Deputy Governors and 15 Directors nominated by Union government. 5. All coins and Re 1 note is issued by Government of India but put into circulation by RBI. 6. RBI manages the exchange rate between the Indian Rupee and foreign currencies by selling and buying foreign exchange to/from Authorised Dealers (RBI’s specified branches and other dealers)
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Flashcard 1738418294028

Question
Monetary and credit policies
Answer
issued by R BI annually

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Flashcard 1738419866892

Question
Fiscal policy - issued by
Answer
Ministry of Finance

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Flashcard 1738423012620

Question
EXIM policy
Answer
Ministry of Comm erce

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Flashcard 1738425634060

Question
RBI can prescribe SLR from
Answer
0 to 4 0 percent of bank ’s DTL

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Reading 23  Financial Reporting Standards (Intro)
#has-images #megafono-session #reading-estandarte
Financial reporting standards provide principles for preparing financial reports and determine the types and amounts of information that must be provided to users of financial statements, including investors and creditors, so that they may make informed decisions. This reading focuses on the framework within which these standards are created. An understanding of the underlying framework of financial reporting standards, which is broader than knowledge of specific accounting rules, will allow an analyst to assess the valuation implications of financial statement elements and transactions—including transactions, such as those that represent new developments, which are not specifically addressed by the standards.
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Reading 23  Financial Reporting Standards Introduction
Financial reporting standards provide principles for preparing financial reports and determine the types and amounts of information that must be provided to users of financial statements, including investors and creditors, so that they may make informed decisions. This reading focuses on the framework within which these standards are created. An understanding of the underlying framework of financial reporting standards, which is broader than knowledge of specific accounting rules, will allow an analyst to assess the valuation implications of financial statement elements and transactions—including transactions, such as those that represent new developments, which are not specifically addressed by the standards. Section 2 of this reading discusses the objective of financial statements and the importance of financial reporting standards in security analysis and valuation. Section 3





Reading 23  Financial Reporting Standards (Layout)
#has-images #megafono-session #reading-estandarte
The reading is organized as follows:

Section 2 of this reading discusses the objective of financial statements and the importance of financial reporting standards in security analysis and valuation.

Section 3 describes the roles of financial reporting standard-setting bodies and regulatory authorities and several of the financial reporting standard-setting bodies and regulatory authorities.

Section 4 describes the trend toward and barriers to convergence of global financial reporting standards.

Section 5 describes the IFRS framework and general requirements for financial statements.

Section 6 discusses the characteristics of an effective financial reporting framework along with some of the barriers to a single coherent framework.

Section 7 illustrates some of the specific differences between IFRS and US GAAP.

Section 8 discusses the importance of monitoring developments in financial reporting standards.
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Reading 23  Financial Reporting Standards Introduction
allow an analyst to assess the valuation implications of financial statement elements and transactions—including transactions, such as those that represent new developments, which are not specifically addressed by the standards. <span>Section 2 of this reading discusses the objective of financial statements and the importance of financial reporting standards in security analysis and valuation. Section 3 describes the roles of financial reporting standard-setting bodies and regulatory authorities and several of the financial reporting standard-setting bodies and regulatory authorities. Section 4 describes the trend toward and barriers to convergence of global financial reporting standards. Section 5 describes the International Financial Reporting Standards (IFRS) framework1 and general requirements for financial statements. Section 6 discusses the characteristics of an effective financial reporting framework along with some of the barriers to a single coherent framework. Section 7 illustrates some of the specific differences between IFRS and US generally accepted accounting practices (US GAAP), and Section 8 discusses the importance of monitoring developments in financial reporting standards. A summary of the key points and practice problems in the CFA Institute multiple choice format conclude the reading. <span><body><html>




"Money Market" refers to the market for short-term requirement and deployment of funds. Money market instruments are those instruments, which have a maturity period of less than one year.The most active part of the money market is the market for overnight call and term money between banks and institutions and repo transactions. Call Money / Repo are very short-term Money Market products.
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Reading 28  Inventories (Intro)
#essay-tubes-session #has-images #reading-tubos-de-ensayo

Merchandising and manufacturing companies generate revenues and profits through the sale of inventory. Further, inventory may represent a significant asset on these companies’ balance sheets. Merchandisers (wholesalers and retailers) purchase inventory, ready for sale, from manufacturers and thus account for only one type of inventory—finished goods inventory. Manufacturers, however, purchase raw materials from suppliers and then add value by transforming the raw materials into finished goods. They typically classify inventory into three different categories: raw materials, work in progress, and finished goods. Work-in-progress inventories have started the conversion process from raw materials but are not yet finished goods ready for sale. Manufacturers may report either the separate carrying amounts of their raw materials, work-in-progress, and finished goods inventories on the balance sheet or simply the total inventory amount. If the latter approach is used, the company must then disclose the carrying amounts of its raw materials, work-in-progress, and finished goods inventories in a footnote to the financial statements.

Inventories and cost of sales (cost of goods sold) are significant items in the financial statements of many companies. Comparing the performance of these companies is challenging because of the allowable choices for valuing inventories: Differences in the choice of inventory valuation method can result in significantly different amounts being assigned to inventory and cost of sales. Financial statement analysis would be much easier if all companies used the same inventory valuation method or if inventory price levels remained constant over time. If there was no inflation or deflation with respect to inventory costs and thus unit costs were unchanged, the choice of inventory valuation method would be irrelevant. However, inventory price levels typically do change over time.

IFRS permit the assignment of inventory costs (costs of goods available for sale) to inventories and cost of sales by three cost formulas: specific identification, first-in, first-out (FIFO), and weighted average cost. US GAAP allow the same three inventory valuation methods, referred to as cost flow assumptions in US GAAP, but also include a fourth method called last-in, first-out (LIFO). The choice of inventory valuation method affects the allocation of the cost of goods available for sale to ending inventory and cost of sales. Analysts must understand the various inventory valuation methods and the related impact on financial statements and financial ratios in order to evaluate a company’s performance over time and relative to industry peers. The company’s financial statements and related notes provide important information that the analyst can use in assessing the impact of the choice of inventory valuation method on financial statements and financial ratios.

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Reading 28  Inventories Introduction
Merchandising and manufacturing companies generate revenues and profits through the sale of inventory. Further, inventory may represent a significant asset on these companies’ balance sheets. Merchandisers (wholesalers and retailers) purchase inventory, ready for sale, from manufacturers and thus account for only one type of inventory—finished goods inventory. Manufacturers, however, purchase raw materials from suppliers and then add value by transforming the raw materials into finished goods. They typically classify inventory into three different categories: raw materials, work in progress, and finished goods. Work-in-progress inventories have started the conversion process from raw materials but are not yet finished goods ready for sale. Manufacturers may report either the separate carrying amounts of their raw materials, work-in-progress, and finished goods inventories on the balance sheet or simply the total inventory amount. If the latter approach is used, the company must then disclose the carrying amounts of its raw materials, work-in-progress, and finished goods inventories in a footnote to the financial statements. Inventories and cost of sales (cost of goods sold)3 are significant items in the financial statements of many companies. Comparing the performance of these companies is challenging because of the allowable choices for valuing inventories: Differences in the choice of inventory valuation method can result in significantly different amounts being assigned to inventory and cost of sales. Financial statement analysis would be much easier if all companies used the same inventory valuation method or if inventory price levels remained constant over time. If there was no inflation or deflation with respect to inventory costs and thus unit costs were unchanged, the choice of inventory valuation method would be irrelevant. However, inventory price levels typically do change over time. International Financial Reporting Standards (IFRS) permit the assignment of inventory costs (costs of goods available for sale) to inventories and cost of sales by three cost formulas: specific identification, first-in, first-out (FIFO), and weighted average cost.4 US generally accepted accounting principles (US GAAP) allow the same three inventory valuation methods, referred to as cost flow assumptions in US GAAP, but also include a fourth method called last-in, first-out (LIFO).5 The choice of inventory valuation method affects the allocation of the cost of goods available for sale to ending inventory and cost of sales. Analysts must understand the various inventory valuation methods and the related impact on financial statements and financial ratios in order to evaluate a company’s performance over time and relative to industry peers. The company’s financial statements and related notes provide important information that the analyst can use in assessing the impact of the choice of inventory valuation method on financial statements and financial ratios. This reading is organized as follows: Section 2 discusses the costs that are included in inventory and the costs that are recognised as expenses in the period in which they





Reading 28  Inventories (Layout)
#essay-tubes-session #has-images #reading-tubos-de-ensayo
This reading is organized as follows:

Section 2 discusses the costs that are included in inventory and the costs that are recognised as expenses in the period in which they are incurred.

Section 3 describes inventory valuation methods and compares the measurement of ending inventory, cost of sales and gross profit under each method, and when using periodic versus perpetual inventory systems.

Section 4 describes the LIFO method, LIFO reserve, and effects of LIFO liquidations, and demonstrates the adjustments required to compare a company that uses LIFO with one that uses FIFO.

Section 5 describes the financial statement effects of a change in inventory valuation method.

Section 6 discusses the measurement and reporting of inventory when its value changes.

Section 7 describes the presentation of inventories on the financial statements and related disclosures, discusses inventory ratios and their interpretation, and shows examples of financial analysis with respect to inventories.
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Reading 28  Inventories Introduction
peers. The company’s financial statements and related notes provide important information that the analyst can use in assessing the impact of the choice of inventory valuation method on financial statements and financial ratios. <span>This reading is organized as follows: Section 2 discusses the costs that are included in inventory and the costs that are recognised as expenses in the period in which they are incurred. Section 3 describes inventory valuation methods and compares the measurement of ending inventory, cost of sales and gross profit under each method, and when using periodic versus perpetual inventory systems. Section 4 describes the LIFO method, LIFO reserve, and effects of LIFO liquidations, and demonstrates the adjustments required to compare a company that uses LIFO with one that uses FIFO. Section 5 describes the financial statement effects of a change in inventory valuation method. Section 6 discusses the measurement and reporting of inventory when its value changes. Section 7 describes the presentation of inventories on the financial statements and related disclosures, discusses inventory ratios and their interpretation, and shows examples of financial analysis with respect to inventories. A summary and practice problems conclude the reading. <span><body><html>





Reading 29  Long-Lived Assets (Intro)
#essay-tubes-session #has-images #reading-max

Long-lived assets , also referred to as non-current assets or long-term assets, are assets that are expected to provide economic benefits over a future period of time, typically greater than one year.1 Long-lived assets may be tangible, intangible, or financial assets. Examples of long-lived tangible assets, typically referred to as property, plant, and equipment and sometimes as fixed assets, include land, buildings, furniture and fixtures, machinery and equipment, and vehicles; examples of long-lived intangible assets (assets lacking physical substance) include patents and trademarks; and examples of long-lived financial assets include investments in equity or debt securities issued by other companies. The scope of this reading is limited to long-lived tangible and intangible assets (hereafter, referred to for simplicity as long-lived assets).

