Question 1 Example 1 (Unleveraged ETF) Assume that P = $1000, r = 10% (0.1), k = 365, t = 1, F = 〖P(1+ r/k )〗^kt = 〖1000(1+ 0.1/365 )〗^365x1 = $1105.16 Return = $1105.16 - $1000 = $105.16 (Triple-leveraged ETF) Assume that P = $1000, r = 30% (0.3), k = 365, t = 1, F = 〖P(1+ r/k )〗^kt = 〖1000(1+ 0.3/365 )〗^365x1 = $1349.69 Return = $1349.69 - $1000 = $349.69 Ratio = 349.69/105.16 = 3.33 Therefore, triple-leveraged ETF gives higher return than the unleveraged ETF. The return is not exactly three times, it is slightly more than three times of the return. Example 2 (Unleveraged ETF) Assume that P = $1000, r = -2% (-0.02), k = 365, t = 1, F = 〖P(1+ r/k )〗^kt = 〖1000(1+ (-0.02)/365 )〗^365x1 = $980.20 …show more content…
The loss is not exactly three times but slightly less than three times of the loss from the unleveraged ETF. Investors tend to use triple-leveraged ETF to obtain triple the return yield of the investments. However, they are discouraged to invest on triple-leveraged ETF as the disadvantages overwhelm the advantages. One of the advantages of triple-leveraged ETF is that it gives three times the return whereas one of the disadvantages of triple-leveraged ETF is that it could lose triple of the tracked index. According to Cummans (2015), ‘The additional risks come in the form of counterparty risk, liquidity risk, and increased correlation risk’. Thus, ETF has higher risk as it may lose three times the return and increases bankruptcy rate. Result shows that the annual return to the triple-leveraged ETF is expected to be triple the annual return to the S&P 500 index, it is only applicable to theory where everything is in constant. In reality the tracked index fluctuating frequently, it will not be three times of the
When an individual engages in physical activity, it decreases the sedentary life, promotes healthy emotional well being while maintaining a healthy body weight. Physical fitness is very important in order to be fit an individual must us proper nutrition. The effect various based on the nutrients that affect the body. When the body needs to repair and grow it uses protein. The body uses carbohydrates during physical activity as an energy source. When an individual is fit the body uses its nutrition to help heal and main certain hydration when conducting physical activity. Healthy physical activity helps the individual sleepy at night, possible live longer, feel better, healthy weight.
The chart to the left shows the relative return on equity for EBAY and its competitors. It clearly indicates
The extracted data used includes monthly returns from January 1972 to July 2011. The assets are selected so that the portfolio contains the largest, most liquid, and most tradable assets. The choice of such a variety of assets across several markets was used in order to generate a large cross sectional dispersion in average return. It helped to reveal new factor exposure and define a general framework of the correlated value and momentum effects in various asset classes.
Advisors and investors would do well to pay as much attention to the expected volatility of any portfolio or investment as they do to anticipated returns. Moreover, all things being equal, a new investment should only be added to a portfolio when it either reduces the expected risk for a targeted level of returns, or when it boosts expected portfolio returns without adding additional risk, as measured by the expected standard deviation of those returns. Lesson 2: Don’t assume bonds or international stocks offer adequate portfolio diversification. As the world’s financial markets become more closely correlated, bonds and foreign stocks may not provide adequate portfolio diversification. Instead, advisors may want to recommend that suitable investors add modest exposure to nontraditional investments such as hedge funds, private equity and real assets. Such exposure may bolster portfolio returns, while reducing overall risk, depending on how it is structured. Lesson 3: Be disciplined in adhering to asset allocation targets. The long-term benefits of portfolio diversification will only be realized if investors are disciplined in adhering to asset allocation guidelines. For this reason, it is recommended that advisors regularly revisit portfolio allocations and rebalance
The Law of diminishing returns states that if one factor of production is increased while the others remain constant, the overall returns will relatively decrease after a certain point. The total fixed cost is the same regardless of the output; the total variable costs will change with the level of output resulting in the total cost as the sum of the fixed cost and variable cost at each level of output. Over the 0 to 4 range of output, the TVC and TC curves slope upward. They reflect a decreasing rate due to the increasing minor returns. The slopes curves will increase due to these diminishing marginal returns.
“The Benefits of diversification are clear. Portfolio theory has played a crucial role in explaining the relationship between risk and return where more than one investment is held. It also enables us to identify optimal and efficient portfolios.”
Select one (1) company or organization which utilized hypothesis test technique for its business process (e.g., whether or not providing flexible work hours improve employee productivity.) Give your opinion as to whether or not the utilization of such a technique improved business process for the selected company or organization. Justify your response.
The amount of money that I spent on discretionary expenses was eye opening. I did not really realize the amount of money that was being spent on food and drinks every day that could be saved by bringing a lunch or just buying the drinks in bulk and bringing them from home. While I was looking on the spreadsheet before totaling the amounts I was not expecting the costs to add up so fast. By completing this assignment, it has caused me to realize the amount of money I could be saving in my bank account or saving for purchases that will make a difference in my life.
In the unit, called cookies, I have come across many mathematical concepts when doing the math problems. Inequalities were one of the concepts. Inequalities are the relation between two equations that are not equal. One of the first things that were done was to guess and check using random numbers to find the highest number of combinations that would still make the inequalities true. Also, in this unit it reviewed how to place inequalities on number lines; the open circle in inequalities represents greater than or less than and the closed circle in inequalities shows that it is either greater than or equal to or less than or equal to.Another mathematical concept is Systems of Equations. Systems of Equations are equations you deal with altogether
* Analyze the topics discussed in Chapter 1, with the exception of the laws. Select two topics and discuss two positive effects and two challenges the topic poses for human resource departments in the public sector.
I am following up with you for the supply order. Please forward an approved RSS from Lynn Ellington, and supporting documentation (Pictures) of the items that need to be purchased. I will request the supplies to be delivered directly to museum addressed to you; however, to make the process successful, once the supplies have been delivered, please send me an email confirmation verifying the items in the box with a scanned packing slip for my records. – Thank you
Each strategy will be used in a different way or ‘style,’ leaving funds of the same strategy with varying results. For example Australian Equity had an average one year return of -6.76 per cent, while Australian Fixed Interest had an average one year return of 6.99 per cent. Comparing the average one year return for each strategy illustrates which funds have the most reliable or steady rate of return, and in this case the most reliable funds are those with fixed interest. This is coherent with the risk factors associated with the different strategies, even though fixed interest is considered low risk and offers low returns, these returns are more reliable than strategies with a high risk, and therefore still perform positively under times of economic crisis.
This document is authorized for use only by Yen Ting Chen in FInancial Markets and Institutions taught by Nawal Ahmed Boston University from September 2014 to December 2014.
1. Looking at both companies Return on Equity is pretty comparable between the two in 1990. However, we can see that LA Gear had a much better performance in the previous two years with a precipitous RoE in 1990 as compared to the previous two years. Reebok on the other had has reported a stable RoE in the last three years.
Sanjun with his own initiative, researched and constructed an ETF income portfolio which the team is currently tracking. The strategy targeted yield constrains of 3.5% with a market beta 0.33 and beta vs. 10 year UST Yield of -1.11. It is constructed to achieve low volatility (currently below 4%). This has a potential to be a successful multi-assets income strategy.