Testing the market for Weak Form Efficiency
Evidence that supports the weak form
Ball 1978: Trading rules that result from technical analysis is not profitable
No serial correlation between daily returns over short intervals
Year 0 Purchase: after-tax cash flow= -$800,000
Year 1-4 Depreciation
Depreciation expense: 800,000/4 = 200,000
Depreciation tax effect: 200,000 x 0.3 = 60,000
PV = 60,000 x 3.0373 = 182,238
Year 5 Sale of YYY
Gain on sale: 50,000
After-tax cash flow:
Year 5 Sale of YYY
Gain on sale: 50,000
After-tax cash flow: 50,000 x 0.7 = 35,000
PV = 35,000 x 0.5674 = 19,859
Year 1-5 Revenue effect
After-tax cash flow = 300,000 x 0.7 = 210,000
PV = 210,000 x 3.6048 = $757,008
A. NPV= (800,000) + 182,238 + 19,859
r 5 Sale of YYY
Gain on sale: 50,000
After-tax cash flow: 50,000 x 0.7 = 35,000
PV = 35,000 x 0.5674 = 19,859
Year 1-5 Revenue effect
After-tax cash flow = 300,000 x 0.7 = 210,000
PV = 210,000 x 3.6048 = $757,008
A. NPV= (800,000) + 182,238 + 19,859 +
FINS1613
Lecture 2:
Financial maths
Annuity: Level stream of cash flows for a fixed time.
Ordinary annuity: cash flows occur at end of each time period
Annuity due: cash flows occur at the beginning of each time period
Deferred annuity: the first cash flo
CVEN2002/CVEN2702
Engineering Computations - Statistics
Statistics Laboratory Class Week 1 : Introductory Matlab Tutorial
In your statistics course, there are scheduled computer tutorials in which you explore the use of
Matlab in statistics. Matlab is ava
Lecture 10
Option strategies
Introduction
At the end of this lecture, you should
understand:
option concepts and various terminologies
various option strategies and their payoffs
put-call parity, and based on the parity derive the
value of puts or cal
Expectations theory (ET)
The Expectations theory asserts that forward rates = market expectations of future IRs
i.e.
If we restrict the forecast to IRs on bonds with 1 year to maturity (i.e. n=1) and drop the n, the
notation can be simplified to f(t) = E
Assumptions of CAPM
1. Investors are Price takers
- No investor is large enough relative to the market to influence () equilibrium prices
by their individual trades
- Everyone should pay/receive the same price for an asset everyone earns an equal
return f
The risk-free asset and the capital allocation line
Main article: Capital allocation line
The risk-free asset is the (hypothetical) asset which pays a risk-free rate. In practice, short-term government securities (such as US
treasury bills) are used as a
IMPORTANT EMPLOYEE BEHAVIOURS
EMPLOYEE PRODUCTIVITY
EMPLOYEE PRODUCTIVITY: is a performance measure of both efficiency and
effectiveness
Managers want to know what factors will influence the efficiency and
effectiveness of employees
ABSENTEEISM
ABSENTEEI