The first issue in accounting for a long-lived asset is determining its cost at acquisition. The second issue is how to allocate the cost to expense over time. The costs of most long-lived assets are capitalised and then allocated as expenses in the profit or loss (income) statement over the period of time during which they are expected to provide economic benefits. The two main types of long-lived assets with costs that are typically not allocated over time are land, which is not depreciated, and those intangible assets with indefinite useful lives. Additional issues that arise are the treatment of subsequent costs incurred related to the asset, the use of the cost model versus the revaluation model, unexpected declines in the value of the asset, classification of the asset with respect to intent (for example, held for use or held for sale), and the derecognition of the asset.

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Reading 29  Long-Lived Assets Introduction
Long-lived assets , also referred to as non-current assets or long-term assets, are assets that are expected to provide economic benefits over a future period of time, typically greater than one year.1 Long-lived assets may be tangible, intangible, or financial assets. Examples of long-lived tangible assets, typically referred to as property, plant, and equipment and sometimes as fixed assets, include land, buildings, furniture and fixtures, machinery and equipment, and vehicles; examples of long-lived intangible assets (assets lacking physical substance) include patents and trademarks; and examples of long-lived financial assets include investments in equity or debt securities issued by other companies. The scope of this reading is limited to long-lived tangible and intangible assets (hereafter, referred to for simplicity as long-lived assets). The first issue in accounting for a long-lived asset is determining its cost at acquisition. The second issue is how to allocate the cost to expense over time. The costs of most long-lived assets are capitalised and then allocated as expenses in the profit or loss (income) statement over the period of time during which they are expected to provide economic benefits. The two main types of long-lived assets with costs that are typically not allocated over time are land, which is not depreciated, and those intangible assets with indefinite useful lives. Additional issues that arise are the treatment of subsequent costs incurred related to the asset, the use of the cost model versus the revaluation model, unexpected declines in the value of the asset, classification of the asset with respect to intent (for example, held for use or held for sale), and the derecognition of the asset. This reading is organised as follows. Section 2 describes and illustrates accounting for the acquisition of long-lived assets, with particular attention to the impact of ca





Reading 29  Long-Lived Assets (Layout)
#essay-tubes-session #has-images #reading-max
This reading is organised as follows:

Section 2 describes and illustrates accounting for the acquisition of long-lived assets, with particular attention to the impact of capitalizing versus expensing expenditures.

Section 3 describes the allocation of the costs of long-lived assets over their useful lives.

Section 4 discusses the revaluation model that is based on changes in the fair value of an asset.

Section 5 covers the concepts of impairment (unexpected decline in the value of an asset).

Section 6 describes accounting for the derecognition of long-lived assets.

Section 7 describes financial statement presentation, disclosures, and analysis of long-lived assets.

Section 8 discusses differences in financial reporting of investment property compared with property, plant, and equipment.

Section 9 describes accounting for leases.
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Reading 29  Long-Lived Assets Introduction
e of the cost model versus the revaluation model, unexpected declines in the value of the asset, classification of the asset with respect to intent (for example, held for use or held for sale), and the derecognition of the asset. <span>This reading is organised as follows. Section 2 describes and illustrates accounting for the acquisition of long-lived assets, with particular attention to the impact of capitalizing versus expensing expenditures. Section 3 describes the allocation of the costs of long-lived assets over their useful lives. Section 4 discusses the revaluation model that is based on changes in the fair value of an asset. Section 5 covers the concepts of impairment (unexpected decline in the value of an asset). Section 6 describes accounting for the derecognition of long-lived assets. Section 7 describes financial statement presentation, disclosures, and analysis of long-lived assets. Section 8 discusses differences in financial reporting of investment property compared with property, plant, and equipment. Section 9 describes accounting for leases. A summary is followed by practice problems. <span><body><html>




#spanish
El entrenador portugués desestimó los argumentos del City y Guardiola por los que desistieron de contratar al jugador chileno.
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Noticias, Estadísticas y Resultados de Premiership de Inglaterra - ESPNDEPORTES - ESPNDeportes
icas Estadísticas [imagelink] [imagelink] Manchester United/Man Utd via Getty Images 2hRob Dawson, ESPN Mourinho: Alexis no se mudó al United por dinero <span>El entrenador portugués desestimó los argumentos del City y Guardiola por los que desistieron de contratar al jugador chileno. [imagelink]play Guido Carrillo, nuevo jugador de Southampton (0:24) [imagelink]play0:24 9h Carrillo pasó al Southampton de Pellegrino El mediocampista ex-Estudiantes ya fue oficializado




#spanish
Las fuentes le han dicho a ESPN FC que Arsenal cotizaba inicialmente en 49.5 millones de dólares (£ 35 millones) por Sánchez en el período de transferencias de enero, a pesar de que el delantero tiene solo seis meses restantes en su contrato.
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Mourinho: Alexis no llegó al Manchester United por dinero
Te gustan las de arriba. "Esas son muy agradables, tan naranjas, tan redondas, tan llenas de jugo, pero no puedes llegar allí, así que dices: 'No quiero ir allí' o 'No me gustaron, prefiero las otras'. ' Me recuerda esa historia ". <span>Las fuentes le han dicho a ESPN FC que Arsenal cotizaba inicialmente en 49.5 millones de dólares (£ 35 millones) por Sánchez en el período de transferencias de enero, a pesar de que el delantero tiene solo seis meses restantes en su contrato. Al final, United no pagó una tarifa después de aceptar y permitir que Mkhitaryan se mude al Emirates. Sánchez ha firmado un contrato de cuatro años y medio en Old Trafford por valor de




#spanish
Pep Guardiola dijo que el City había decidido no firmar al jugador de 29 años en un intento por mantenerse "estable con los salarios", pero Mourinho sugirió que podría tratarse de pura envidia.
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Mourinho: Alexis no llegó al Manchester United por dinero
ciones. Decidió venir aquí y tienes que preguntarle por qué". Sánchez selló su movimiento a Old Trafford el lunes y se espera que haga su debut con el United en el enfrentamiento de la FA Cup con Yeovil Town en Huish Park el viernes. <span>Pep Guardiola dijo que el City había decidido no firmar al jugador de 29 años en un intento por mantenerse "estable con los salarios", pero Mourinho sugirió que podría tratarse de pura envidia. Agregó: "Creo que Alexis me recuerda un poco de la historia, no sé, no es una historia, casi una metáfora, cuando ves el árbol con naranjas increíbles en la parte superior del árbo




#spanish
Sánchez selló su movimiento a Old Trafford el lunes y se espera que haga su debut con el United en el enfrentamiento de la FA Cup con Yeovil Town en Huish Park el viernes.
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Mourinho: Alexis no llegó al Manchester United por dinero
ó más dinero que nosotros, creo que incluso Everton gastó más dinero que nosotros. No creo que ese sea el problema. "No sé. Alexis podía ir a todas partes. Tenía muchas opciones. Decidió venir aquí y tienes que preguntarle por qué". <span>Sánchez selló su movimiento a Old Trafford el lunes y se espera que haga su debut con el United en el enfrentamiento de la FA Cup con Yeovil Town en Huish Park el viernes. Pep Guardiola dijo que el City había decidido no firmar al jugador de 29 años en un intento por mantenerse "estable con los salarios", pero Mourinho sugirió que podría tratar




#spanish
Se informó que City se retiró de la carrera después de negarse a cumplir con el precio de venta del Arsenal y las demandas salariales de Sánchez. Mourinho, sin embargo, ha desestimado los reclamos.
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Mourinho: Alexis no llegó al Manchester United por dinero
el Manchester United sobre Manchester City no estuvo motivada por el dinero. United y City se enfrentaron cara a cara por el chileno este mes con el delantero moviéndose a Old Trafford y Henrikh Mkhitaryan firmando por el Arsenal a cambio. <span>Se informó que City se retiró de la carrera después de negarse a cumplir con el precio de venta del Arsenal y las demandas salariales de Sánchez. Mourinho, sin embargo, ha desestimado los reclamos. Lleva ESPN a todos lados Si quieres recibir alertas del Futbol Europeo, descarga la App ahora. espn.com/app » Él dijo en una conferencia de prensa el jueves: "Sé que si otros club




#spanish
Jose Mourinho: Alexis Sánchez no se mudó al Manchester United por dinero
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Mourinho: Alexis no llegó al Manchester United por dinero
stos colores" 5hESPN Digital La Copa del Rey se tiñe de azulgrana 5hJordi Blanco | ESPN Digital Jugadores que militan en Europa tienen pie y medio en el Mundial 5hIván Cañada América cierra pase de Romero a Independiente 6hRicardo Cariño <span>Jose Mourinho: Alexis Sánchez no se mudó al Manchester United por dinero El jugador chileno firmó contrato con el Manchester United el lunes. Manchester United/Man Utd via Getty Images Facebook Twitter Facebook Messenger Correo-e Comentar 9:20 AM CT Rob Daw




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Jose Mourinho: Alexis Sánchez no [...] al Manchester United por dinero
Answer
se mudó

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Jose Mourinho: Alexis Sánchez no se mudó al Manchester United por dinero

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Mourinho: Alexis no llegó al Manchester United por dinero
stos colores" 5hESPN Digital La Copa del Rey se tiñe de azulgrana 5hJordi Blanco | ESPN Digital Jugadores que militan en Europa tienen pie y medio en el Mundial 5hIván Cañada América cierra pase de Romero a Independiente 6hRicardo Cariño <span>Jose Mourinho: Alexis Sánchez no se mudó al Manchester United por dinero El jugador chileno firmó contrato con el Manchester United el lunes. Manchester United/Man Utd via Getty Images Facebook Twitter Facebook Messenger Correo-e Comentar 9:20 AM CT Rob Daw







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Se informó que City [...] de la carrera después de negarse a cumplir con el precio de venta del Arsenal y las demandas salariales de Sánchez.
Answer
se retiró

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Se informó que City se retiró de la carrera después de negarse a cumplir con el precio de venta del Arsenal y las demandas salariales de Sánchez. Mourinho, sin embargo, ha desestimado los reclamos. </

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Mourinho: Alexis no llegó al Manchester United por dinero
el Manchester United sobre Manchester City no estuvo motivada por el dinero. United y City se enfrentaron cara a cara por el chileno este mes con el delantero moviéndose a Old Trafford y Henrikh Mkhitaryan firmando por el Arsenal a cambio. <span>Se informó que City se retiró de la carrera después de negarse a cumplir con el precio de venta del Arsenal y las demandas salariales de Sánchez. Mourinho, sin embargo, ha desestimado los reclamos. Lleva ESPN a todos lados Si quieres recibir alertas del Futbol Europeo, descarga la App ahora. espn.com/app » Él dijo en una conferencia de prensa el jueves: "Sé que si otros club







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Se informó que City se retiró de la carrera después de negarse a cumplir con el precio de venta del Arsenal y las demandas salariales de Sánchez. Mourinho, sin embargo, ha [...] los reclamos.
Answer
desestimado

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Se informó que City se retiró de la carrera después de negarse a cumplir con el precio de venta del Arsenal y las demandas salariales de Sánchez. Mourinho, sin embargo, ha desestimado los reclamos.

