Study Guides
(238,516)

Canada
(115,191)

Wilfrid Laurier University
(4,106)

Business
(1,198)

BU473
(3)

Ning Tang
(3)

# cheat sheet mid2.pdflksad

Unlock Document

Wilfrid Laurier University

Business

BU473

Ning Tang

Winter

Description

Bottom-up approach: firm-specific, work upwards Put Option: rgt to Sell Cum Wealth Ind CWIn= WI 0 (1 TR1 )( 1 T2 )...( 1 Tn) CWI
Top-down approach: analyze economy, then industry, then firm TRn = (CWIn/CWIn-1) - 1 CPC
End Val. of For.Curr. YI
CAPM: Rf = real RoR + inf…. k = Rf + Rp Fisher eq’n: 1+i = (1+r)(1+inf) Int’l Rtrns: TR in domestic currency = RR CI 1
effct mkt take passive approach b/c no active strat beat it on risk-adjusted TR, RR, CWI only good for single time period… Begin Val. of For.YIrr.
CPC
value of analyst report depends on: amt of recent info, # of anlyts follwng stock, For several periods use arithmeti1/nr geometric means 2 2
degree of consensus, quality of analysts. Geo = (1 TR1)(1 TR2)...(1TRn) 1 diff b/w geo & arith1 G 1 X s 2
Defensive stocks unhurt by bus. cycle downside…TAA: tactical asset allocation Adjust for inf: TRia = [(1+TR)/(1+CPI)] – 1 OR CWIia = CWI/CIinf
takes advantage of mkt timing skills (ST dev from LT asst mixes) CI = (1 + GM of inflation rate)^n
Technical Analysis: unconcerned w/ underlying econ vars affting firms/mkt Sources of Risk: Int, Mkt, Inf, Busi, Finan, Liq, Xchg, Country
GDP = G+C + I + (X – M) = Gov’t Spnd + Consmr Spend + bus Invst + (Cdn Ex– Im) Std Dev 2 1/2 “Equity Risk Prem” and “Bond Default Prem”
X X
Normal unemplymt frictional; structural unemp natural umemp rate; cyclical s n 1 ERP=[(1+TR)/(1+RF)] – 1
Bus Cyc: expansion = durabls, peak=nat resurce+energy, contrctin=defensive ind, m
2 2
trough=cap gds…”soft landing”=econ growth slows but not neg…leading ind: Variance: [(R i E(R)) pr ] i
stocks,money supp, wrk week, sales of consumer durables…extreme times, econ i1
lead mkt, otrwise,mkt lead n m m
2 w w
Coincident + lagging indicators…interest rate determinants: inf rate, xchg rate, n-asset case: E(R ) p w i(R ) i P i j ij
gov’t deficits, BoC, default risk of the borrower… i1 i 1 j 1
CERI =Cdn effect. xchg rte index is trade-weighted msre of xchg rte m m m
2-asset case: E(R )w E(R )w E(R ) 2 2
P/E tends to b high whn inf and int rates are low p A A B B w i i w wi j ij
NAICS=NA Indust Classif Syst, SIC=Std Indus clas11divs, lgr digits, more spfc w w 2w w 2 i 1 i 1 j 1
P A A B B A B A,B i j
Pionerng stg(most risk), expns stg (hi invmt funds, strt divs), stablztn (avd if desire m
cap gains), dclng (new prds, low ror) Covariance: [R E(R )][R E(R )]pr i
4 crucial factors asing ind: Historicals, compttin, gov’t, strctl chng A,B A,i A B,i B i

More
Less
Related notes for BU473