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Mourinho: Alexis no llegó al Manchester United por dinero
el Manchester United sobre Manchester City no estuvo motivada por el dinero. United y City se enfrentaron cara a cara por el chileno este mes con el delantero moviéndose a Old Trafford y Henrikh Mkhitaryan firmando por el Arsenal a cambio. <span>Se informó que City se retiró de la carrera después de negarse a cumplir con el precio de venta del Arsenal y las demandas salariales de Sánchez. Mourinho, sin embargo, ha desestimado los reclamos. Lleva ESPN a todos lados Si quieres recibir alertas del Futbol Europeo, descarga la App ahora. espn.com/app » Él dijo en una conferencia de prensa el jueves: "Sé que si otros club







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Sánchez [...] su movimiento a Old Trafford el lunes y se espera que haga su debut con el United en el enfrentamiento de la FA Cup con Yeovil Town en Huish Park el viernes.
Answer
selló

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Sánchez selló su movimiento a Old Trafford el lunes y se espera que haga su debut con el United en el enfrentamiento de la FA Cup con Yeovil Town en Huish Park el viernes. <

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Mourinho: Alexis no llegó al Manchester United por dinero
ó más dinero que nosotros, creo que incluso Everton gastó más dinero que nosotros. No creo que ese sea el problema. "No sé. Alexis podía ir a todas partes. Tenía muchas opciones. Decidió venir aquí y tienes que preguntarle por qué". <span>Sánchez selló su movimiento a Old Trafford el lunes y se espera que haga su debut con el United en el enfrentamiento de la FA Cup con Yeovil Town en Huish Park el viernes. Pep Guardiola dijo que el City había decidido no firmar al jugador de 29 años en un intento por mantenerse "estable con los salarios", pero Mourinho sugirió que podría tratar







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Pep Guardiola dijo que el City había decidido no firmar al jugador de 29 años en un intento por mantenerse "estable con los salarios", pero Mourinho [...] que podría tratarse de pura envidia.
Answer
sugirió

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Pep Guardiola dijo que el City había decidido no firmar al jugador de 29 años en un intento por mantenerse "estable con los salarios", pero Mourinho sugirió que podría tratarse de pura envidia.

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Mourinho: Alexis no llegó al Manchester United por dinero
ciones. Decidió venir aquí y tienes que preguntarle por qué". Sánchez selló su movimiento a Old Trafford el lunes y se espera que haga su debut con el United en el enfrentamiento de la FA Cup con Yeovil Town en Huish Park el viernes. <span>Pep Guardiola dijo que el City había decidido no firmar al jugador de 29 años en un intento por mantenerse "estable con los salarios", pero Mourinho sugirió que podría tratarse de pura envidia. Agregó: "Creo que Alexis me recuerda un poco de la historia, no sé, no es una historia, casi una metáfora, cuando ves el árbol con naranjas increíbles en la parte superior del árbo







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Pep Guardiola dijo que el City había decidido no firmar al jugador de 29 años en un intento por mantenerse "estable con los salarios", pero Mourinho sugirió que podría tratarse de pura [...].
Answer
envidia

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><head> Pep Guardiola dijo que el City había decidido no firmar al jugador de 29 años en un intento por mantenerse "estable con los salarios", pero Mourinho sugirió que podría tratarse de pura envidia. <html>

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Mourinho: Alexis no llegó al Manchester United por dinero
ciones. Decidió venir aquí y tienes que preguntarle por qué". Sánchez selló su movimiento a Old Trafford el lunes y se espera que haga su debut con el United en el enfrentamiento de la FA Cup con Yeovil Town en Huish Park el viernes. <span>Pep Guardiola dijo que el City había decidido no firmar al jugador de 29 años en un intento por mantenerse "estable con los salarios", pero Mourinho sugirió que podría tratarse de pura envidia. Agregó: "Creo que Alexis me recuerda un poco de la historia, no sé, no es una historia, casi una metáfora, cuando ves el árbol con naranjas increíbles en la parte superior del árbo







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Las fuentes le han dicho a ESPN FC que Arsenal [...] inicialmente en 49.5 millones de dólares por Sánchez
Answer
cotizaba

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Las fuentes le han dicho a ESPN FC que Arsenal cotizaba inicialmente en 49.5 millones de dólares (£ 35 millones) por Sánchez en el período de transferencias de enero, a pesar de que el delantero tiene solo seis meses restantes en su contrato

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Mourinho: Alexis no llegó al Manchester United por dinero
Te gustan las de arriba. "Esas son muy agradables, tan naranjas, tan redondas, tan llenas de jugo, pero no puedes llegar allí, así que dices: 'No quiero ir allí' o 'No me gustaron, prefiero las otras'. ' Me recuerda esa historia ". <span>Las fuentes le han dicho a ESPN FC que Arsenal cotizaba inicialmente en 49.5 millones de dólares (£ 35 millones) por Sánchez en el período de transferencias de enero, a pesar de que el delantero tiene solo seis meses restantes en su contrato. Al final, United no pagó una tarifa después de aceptar y permitir que Mkhitaryan se mude al Emirates. Sánchez ha firmado un contrato de cuatro años y medio en Old Trafford por valor de







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Las fuentes le han dicho a ESPN FC que Arsenal cotizaba inicialmente en 49.5 millones de dólares (£ 35 millones) por Sánchez en el período de transferencias de enero, [...] que el delantero tiene solo seis meses restantes en su contrato.
Answer
a pesar de

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Las fuentes le han dicho a ESPN FC que Arsenal cotizaba inicialmente en 49.5 millones de dólares (£ 35 millones) por Sánchez en el período de transferencias de enero, a pesar de que el delantero tiene solo seis meses restantes en su contrato.

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Mourinho: Alexis no llegó al Manchester United por dinero
Te gustan las de arriba. "Esas son muy agradables, tan naranjas, tan redondas, tan llenas de jugo, pero no puedes llegar allí, así que dices: 'No quiero ir allí' o 'No me gustaron, prefiero las otras'. ' Me recuerda esa historia ". <span>Las fuentes le han dicho a ESPN FC que Arsenal cotizaba inicialmente en 49.5 millones de dólares (£ 35 millones) por Sánchez en el período de transferencias de enero, a pesar de que el delantero tiene solo seis meses restantes en su contrato. Al final, United no pagó una tarifa después de aceptar y permitir que Mkhitaryan se mude al Emirates. Sánchez ha firmado un contrato de cuatro años y medio en Old Trafford por valor de







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El [...] portugués desestimó los argumentos del City y Guardiola por los que desistieron de contratar al jugador chileno.
Answer
entrenador

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El entrenador portugués desestimó los argumentos del City y Guardiola por los que desistieron de contratar al jugador chileno.

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Noticias, Estadísticas y Resultados de Premiership de Inglaterra - ESPNDEPORTES - ESPNDeportes
icas Estadísticas [imagelink] [imagelink] Manchester United/Man Utd via Getty Images 2hRob Dawson, ESPN Mourinho: Alexis no se mudó al United por dinero <span>El entrenador portugués desestimó los argumentos del City y Guardiola por los que desistieron de contratar al jugador chileno. [imagelink]play Guido Carrillo, nuevo jugador de Southampton (0:24) [imagelink]play0:24 9h Carrillo pasó al Southampton de Pellegrino El mediocampista ex-Estudiantes ya fue oficializado







#spanish
El entrenador del Chelsea destacó que, considerando la inversiones del City y United, el título de liga de la temporada pasada fue un "pequeño milagro".
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Noticias, Estadísticas y Resultados de Premiership de Inglaterra - ESPNDEPORTES - ESPNDeportes
Arsenal La leyenda gunner salió al cruce de los rumores que afirmaban que había influido en el pase del chileno al United. [imagelink] Darren Walsh/Chelsea FC via Getty Images 2dLiam Twomey, ESPN Conte: Chelsea no puede gastar como Manchester <span>El entrenador del Chelsea destacó que, considerando la inversiones del City y United, el título de liga de la temporada pasada fue un "pequeño milagro". [imagelink]play João Castelo-Branco traz todas as novidades da movimentação do mercado na Inglaterra (6:34) [imagelink]play Liverpool se estrelló ante Swansea City (1:25) [imagelink]pla




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El entrenador del Chelsea destacó que, considerando las [...] del City y United, el título de liga de la temporada pasada fue un "pequeño milagro".
Answer
inversiones

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El entrenador del Chelsea destacó que, considerando la inversiones del City y United, el título de liga de la temporada pasada fue un "pequeño milagro".

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Noticias, Estadísticas y Resultados de Premiership de Inglaterra - ESPNDEPORTES - ESPNDeportes
Arsenal La leyenda gunner salió al cruce de los rumores que afirmaban que había influido en el pase del chileno al United. [imagelink] Darren Walsh/Chelsea FC via Getty Images 2dLiam Twomey, ESPN Conte: Chelsea no puede gastar como Manchester <span>El entrenador del Chelsea destacó que, considerando la inversiones del City y United, el título de liga de la temporada pasada fue un "pequeño milagro". [imagelink]play João Castelo-Branco traz todas as novidades da movimentação do mercado na Inglaterra (6:34) [imagelink]play Liverpool se estrelló ante Swansea City (1:25) [imagelink]pla







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El entrenador del Chelsea destacó que, considerando la inversiones del City y United, el título de liga de la temporada pasada fue un "pequeño [...]".
Answer
milagro

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El entrenador del Chelsea destacó que, considerando la inversiones del City y United, el título de liga de la temporada pasada fue un "pequeño milagro".

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Noticias, Estadísticas y Resultados de Premiership de Inglaterra - ESPNDEPORTES - ESPNDeportes
Arsenal La leyenda gunner salió al cruce de los rumores que afirmaban que había influido en el pase del chileno al United. [imagelink] Darren Walsh/Chelsea FC via Getty Images 2dLiam Twomey, ESPN Conte: Chelsea no puede gastar como Manchester <span>El entrenador del Chelsea destacó que, considerando la inversiones del City y United, el título de liga de la temporada pasada fue un "pequeño milagro". [imagelink]play João Castelo-Branco traz todas as novidades da movimentação do mercado na Inglaterra (6:34) [imagelink]play Liverpool se estrelló ante Swansea City (1:25) [imagelink]pla







#measure-theory #stochastics
Historically, the dividing line is 1933 when Grundbegriffe der Wahrscheinlichkeitsrech- nung (Foundations of the Theory of Probability) by Andrey Kolmogorov was published
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#measure-theory #stochastics
What Kolmogorov did was to say that the new real analysis that had started with the PhD thesis of Henri Lebesgue (1902) and had been rapidly generalized to integrals of real-valued functions on arbitrary spaces by Radon, Fr´echet, and others (called Lebesgue integration or abstract integration) should also be used in probability theory
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#multivariate-normal-distribution
If the covariance matrix is not full rank, then the multivariate normal distribution is degenerate and does not have a density.
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Multivariate normal distribution - Wikipedia
operatorname {sgn}(\rho ){\frac {\sigma _{Y}}{\sigma _{X}}}(x-\mu _{X})+\mu _{Y}.} This is because this expression, with sgn(ρ) replaced by ρ, is the best linear unbiased prediction of Y given a value of X. [4] Degenerate case[edit] <span>If the covariance matrix Σ {\displaystyle {\boldsymbol {\Sigma }}} is not full rank, then the multivariate normal distribution is degenerate and does not have a density. More precisely, it does not have a density with respect to k-dimensional Lebesgue measure (which is the usual measure assumed in calculus-level probability courses). Only random vectors




#measure-theory #stochastics
We are told that any linear function of a normal random vector is another normal random vector. But this gives rise to degenerate normal random vectors.
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#measure-theory
The Cantor ternary set is created by iteratively deleting the open middle third from a set of line segments.
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Cantor set - Wikipedia
bability 3.7 Cantor numbers 4 Variants 4.1 Smith–Volterra–Cantor set 4.2 Stochastic Cantor set 4.3 Cantor dust 5 Historical remarks 6 See also 7 Notes 8 References 9 External links Construction and formula of the ternary set[edit] <span>The Cantor ternary set C {\displaystyle {\mathcal {C}}} is created by iteratively deleting the open middle third from a set of line segments. One starts by deleting the open middle third (1/3, 2/3) from the interval [0, 1], leaving two line segments: [0, 1/3] ∪ [2/3, 1]. Next, the open middle third of each of these remaining




#measure-theory #stochastics
Also the notion that every DF corresponds to a probability distribution (which comes from measure-theoretic probability theory) allows much more bizarre distributions than master’s level theory can handle
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#measure-theory #stochastics
This distribution attributes probability zero to each of the intervals removed, and the lengths of these intervals add up to one. So all of the probability is concentrated on the Cantor set C ∞ , which is what the measure-theoretic jargon calls a set of Lebesgue measure zero, Lebesgue measure being the measure-theoretic analog of ordinary length.
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#measure-theory #stochastics
Lebesgue integration or abstract integration gives the same result as Riemann integration when the latter exists, so nothing you know from calculus changes, but a lot more functions are integrable
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#measure-theory
The Cantor function challenges naive intuitions about continuity and measure; though it is continuous everywhere and has zero derivative almost everywhere, goes from 0 to 1 as goes from 0 to 1, and takes on every value in between.
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Cantor function - Wikipedia
= 1/4. 200/243 becomes 0.21102 (or 0.211012222...) in base 3. The digits after the first 1 are replaced by 0s to produce 0.21. This is rewritten as 0.11. When read in base 2, this corresponds to 3/4, so c(200/243) = 3/4. Properties[edit] <span>The Cantor function challenges naive intuitions about continuity and measure; though it is continuous everywhere and has zero derivative almost everywhere, c ( x ) {\textstyle c(x)} goes from 0 to 1 as x {\textstyle x} goes from 0 to 1, and takes on every value in between. The Cantor function is the most frequently cited example of a real function that is uniformly continuous (precisely, it is Hölder continuous of exponent α = log 2/log 3) but not absolut




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#measure-theory
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The [...] function challenges naive intuitions about continuity and measure
Answer
Cantor

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The Cantor function challenges naive intuitions about continuity and measure; though it is continuous everywhere and has zero derivative almost everywhere, goes from 0 to 1 as goes from 0 to 1, and take

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Cantor function - Wikipedia
= 1/4. 200/243 becomes 0.21102 (or 0.211012222...) in base 3. The digits after the first 1 are replaced by 0s to produce 0.21. This is rewritten as 0.11. When read in base 2, this corresponds to 3/4, so c(200/243) = 3/4. Properties[edit] <span>The Cantor function challenges naive intuitions about continuity and measure; though it is continuous everywhere and has zero derivative almost everywhere, c ( x ) {\textstyle c(x)} goes from 0 to 1 as x {\textstyle x} goes from 0 to 1, and takes on every value in between. The Cantor function is the most frequently cited example of a real function that is uniformly continuous (precisely, it is Hölder continuous of exponent α = log 2/log 3) but not absolut







Flashcard 1738560113932

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#measure-theory
Question
although the Cantor function is [...], goes from 0 to 1 as goes from 0 to 1, and takes on every value in between.
Answer
continuous everywhere and has zero derivative almost everywhere

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The Cantor function challenges naive intuitions about continuity and measure; though it is continuous everywhere and has zero derivative almost everywhere, goes from 0 to 1 as goes from 0 to 1, and takes on every value in between.

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Cantor function - Wikipedia
= 1/4. 200/243 becomes 0.21102 (or 0.211012222...) in base 3. The digits after the first 1 are replaced by 0s to produce 0.21. This is rewritten as 0.11. When read in base 2, this corresponds to 3/4, so c(200/243) = 3/4. Properties[edit] <span>The Cantor function challenges naive intuitions about continuity and measure; though it is continuous everywhere and has zero derivative almost everywhere, c ( x ) {\textstyle c(x)} goes from 0 to 1 as x {\textstyle x} goes from 0 to 1, and takes on every value in between. The Cantor function is the most frequently cited example of a real function that is uniformly continuous (precisely, it is Hölder continuous of exponent α = log 2/log 3) but not absolut







Flashcard 1738561686796

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#measure-theory #stochastics
Question
[...] gives the same result as Riemann integration when the latter exists
Answer
Lebesgue integration

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Lebesgue integration or abstract integration gives the same result as Riemann integration when the latter exists, so nothing you know from calculus changes, but a lot more functions are integrable <

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Flashcard 1738563259660

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#measure-theory #stochastics
Question
abstract integration gives the same result as [...] when the latter exists
Answer
Riemann integration

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Lebesgue integration or abstract integration gives the same result as Riemann integration when the latter exists, so nothing you know from calculus changes, but a lot more functions are integrable

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Flashcard 1738564832524

Tags
#measure-theory #stochastics
Question
This Cantor distribution attributes [...probability...] to each of the intervals removed
Answer
probability zero

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This distribution attributes probability zero to each of the intervals removed, and the lengths of these intervals add up to one. So all of the probability is concentrated on the Cantor set C ∞ , which is what the measure-theoretic

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Flashcard 1738566405388

Tags
#measure-theory #stochastics
Question
In the Cantor devil's staircase, the lengths of the removed intervals add up to [...].
Answer
one

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This distribution attributes probability zero to each of the intervals removed, and the lengths of these intervals add up to one. So all of the probability is concentrated on the Cantor set C ∞ , which is what the measure-theoretic jargon calls a set of Lebesgue measure zero, Lebesgue measure being the measure-th

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Flashcard 1738568240396

Tags
#measure-theory #stochastics
Question
the Cantor set C∞ is a set of Lebesgue measure [...]
Answer
Lebesgue measure zero

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bution attributes probability zero to each of the intervals removed, and the lengths of these intervals add up to one. So all of the probability is concentrated on the Cantor set C ∞ , which is what the measure-theoretic jargon calls a set of <span>Lebesgue measure zero, Lebesgue measure being the measure-theoretic analog of ordinary length. <span><body><html>

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Flashcard 1738569813260

Tags
#measure-theory #stochastics
Question
In [...theory...] every distribution function corresponds to a probability distribution
Answer
measure-theoretic probability theory

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Also the notion that every DF corresponds to a probability distribution (which comes from measure-theoretic probability theory) allows much more bizarre distributions than master’s level theory can handle

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Flashcard 1738581871884

Tags
#measure-theory #probability-theory
Question
Historically, the dividing line for probability is [...] when Andrey Kolmogorov published Foundations of the Theory of Probability
Answer
1933

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Historically, the dividing line is 1933 when Grundbegriffe der Wahrscheinlichkeitsrech- nung (Foundations of the Theory of Probability) by Andrey Kolmogorov was published

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Flashcard 1738583444748

Tags
#measure-theory #stochastics
Question
Kolmogorov applied the new [...] to probability theory
Answer
real analysis

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What Kolmogorov did was to say that the new real analysis that had started with the PhD thesis of Henri Lebesgue (1902) and had been rapidly generalized to integrals of real-valued functions on arbitrary spaces by Radon, Fr´echet, and others (

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Flashcard 1738585017612

Tags
#measure-theory #stochastics
Question
the new real analysis started with the PhD thesis of [...] (1902)
Answer
Henri Lebesgue

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What Kolmogorov did was to say that the new real analysis that had started with the PhD thesis of Henri Lebesgue (1902) and had been rapidly generalized to integrals of real-valued functions on arbitrary spaces by Radon, Fr´echet, and others (called Lebesgue integration or abstract integration) sh

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Flashcard 1738586590476

Tags
#measure-theory #stochastics
Question
Radon, Fréchet, and others generalized the new real analysis to [...of...on...]
Answer
integrals of real-valued functions on arbitrary spaces

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What Kolmogorov did was to say that the new real analysis that had started with the PhD thesis of Henri Lebesgue (1902) and had been rapidly generalized to integrals of real-valued functions on arbitrary spaces by Radon, Fr´echet, and others (called Lebesgue integration or abstract integration) should also be used in probability theory

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Flashcard 1738588949772

Tags
#multivariate-normal-distribution
Question
If [...], then the multivariate normal distribution is degenerate and does not have a density.
Answer
the covariance matrix is not full rank

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If the covariance matrix is not full rank, then the multivariate normal distribution is degenerate and does not have a density.

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Multivariate normal distribution - Wikipedia
operatorname {sgn}(\rho ){\frac {\sigma _{Y}}{\sigma _{X}}}(x-\mu _{X})+\mu _{Y}.} This is because this expression, with sgn(ρ) replaced by ρ, is the best linear unbiased prediction of Y given a value of X. [4] Degenerate case[edit] <span>If the covariance matrix Σ {\displaystyle {\boldsymbol {\Sigma }}} is not full rank, then the multivariate normal distribution is degenerate and does not have a density. More precisely, it does not have a density with respect to k-dimensional Lebesgue measure (which is the usual measure assumed in calculus-level probability courses). Only random vectors







Flashcard 1738591571212

Tags
#measure-theory #stochastics
Question
We are told that any linear function of a normal random vector is another normal random vector. But this gives rise to [...].
Answer
degenerate normal random vectors

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We are told that any linear function of a normal random vector is another normal random vector. But this gives rise to degenerate normal random vectors.

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Flashcard 1738593144076

Tags
#measure-theory
Question
The [...] is created by iteratively deleting the open middle third from a set of line segments.
Answer
Cantor ternary set

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The Cantor ternary set is created by iteratively deleting the open middle third from a set of line segments.

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Cantor set - Wikipedia
bability 3.7 Cantor numbers 4 Variants 4.1 Smith–Volterra–Cantor set 4.2 Stochastic Cantor set 4.3 Cantor dust 5 Historical remarks 6 See also 7 Notes 8 References 9 External links Construction and formula of the ternary set[edit] <span>The Cantor ternary set C {\displaystyle {\mathcal {C}}} is created by iteratively deleting the open middle third from a set of line segments. One starts by deleting the open middle third (1/3, 2/3) from the interval [0, 1], leaving two line segments: [0, 1/3] ∪ [2/3, 1]. Next, the open middle third of each of these remaining







Flashcard 1738595765516

Tags
#measure-theory
Question
The Cantor ternary set is created by iteratively deleting [...] from a set of line segments.
Answer
the open middle third

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The Cantor ternary set is created by iteratively deleting the open middle third from a set of line segments.

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Cantor set - Wikipedia
bability 3.7 Cantor numbers 4 Variants 4.1 Smith–Volterra–Cantor set 4.2 Stochastic Cantor set 4.3 Cantor dust 5 Historical remarks 6 See also 7 Notes 8 References 9 External links Construction and formula of the ternary set[edit] <span>The Cantor ternary set C {\displaystyle {\mathcal {C}}} is created by iteratively deleting the open middle third from a set of line segments. One starts by deleting the open middle third (1/3, 2/3) from the interval [0, 1], leaving two line segments: [0, 1/3] ∪ [2/3, 1]. Next, the open middle third of each of these remaining








Reading 31  Non-Current (Long-Term) Liabilities (Intro)
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A non-current liability (long-term liability) broadly represents a probable sacrifice of economic benefits in periods generally greater than one year in the future. Common types of non-current liabilities reported in a company’s financial statements include long-term debt (e.g., bonds payable, long-term notes payable), finance leases, pension liabilities, and deferred tax liabilities. This reading focuses on bonds payable and leases. Pension liabilities are also introduced.
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Reading 31  Non-Current (Long-Term) Liabilities Introduction
A non-current liability (long-term liability) broadly represents a probable sacrifice of economic benefits in periods generally greater than one year in the future. Common types of non-current liabilities reported in a company’s financial statements include long-term debt (e.g., bonds payable, long-term notes payable), finance leases, pension liabilities, and deferred tax liabilities. This reading focuses on bonds payable and leases. Pension liabilities are also introduced. This reading is organised as follows. Section 2 describes and illustrates the accounting for long-term bonds, including the issuance of bonds, the recording of interest exp





Reading 31  Non-Current (Long-Term) Liabilities Introduction (Layout)
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This reading is organised as follows:

Section 2 describes and illustrates the accounting for long-term bonds, including the issuance of bonds, the recording of interest expense and interest payments, the amortisation of any discount or premium, the derecognition of debt, and the disclosure of information about debt financings. In discussing the financial statement effects and analyses of these issues, we focus on solvency and coverage ratios.

Section 3 discusses leases, including benefits of leasing and accounting for leases by both lessees and lessors.

Section 4 provides an introduction to pension accounting and the resulting non-current liabilities.

Section 5 discusses the use of leverage and coverage ratios in evaluating solvency.

Section 6 concludes and summarises the reading.

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Reading 31  Non-Current (Long-Term) Liabilities Introduction
include long-term debt (e.g., bonds payable, long-term notes payable), finance leases, pension liabilities, and deferred tax liabilities. This reading focuses on bonds payable and leases. Pension liabilities are also introduced. <span>This reading is organised as follows. Section 2 describes and illustrates the accounting for long-term bonds, including the issuance of bonds, the recording of interest expense and interest payments, the amortisation of any discount or premium, the derecognition of debt, and the disclosure of information about debt financings. In discussing the financial statement effects and analyses of these issues, we focus on solvency and coverage ratios. Section 3 discusses leases, including benefits of leasing and accounting for leases by both lessees and lessors. Section 4 provides an introduction to pension accounting and the resulting non-current liabilities. Section 5 discusses the use of leverage and coverage ratios in evaluating solvency. Section 6 concludes and summarises the reading. Practice problems in the CFA Institute format are included after the reading. <span><body><html>





Reading 34  Corporate Governance and ESG: An Introduction (Intro)
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Weak corporate governance is a common thread found in many company failures. A lack of proper oversight by the board of directors, inadequate protection for minority shareholders, and incentives at companies that promote excessive risk taking are just a few of the examples that can be problematic for a company. Poor corporate governance practices resulted in several high-profile accounting scandals and corporate bankruptcies over the past several decades and have been cited as significantly contributing to the 2008–2009 global financial crisis.

In response to these company failures, regulations have been introduced to promote stronger governance practices and protect financial markets and investors. Academics, policy makers, and other groups have published numerous works discussing the benefits of good corporate governance and identifying core corporate governance principles believed to be essential to ensuring sound capital markets and the stability of the financial system.

The investment community has also demonstrated a greater appreciation for the importance of good corporate governance. The assessment of a company’s corporate governance system, including consideration of conflicts of interest and transparency of operations, has increasingly become an essential factor in the investment decision-making process. Additionally, investors have become more attentive to environment and social issues related to a company’s operations. Collectively, these areas often are referred to as environmental, social, and governance ( ESG ).

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Reading 34  Corporate Governance and ESG: An Introduction
Weak corporate governance is a common thread found in many company failures. A lack of proper oversight by the board of directors, inadequate protection for minority shareholders, and incentives at companies that promote excessive risk taking are just a few of the examples that can be problematic for a company. Poor corporate governance practices resulted in several high-profile accounting scandals and corporate bankruptcies over the past several decades and have been cited as significantly contributing to the 2008–2009 global financial crisis. In response to these company failures, regulations have been introduced to promote stronger governance practices and protect financial markets and investors. Academics, policy makers, and other groups have published numerous works discussing the benefits of good corporate governance and identifying core corporate governance principles believed to be essential to ensuring sound capital markets and the stability of the financial system. The investment community has also demonstrated a greater appreciation for the importance of good corporate governance. The assessment of a company’s corporate governance system, including consideration of conflicts of interest and transparency of operations, has increasingly become an essential factor in the investment decision-making process. Additionally, investors have become more attentive to environment and social issues related to a company’s operations. Collectively, these areas often are referred to as environmental, social, and governance ( ESG ). Section 2 of this reading provides an overview of corporate governance, including its underlying principles and theories. Section 3 discusses the various stakeholders of a





Reading 34  Corporate Governance and ESG: An Introduction (Layout)
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Section 2 of this reading provides an overview of corporate governance, including its underlying principles and theories.

Section 3 discusses the various stakeholders of a company and conflicts of interest that exist among stakeholder groups.

Section 4 describes stakeholder management, reflecting how companies manage their relationships with stakeholders.

Section 5 focuses on the role of the board of directors and its committees as overseers of the company.

Section 6 explores certain key factors that affect corporate governance.

Section 7 highlights the risks and benefits that underlie a corporate governance structure.

Section 8 provides an overview of corporate governance issues relevant for investment professionals.

Section 9 discusses the growing effect of environmental and social considerations in the investment process.
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Reading 34  Corporate Governance and ESG: An Introduction
ing process. Additionally, investors have become more attentive to environment and social issues related to a company’s operations. Collectively, these areas often are referred to as environmental, social, and governance ( ESG ). <span>Section 2 of this reading provides an overview of corporate governance, including its underlying principles and theories. Section 3 discusses the various stakeholders of a company and conflicts of interest that exist among stakeholder groups. Section 4 describes stakeholder management, reflecting how companies manage their relationships with stakeholders. Section 5 focuses on the role of the board of directors and its committees as overseers of the company. Section 6 explores certain key factors that affect corporate governance. Section 7 highlights the risks and benefits that underlie a corporate governance structure. Section 8 provides an overview of corporate governance issues relevant for investment professionals. Finally, Section 9 discusses the growing effect of environmental and social considerations in the investment process. <span><body><html>





Reading 35  Capital Budgeting (Intro)
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Capital budgeting is the process that companies use for decision making on capital projects—those projects with a life of a year or more. This is a fundamental area of knowledge for financial analysts for many reasons.

  • First, capital budgeting is very important for corporations. Capital projects, which make up the long-term asset portion of the balance sheet, can be so large that sound capital budgeting decisions ultimately decide the future of many corporations. Capital decisions cannot be reversed at a low cost, so mistakes are very costly. Indeed, the real capital investments of a company describe a company better than its working capital or capital structures, which are intangible and tend to be similar for many corporations.

  • Second, the principles of capital budgeting have been adapted for many other corporate decisions, such as investments in working capital, leasing, mergers and acquisitions, and bond refunding.

  • Third, the valuation principles used in capital budgeting are similar to the valuation principles used in security analysis and portfolio management. Many of the methods used by security analysts and portfolio managers are based on capital budgeting methods. Conversely, there have been innovations in security analysis and portfolio management that have also been adapted to capital budgeting.

  • Finally, although analysts have a vantage point outside the company, their interest in valuation coincides with the capital budgeting focus of maximizing shareholder value. Because capital budgeting information is not ordinarily available outside the company, the analyst may attempt to estimate the process, within reason, at least for companies that are not too complex. Further, analysts may be able to appraise the quality of the company’s capital budgeting process—for example, on the basis of whether the company has an accounting focus or an economic focus.

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Reading 35  Capital Budgeting Introduction
Capital budgeting is the process that companies use for decision making on capital projects—those projects with a life of a year or more. This is a fundamental area of knowledge for financial analysts for many reasons. First, capital budgeting is very important for corporations. Capital projects, which make up the long-term asset portion of the balance sheet, can be so large that sound capital budgeting decisions ultimately decide the future of many corporations. Capital decisions cannot be reversed at a low cost, so mistakes are very costly. Indeed, the real capital investments of a company describe a company better than its working capital or capital structures, which are intangible and tend to be similar for many corporations. Second, the principles of capital budgeting have been adapted for many other corporate decisions, such as investments in working capital, leasing, mergers and acquisitions, and bond refunding. Third, the valuation principles used in capital budgeting are similar to the valuation principles used in security analysis and portfolio management. Many of the methods used by security analysts and portfolio managers are based on capital budgeting methods. Conversely, there have been innovations in security analysis and portfolio management that have also been adapted to capital budgeting. Finally, although analysts have a vantage point outside the company, their interest in valuation coincides with the capital budgeting focus of maximizing shareholder value. Because capital budgeting information is not ordinarily available outside the company, the analyst may attempt to estimate the process, within reason, at least for companies that are not too complex. Further, analysts may be able to appraise the quality of the company’s capital budgeting process—for example, on the basis of whether the company has an accounting focus or an economic focus. This reading is organized as follows: Section 2 presents the steps in a typical capital budgeting process. After introducing the basic principles of capital budgeti





Reading 35  Capital Budgeting (Layout)
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This reading is organized as follows:

Section 2 presents the steps in a typical capital budgeting process.

Section 3, introduces the basic principles of capital budgeting.

Section 4 we discuss the criteria by which a decision to invest in a project may be made.
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Reading 35  Capital Budgeting Introduction
ies that are not too complex. Further, analysts may be able to appraise the quality of the company’s capital budgeting process—for example, on the basis of whether the company has an accounting focus or an economic focus. <span>This reading is organized as follows: Section 2 presents the steps in a typical capital budgeting process. After introducing the basic principles of capital budgeting in Section 3, in Section 4 we discuss the criteria by which a decision to invest in a project may be made. <span><body><html>





Reading 36  Cost of Capital (Intro)
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A company grows by making investments that are expected to increase revenues and profits. The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds.

The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well.

Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project.

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Reading 36  Cost of Capital Introduction
A company grows by making investments that are expected to increase revenues and profits. The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimat





Reading 36  Cost of Capital (Layout)
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This reading is organized as follows:

In Section 2 we introduce the cost of capital and its basic computation.

Section 3 presents a selection of methods for estimating the costs of the various sources of capital.

Section 4 discusses issues an analyst faces in using the cost of capital.
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Reading 36  Cost of Capital Introduction
r, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. <span>This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimating the costs of the various sources of capital. Section 4 discusses issues an analyst faces in using the cost of capital. A summary concludes the reading. <span><body><html>





Reading 45  Security Market Indexes (Intro)
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Investors gather and analyze vast amounts of information about security markets on a continual basis. Because this work can be both time consuming and data intensive, investors often use a single measure that consolidates this information and reflects the performance of an entire security market.

Security market indexes were first introduced as a simple measure to reflect the performance of the US stock market. Since then, security market indexes have evolved into important multi-purpose tools that help investors track the performance of various security markets, estimate risk, and evaluate the performance of investment managers. They also form the basis for new investment products.

 

in·dex, noun (pl. in·dex·es or in·di·ces) Latin indic-, index, from indicare to indicate: an indicator, sign, or measure of something.

ORIGIN OF MARKET INDEXES

Investors had access to regularly published data on individual security prices in London as early as 1698, but nearly 200 years passed before they had access to a simple indicator to reflect security market information.1 To give readers a sense of how the US stock market in general performed on a given day, publishers Charles H. Dow and Edward D. Jones introduced the Dow Jones Average, the world’s first security market index, in 1884.2 The index, which appeared in The Customers’ Afternoon Letter, consisted of the stocks of nine railroads and two industrial companies. It eventually became the Dow Jones Transportation Average.3Convinced that industrial companies, rather than railroads, would be “the great speculative market” of the future, Dow and Jones introduced a second index in May 1896—the Dow Jones Industrial Average (DJIA). It had an initial value of 40.94 and consisted of 12 stocks from major US industries.4,5 Today, investors can choose from among thousands of indexes to measure and monitor different security markets and asset classes.

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Reading 45  Security Market Indexes (Intro)
Investors gather and analyze vast amounts of information about security markets on a continual basis. Because this work can be both time consuming and data intensive, investors often use a single measure that consolidates this information and reflects the performance of an entire security market. Security market indexes were first introduced as a simple measure to reflect the performance of the US stock market. Since then, security market indexes have evolved into important multi-purpose tools that help investors track the performance of various security markets, estimate risk, and evaluate the performance of investment managers. They also form the basis for new investment products.   in·dex, noun (pl. in·dex·es or in·di·ces) Latin indic-, index, from indicare to indicate: an indicator, sign, or measure of something. ORIGIN OF MARKET INDEXES Investors had access to regularly published data on individual security prices in London as early as 1698, but nearly 200 years passed before they had access to a simple indicator to reflect security market information.1 To give readers a sense of how the US stock market in general performed on a given day, publishers Charles H. Dow and Edward D. Jones introduced the Dow Jones Average, the world’s first security market index, in 1884.2 The index, which appeared in The Customers’ Afternoon Letter, consisted of the stocks of nine railroads and two industrial companies. It eventually became the Dow Jones Transportation Average.3Convinced that industrial companies, rather than railroads, would be “the great speculative market” of the future, Dow and Jones introduced a second index in May 1896—the Dow Jones Industrial Average (DJIA). It had an initial value of 40.94 and consisted of 12 stocks from major US industries.4 , 5 Today, investors can choose from among thousands of indexes to measure and monitor different security markets and asset classes. This reading is organized as follows. Section 2 defines a security market index and explains how to calculate the price return and total return of an index for a single per





Reading 45  Security Market Indexes (Layout)
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This reading is organized as follows:

Section 2 defines a security market index and explains how to calculate the price return and total return of an index for a single period and over multiple periods.

Section 3 describes how indexes are constructed and managed.

Section 4 discusses the use of market indexes.

Sections 5, 6, and 7 discuss various types of indexes,

Section 8 summarizes the reading.
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Reading 45  Security Market Indexes (Intro)
e (DJIA). It had an initial value of 40.94 and consisted of 12 stocks from major US industries.4 , 5 Today, investors can choose from among thousands of indexes to measure and monitor different security markets and asset classes. <span>This reading is organized as follows. Section 2 defines a security market index and explains how to calculate the price return and total return of an index for a single period and over multiple periods. Section 3 describes how indexes are constructed and managed. Section 4 discusses the use of market indexes. Sections 5, 6, and 7 discuss various types of indexes, and the final section summarizes the reading. Practice problems follow the conclusions and summary. <span><body><html>





Reading 46  Market Efficiency (Intro)
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Market efficiency concerns the extent to which market prices incorporate available information. If market prices do not fully incorporate information, then opportunities may exist to make a profit from the gathering and processing of information. The subject of market efficiency is, therefore, of great interest to investment managers, as illustrated in Example 1.

EXAMPLE 1 Market Efficiency and Active Manager Selection

The chief investment officer (CIO) of a major university endowment fund has listed eight steps in the active manager selection process that can be applied both to traditional investments (e.g., common equity and fixed-income securities) and to alternative investments (e.g., private equity, hedge funds, and real assets). The first step specified is the evaluation of market opportunity:

What is the opportunity and why is it there? To answer this question we start by studying capital markets and the types of managers operating within those markets. We identify market inefficiencies and try to understand their causes, such as regulatory structures or behavioral biases. We can rule out many broad groups of managers and strategies by simply determining that the degree of market inefficiency necessary to support a strategy is implausible. Importantly, we consider the past history of active returns meaningless unless we understand why markets will allow those active returns to continue into the future.1

The CIO’s description underscores the importance of not assuming that past active returns that might be found in a historical dataset will repeat themselves in the future. Active returns refer to returns earned by strategies that do not assume that all information is fully reflected in market prices.

Governments and market regulators also care about the extent to which market prices incorporate information. Efficient markets imply informative prices—prices that accurately reflect available information about fundamental values. In market-based economies, market prices help determine which companies (and which projects) obtain capital. If these prices do not efficiently incorporate information about a company’s prospects, then it is possible that funds will be misdirected. By contrast, prices that are informative help direct scarce resources and funds available for investment to their highest-valued uses.2 Informative prices thus promote economic growth. The efficiency of a country’s capital markets (in which businesses raise financing) is an important characteristic of a well-functioning financial system.

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Reading 46  Market Efficiency (Intro)
Market efficiency concerns the extent to which market prices incorporate available information. If market prices do not fully incorporate information, then opportunities may exist to make a profit from the gathering and processing of information. The subject of market efficiency is, therefore, of great interest to investment managers, as illustrated in Example 1. EXAMPLE 1 Market Efficiency and Active Manager Selection The chief investment officer (CIO) of a major university endowment fund has listed eight steps in the active manager selection process that can be applied both to traditional investments (e.g., common equity and fixed-income securities) and to alternative investments (e.g., private equity, hedge funds, and real assets). The first step specified is the evaluation of market opportunity: What is the opportunity and why is it there? To answer this question we start by studying capital markets and the types of managers operating within those markets. We identify market inefficiencies and try to understand their causes, such as regulatory structures or behavioral biases. We can rule out many broad groups of managers and strategies by simply determining that the degree of market inefficiency necessary to support a strategy is implausible. Importantly, we consider the past history of active returns meaningless unless we understand why markets will allow those active returns to continue into the future.1 The CIO’s description underscores the importance of not assuming that past active returns that might be found in a historical dataset will repeat themselves in the future. Active returns refer to returns earned by strategies that do not assume that all information is fully reflected in market prices. Governments and market regulators also care about the extent to which market prices incorporate information. Efficient markets imply informative prices—prices that accurately reflect available information about fundamental values. In market-based economies, market prices help determine which companies (and which projects) obtain capital. If these prices do not efficiently incorporate information about a company’s prospects, then it is possible that funds will be misdirected. By contrast, prices that are informative help direct scarce resources and funds available for investment to their highest-valued uses.2 Informative prices thus promote economic growth. The efficiency of a country’s capital markets (in which businesses raise financing) is an important characteristic of a well-functioning financial system. The remainder of this reading is organized as follows. Section 2 provides specifics on how the efficiency of an asset market is described and discusses the factors affectin





Reading 46  Market Efficiency (Layout)
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The remainder of this reading is organized as follows:

Section 2 provides specifics on how the efficiency of an asset market is described and discusses the factors affecting (i.e., contributing to and impeding) market efficiency.

Section 3 presents an influential three-way classification of the efficiency of security markets and discusses its implications for fundamental analysis, technical analysis, and portfolio management.

Section 4 presents several market anomalies (apparent market inefficiencies that have received enough attention to be individually identified and named) and describes how these anomalies relate to investment strategies.

Section 5 introduces behavioral finance and how that field of study relates to market efficiency.
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Reading 46  Market Efficiency (Intro)
eir highest-valued uses.2 Informative prices thus promote economic growth. The efficiency of a country’s capital markets (in which businesses raise financing) is an important characteristic of a well-functioning financial system. <span>The remainder of this reading is organized as follows. Section 2 provides specifics on how the efficiency of an asset market is described and discusses the factors affecting (i.e., contributing to and impeding) market efficiency. Section 3 presents an influential three-way classification of the efficiency of security markets and discusses its implications for fundamental analysis, technical analysis, and portfolio management. Section 4 presents several market anomalies (apparent market inefficiencies that have received enough attention to be individually identified and named) and describes how these anomalies relate to investment strategies. Section 5 introduces behavioral finance and how that field of study relates to market efficiency. A summary concludes the reading. <span><body><html>





Reading 47  Overview of Equity Securities (Intro)
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Equity securities represent ownership claims on a company’s net assets. As an asset class, equity plays a fundamental role in investment analysis and portfolio management because it represents a significant portion of many individual and institutional investment portfolios.

The study of equity securities is important for many reasons. First, the decision on how much of a client’s portfolio to allocate to equities affects the risk and return characteristics of the entire portfolio. Second, different types of equity securities have different ownership claims on a company’s net assets, which affect their risk and return characteristics in different ways. Finally, variations in the features of equity securities are reflected in their market prices, so it is important to understand the valuation implications of these features.

This reading provides an overview of equity securities and their different features and establishes the background required to analyze and value equity securities in a global context. It addresses the following questions:

  • What distinguishes common shares from preference shares, and what purposes do these securities serve in financing a company’s operations?

  • What are convertible preference shares, and why are they often used to raise equity for unseasoned or highly risky companies?

  • What are private equity securities, and how do they differ from public equity securities?

  • What are depository receipts and their various types, and what is the rationale for investing in them?

  • What are the risk factors involved in investing in equity securities?

  • How do equity securities create company value?

  • What is the relationship between a company’s cost of equity, its return on equity, and investors’ required rate of return?

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Reading 47  Overview of Equity Securities (Intro)
Equity securities represent ownership claims on a company’s net assets. As an asset class, equity plays a fundamental role in investment analysis and portfolio management because it represents a significant portion of many individual and institutional investment portfolios. The study of equity securities is important for many reasons. First, the decision on how much of a client’s portfolio to allocate to equities affects the risk and return characteristics of the entire portfolio. Second, different types of equity securities have different ownership claims on a company’s net assets, which affect their risk and return characteristics in different ways. Finally, variations in the features of equity securities are reflected in their market prices, so it is important to understand the valuation implications of these features. This reading provides an overview of equity securities and their different features and establishes the background required to analyze and value equity securities in a global context. It addresses the following questions: What distinguishes common shares from preference shares, and what purposes do these securities serve in financing a company’s operations? What are convertible preference shares, and why are they often used to raise equity for unseasoned or highly risky companies? What are private equity securities, and how do they differ from public equity securities? What are depository receipts and their various types, and what is the rationale for investing in them? What are the risk factors involved in investing in equity securities? How do equity securities create company value? What is the relationship between a company’s cost of equity, its return on equity, and investors’ required rate of return? The remainder of this reading is organized as follows. Section 2 provides an overview of global equity markets and their historical performance. Section 3 examines





Reading 47  Overview of Equity Securities (Layout)
#has-images #lingote-de-oro-session #reading-ana-de-la-garza
The remainder of this reading is organized as follows:

Section 2 provides an overview of global equity markets and their historical performance.

Section 3 examines the different types and characteristics of equity securities.

Section 4 outlines the differences between public and private equity securities.

Section 5 provides an overview of the various types of equity securities listed and traded in global markets.

Section 6 discusses the risk and return characteristics of equity securities.

Section 7 examines the role of equity securities in creating company value and the relationship between a company’s cost of equity, its return on equity, and investors’ required rate of return.

The final section summarizes the reading.
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Reading 47  Overview of Equity Securities (Intro)
equity securities? How do equity securities create company value? What is the relationship between a company’s cost of equity, its return on equity, and investors’ required rate of return? <span>The remainder of this reading is organized as follows. Section 2 provides an overview of global equity markets and their historical performance. Section 3 examines the different types and characteristics of equity securities, and Section 4 outlines the differences between public and private equity securities. Section 5 provides an overview of the various types of equity securities listed and traded in global markets. Section 6 discusses the risk and return characteristics of equity securities. Section 7 examines the role of equity securities in creating company value and the relationship between a company’s cost of equity, its return on equity, and investors’ required rate of return. The final section summarizes the reading. <span><body><html>





Reading 50  Fixed-Income Securities: Defining Elements (Intro)
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Judged by total market value, fixed-income securities constitute the most prevalent means of raising capital globally. A fixed-income security is an instrument that allows governments, companies, and other types of issuers to borrow money from investors. Any borrowing of money is debt. The promised payments on fixed-income securities are, in general, contractual (legal) obligations of the issuer to the investor. For companies, fixed-income securities contrast to common shares in not having ownership rights. Payment of interest and repayment of principal (amount borrowed) are a prior claim on the company’s earnings and assets compared with the claim of common shareholders. Thus, a company’s fixed-income securities have, in theory, lower risk than that company’s common shares.

In portfolio management, fixed-income securities fulfill several important roles. They are a prime means by which investors—individual and institutional—can prepare to fund, with some degree of safety, known future obligations such as tuition payments or pension obligations. The correlations of fixed-income securities with common shares vary, but adding fixed-income securities to portfolios including common shares is usually an effective way of obtaining diversification benefits.

Among the questions this reading addresses are the following:

  • What set of features define a fixed-income security, and how do these features determine the scheduled cash flows?

  • What are the legal, regulatory, and tax considerations associated with a fixed-income security, and why are these considerations important for investors?

  • What are the common structures regarding the payment of interest and repayment of principal?

  • What types of provisions may affect the disposal or redemption of fixed-income securities?

Embarking on the study of fixed-income securities, please note that the terms “fixed-income securities,” “debt securities,” and “bonds” are often used interchangeably by experts and non-experts alike. We will also follow this convention, and where any nuance of meaning is intended, it will be made clear.1

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Reading 50  Fixed-Income Securities: Defining Elements (Intro)
Judged by total market value, fixed-income securities constitute the most prevalent means of raising capital globally. A fixed-income security is an instrument that allows governments, companies, and other types of issuers to borrow money from investors. Any borrowing of money is debt. The promised payments on fixed-income securities are, in general, contractual (legal) obligations of the issuer to the investor. For companies, fixed-income securities contrast to common shares in not having ownership rights. Payment of interest and repayment of principal (amount borrowed) are a prior claim on the company’s earnings and assets compared with the claim of common shareholders. Thus, a company’s fixed-income securities have, in theory, lower risk than that company’s common shares. In portfolio management, fixed-income securities fulfill several important roles. They are a prime means by which investors—individual and institutional—can prepare to fund, with some degree of safety, known future obligations such as tuition payments or pension obligations. The correlations of fixed-income securities with common shares vary, but adding fixed-income securities to portfolios including common shares is usually an effective way of obtaining diversification benefits. Among the questions this reading addresses are the following: What set of features define a fixed-income security, and how do these features determine the scheduled cash flows? What are the legal, regulatory, and tax considerations associated with a fixed-income security, and why are these considerations important for investors? What are the common structures regarding the payment of interest and repayment of principal? What types of provisions may affect the disposal or redemption of fixed-income securities? Embarking on the study of fixed-income securities, please note that the terms “fixed-income securities,” “debt securities,” and “bonds” are often used interchangeably by experts and non-experts alike. We will also follow this convention, and where any nuance of meaning is intended, it will be made clear.1 The remainder of this reading is organized as follows. Section 2 describes, in broad terms, what an investor needs to know when investing in fixed-income securities. Sectio





Reading 50  Fixed-Income Securities: Defining Elements (Layout)
#estatua-session #has-images #reading-david-de-miguel-angel
This reading is organized as follows:

Section 2 describes, in broad terms, what an investor needs to know when investing in fixed-income securities.

Section 3 covers both the nature of the contract between the issuer and the bondholders as well as the legal, regulatory, and tax framework within which this contract exists.

Section 4 presents the principal and interest payment structures that characterize fixed-income securities.

Section 5 discusses the contingency provisions that affect the timing and/or nature of a bond’s cash flows.

The final section provides a conclusion and summary of the reading.
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Reading 50  Fixed-Income Securities: Defining Elements (Intro)
“fixed-income securities,” “debt securities,” and “bonds” are often used interchangeably by experts and non-experts alike. We will also follow this convention, and where any nuance of meaning is intended, it will be made clear.1 <span>The remainder of this reading is organized as follows. Section 2 describes, in broad terms, what an investor needs to know when investing in fixed-income securities. Section 3 covers both the nature of the contract between the issuer and the bondholders as well as the legal, regulatory, and tax framework within which this contract exists. Section 4 presents the principal and interest payment structures that characterize fixed-income securities. Section 5 discusses the contingency provisions that affect the timing and/or nature of a bond’s cash flows. The final section provides a conclusion and summary of the reading. <span><body><html>





Reading 51  Fixed-Income Markets: Issuance, Trading, and Funding (Intro)
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Global fixed-income markets represent the largest subset of financial markets in terms of number of issuances and market capitalization. These markets bring borrowers and lenders together to allocate capital globally to its most efficient uses. Fixed-income markets include not only publicly traded securities, such as commercial paper, notes, and bonds, but also non-publicly traded loans. At the end of 2010, the total amount of debt and equity outstanding was about $212 trillion globally.1 The global fixed-income market represented approximately 75% of this total; simply put, global debt markets are three times larger than global equity markets.

Understanding how fixed-income markets are structured and how they operate is important for debt issuers and investors. Debt issuers have financing needs that must be met. For example, a government may need to finance an infrastructure project, a new hospital, or a new school. A company may require funds to expand its business. Financial institutions also have funding needs, and they are among the largest issuers of fixed-income securities. Fixed income is an important asset class for both individual and institutional investors. Thus, investors need to understand the characteristics of fixed-income securities including how these securities are issued and traded.

Among the questions this reading addresses are the following:

  • What are the key bond market sectors?

  • How are bonds sold in primary markets and traded in secondary markets?

  • What types of bonds are issued by governments, government-related entities, financial companies, and non-financial companies?

  • What additional sources of funds are available to banks?

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Reading 51  Fixed-Income Markets: Issuance, Trading, and Funding (Intro)
Global fixed-income markets represent the largest subset of financial markets in terms of number of issuances and market capitalization. These markets bring borrowers and lenders together to allocate capital globally to its most efficient uses. Fixed-income markets include not only publicly traded securities, such as commercial paper, notes, and bonds, but also non-publicly traded loans. At the end of 2010, the total amount of debt and equity outstanding was about $212 trillion globally.1 The global fixed-income market represented approximately 75% of this total; simply put, global debt markets are three times larger than global equity markets. Understanding how fixed-income markets are structured and how they operate is important for debt issuers and investors. Debt issuers have financing needs that must be met. For example, a government may need to finance an infrastructure project, a new hospital, or a new school. A company may require funds to expand its business. Financial institutions also have funding needs, and they are among the largest issuers of fixed-income securities. Fixed income is an important asset class for both individual and institutional investors. Thus, investors need to understand the characteristics of fixed-income securities including how these securities are issued and traded. Among the questions this reading addresses are the following: What are the key bond market sectors? How are bonds sold in primary markets and traded in secondary markets? What types of bonds are issued by governments, government-related entities, financial companies, and non-financial companies? What additional sources of funds are available to banks? The remainder of this reading is organized as follows. Section 2 presents an overview of global fixed-income markets and how these markets are classified, including





Reading 51  Fixed-Income Markets: Issuance, Trading, and Funding (Layout)
#estatua-session #has-images #reading-barro-en-la-madre-que-da-vueltas
The remainder of this reading is organized as follows.

Section 2 presents an overview of global fixed-income markets and how these markets are classified, including some descriptive statistics on the size of the different bond market sectors.

Section 2 also identifies the major issuers of and investors in fixed-income securities and presents fixed-income indexes.

Section 3 discusses how fixed-income securities are issued in primary markets, and how these securities are then traded in secondary markets.

Sections 4 to 7 examine different bond market sectors.

Section 8 discusses additional short-term funding alternatives available to banks, including repurchase agreements.

Section 9 concludes and summarizes the reading.
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Reading 51  Fixed-Income Markets: Issuance, Trading, and Funding (Intro)
rkets? What types of bonds are issued by governments, government-related entities, financial companies, and non-financial companies? What additional sources of funds are available to banks? <span>The remainder of this reading is organized as follows. Section 2 presents an overview of global fixed-income markets and how these markets are classified, including some descriptive statistics on the size of the different bond market sectors. Section 2 also identifies the major issuers of and investors in fixed-income securities and presents fixed-income indexes. Section 3 discusses how fixed-income securities are issued in primary markets, and how these securities are then traded in secondary markets. Sections 4 to 7 examine different bond market sectors. Section 8 discusses additional short-term funding alternatives available to banks, including repurchase agreements. Section 9 concludes and summarizes the reading. <span><body><html>





Reading 54  Understanding Fixed‑Income Risk and Return (Intro)
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It is important for analysts to have a well-developed understanding of the risk and return characteristics of fixed-income investments. Beyond the vast worldwide market for publicly and privately issued fixed-rate bonds, many financial assets and liabilities with known future cash flows may be evaluated using the same principles. The starting point for this analysis is the yield-to-maturity, or internal rate of return on future cash flows, which was introduced in the fixed-income valuation reading. The return on a fixed-rate bond is affected by many factors, the most important of which is the receipt of the interest and principal payments in the full amount and on the scheduled dates. Assuming no default, the return is also affected by changes in interest rates that affect coupon reinvestment and the price of the bond if it is sold before it matures. Measures of the price change can be derived from the mathematical relationship used to calculate the price of the bond. The first of these measures (duration) estimates the change in the price for a given change in interest rates. The second measure (convexity) improves on the duration estimate by taking into account the fact that the relationship between price and yield-to-maturity of a fixed-rate bond is not linear.
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Reading 54  Understanding Fixed‑Income Risk and Return (Intro)
It is important for analysts to have a well-developed understanding of the risk and return characteristics of fixed-income investments. Beyond the vast worldwide market for publicly and privately issued fixed-rate bonds, many financial assets and liabilities with known future cash flows may be evaluated using the same principles. The starting point for this analysis is the yield-to-maturity, or internal rate of return on future cash flows, which was introduced in the fixed-income valuation reading. The return on a fixed-rate bond is affected by many factors, the most important of which is the receipt of the interest and principal payments in the full amount and on the scheduled dates. Assuming no default, the return is also affected by changes in interest rates that affect coupon reinvestment and the price of the bond if it is sold before it matures. Measures of the price change can be derived from the mathematical relationship used to calculate the price of the bond. The first of these measures (duration) estimates the change in the price for a given change in interest rates. The second measure (convexity) improves on the duration estimate by taking into account the fact that the relationship between price and yield-to-maturity of a fixed-rate bond is not linear. Section 2 uses numerical examples to demonstrate the sources of return on an investment in a fixed-rate bond, which includes the receipt and reinvestment of coupon interest





Reading 54  Understanding Fixed‑Income Risk and Return (Layout)
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Section 2 uses numerical examples to demonstrate the sources of return on an investment in a fixed-rate bond, which includes the receipt and reinvestment of coupon interest payments and the redemption of principal if the bond is held to maturity. The other source of return is capital gains (and losses) on the sale of the bond prior to maturity. Section 2 also shows that fixed-income investors holding the same bond can have different exposures to interest rate risk if their investment horizons differ. Discussion of credit risk, although critical to investors, is postponed to Section 5 so that attention can be focused on interest rate risk.

Section 3 provides a thorough review of bond duration and convexity, and shows how the statistics are calculated and used as measures of interest rate risk. Although procedures and formulas exist to calculate duration and convexity, these statistics can be approximated using basic bond-pricing techniques and a financial calculator. Commonly used versions of the statistics are covered, including Macaulay, modified, effective, and key rate durations. The distinction is made between risk measures that are based on changes in the bond’s yield-to-maturity (i.e., yield duration and convexity) and on benchmark yield curve changes (i.e., curve duration and convexity).

Section 4 returns to the issue of the investment horizon. When an investor has a short-term horizon, duration (and convexity) are used to estimate the change in the bond price. In this case, yield volatility matters. In particular, bonds with varying times-to-maturity have different degrees of yield volatility. When an investor has a long-term horizon, the interaction between coupon reinvestment risk and market price risk matters. The relationship among interest rate risk, bond duration, and the investment horizon is explored.

Section 5 discusses how the tools of duration and convexity can be extended to credit and liquidity risks and highlights how these different factors can affect a bond’s return and risk.

A summary of key points and practice problems in the CFA Institute multiple-choice format conclude the reading.

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Reading 54  Understanding Fixed‑Income Risk and Return (Intro)
for a given change in interest rates. The second measure (convexity) improves on the duration estimate by taking into account the fact that the relationship between price and yield-to-maturity of a fixed-rate bond is not linear. <span>Section 2 uses numerical examples to demonstrate the sources of return on an investment in a fixed-rate bond, which includes the receipt and reinvestment of coupon interest payments and the redemption of principal if the bond is held to maturity. The other source of return is capital gains (and losses) on the sale of the bond prior to maturity. Section 2 also shows that fixed-income investors holding the same bond can have different exposures to interest rate risk if their investment horizons differ. Discussion of credit risk, although critical to investors, is postponed to Section 5 so that attention can be focused on interest rate risk. Section 3 provides a thorough review of bond duration and convexity, and shows how the statistics are calculated and used as measures of interest rate risk. Although procedures and formulas exist to calculate duration and convexity, these statistics can be approximated using basic bond-pricing techniques and a financial calculator. Commonly used versions of the statistics are covered, including Macaulay, modified, effective, and key rate durations. The distinction is made between risk measures that are based on changes in the bond’s yield-to-maturity (i.e., yield duration and convexity) and on benchmark yield curve changes (i.e., curve duration and convexity). Section 4 returns to the issue of the investment horizon. When an investor has a short-term horizon, duration (and convexity) are used to estimate the change in the bond price. In this case, yield volatility matters. In particular, bonds with varying times-to-maturity have different degrees of yield volatility. When an investor has a long-term horizon, the interaction between coupon reinvestment risk and market price risk matters. The relationship among interest rate risk, bond duration, and the investment horizon is explored. Section 5 discusses how the tools of duration and convexity can be extended to credit and liquidity risks and highlights how these different factors can affect a bond’s return and risk. A summary of key points and practice problems in the CFA Institute multiple-choice format conclude the reading. <span><body><html>





Reading 56  Derivative Markets and Instruments (Intro)
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Equity, fixed-income, currency, and commodity markets are facilities for trading the basic assets of an economy. Equity and fixed-income securities are claims on the assets of a company. Currencies are the monetary units issued by a government or central bank. Commodities are natural resources, such as oil or gold. These underlying assets are said to trade in cash markets or spot markets and their prices are sometimes referred to as cash prices or spot prices , though we usually just refer to them as stock prices, bond prices, exchange rates, and commodity prices. These markets exist around the world and receive much attention in the financial and mainstream media. Hence, they are relatively familiar not only to financial experts but also to the general population.

Somewhat less familiar are the markets for derivatives , which are financial instruments that derive their values from the performance of these basic assets. This reading is an overview of derivatives. Subsequent readings will explore many aspects of derivatives and their uses in depth. Among the questions that this first reading will address are the following:

  • What are the defining characteristics of derivatives?

  • What purposes do derivatives serve for financial market participants?

  • What is the distinction between a forward commitment and a contingent claim?

  • What are forward and futures contracts? In what ways are they alike and in what ways are they different?

  • What are swaps?

  • What are call and put options and how do they differ from forwards, futures, and swaps?

  • What are credit derivatives and what are the various types of credit derivatives?

  • What are the benefits of derivatives?

  • What are some criticisms of derivatives and to what extent are they well founded?

  • What is arbitrage and what role does it play in a well-functioning financial market?

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Reading 56  Derivative Markets and Instruments (Intro)
Equity, fixed-income, currency, and commodity markets are facilities for trading the basic assets of an economy. Equity and fixed-income securities are claims on the assets of a company. Currencies are the monetary units issued by a government or central bank. Commodities are natural resources, such as oil or gold. These underlying assets are said to trade in cash markets or spot markets and their prices are sometimes referred to as cash prices or spot prices , though we usually just refer to them as stock prices, bond prices, exchange rates, and commodity prices. These markets exist around the world and receive much attention in the financial and mainstream media. Hence, they are relatively familiar not only to financial experts but also to the general population. Somewhat less familiar are the markets for derivatives , which are financial instruments that derive their values from the performance of these basic assets. This reading is an overview of derivatives. Subsequent readings will explore many aspects of derivatives and their uses in depth. Among the questions that this first reading will address are the following: What are the defining characteristics of derivatives? What purposes do derivatives serve for financial market participants? What is the distinction between a forward commitment and a contingent claim? What are forward and futures contracts? In what ways are they alike and in what ways are they different? What are swaps? What are call and put options and how do they differ from forwards, futures, and swaps? What are credit derivatives and what are the various types of credit derivatives? What are the benefits of derivatives? What are some criticisms of derivatives and to what extent are they well founded? What is arbitrage and what role does it play in a well-functioning financial market? This reading is organized as follows. Section 2 explores the definition and uses of derivatives and establishes some basic terminology. Section 3 describes derivati





Reading 56  Derivative Markets and Instruments (Layout)
#has-images #reading-volante #volante-session
This reading is organized as follows:

Section 2 explores the definition and uses of derivatives and establishes some basic terminology.

Section 3 describes derivatives markets.

Section 4 categorizes and explains types of derivatives.

Sections 5 and 6 discuss the benefits and criticisms of derivatives, respectively.

Section 7 introduces the basic principles of derivative pricing and the concept of arbitrage.

Section 8 provides a summary.
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Reading 56  Derivative Markets and Instruments (Intro)
nefits of derivatives? What are some criticisms of derivatives and to what extent are they well founded? What is arbitrage and what role does it play in a well-functioning financial market? <span>This reading is organized as follows. Section 2 explores the definition and uses of derivatives and establishes some basic terminology. Section 3 describes derivatives markets. Section 4 categorizes and explains types of derivatives. Sections 5 and 6 discuss the benefits and criticisms of derivatives, respectively. Section 7 introduces the basic principles of derivative pricing and the concept of arbitrage. Section 8 provides a summary. <span><body><html>