Dimensional Fund Advisors: Small Stock Superman
By Chethan Reddy, Deepak Bhandarkar & James Sears- Feb 20, 2013 4:50 PM ET
No arbitrage opportunities? Talk to DFA; the small fund advisory firm that ha
CHAPTER 8
Long-Term Producing Assets and Investments in Equity Securities
TEST YOUR KNOWLEDGE: PROPERTY, PLANT AND EQUIPMENT (p 265)
1. (a)
Expensed immediately:
Income Statement
2010
Revenues
Amortiz
Chapter 20 - Hedge Funds
CHAPTER 20 HEDGE FUNDS
1. No, a market-neutral hedge fund would not be a good candidate for an investors entire retirement portfolio because such a fund is not a diversified p
Chapter 15 - Options Markets
CHAPTER 15 OPTIONS MARKETS
1. Options provide numerous opportunities to modify the risk profile of a portfolio. The simplest example of an option strategy that increases r
Chapter 19 - Globalization and International Investing
CHAPTER 19
GLOBALIZATION AND INTERNATIONAL INVESTING
1. False. Investments made in a local currency have the added risk associated with
exchange
Chapter 17 - Futures Markets and Risk Management
CHAPTER 17 FUTURES MARKETS AND RISK MANAGEMENT
1. Selling a contract is a short position. If the price rises, you lose money. Loss = (850 800) x 250 =
Chapter 13 - Equity Valuation
CHAPTER 13 EQUITY VALUATION
1. Theoretically, dividend discount models can be used to value the stock of rapidly growing companies that do not currently pay dividends; in
Chapter 14 - Financial Statement Analysis
CHAPTER 14 FINANCIAL STATEMENT ANALYSIS
1. N a. Inventory turnover ratio in 2009. = 2850 / (490 + 480) x .5 = 1.47 b. Debt equity ratio in 2009. = 3340 / 960
Chapter 06 - Efficient Diversification
CHAPTER 06 EFFICIENT DIVERSIFICATION
1. So long as the correlation coefficient is neither zero nor 1.0, the portfolio will contain diversification benefits. Any
Chapter 22 - Investors and The Investment Process
CHAPTER 22
INVESTORS AND THE INVESTMENT PROCESS
1.
The investment objectives of the Masons should be expressed in terms of return and
risk. These retu
Chapter 18 - Portfolio Performance Evaluation
CHAPTER 18
PORTFOLIO PERFORMANCE EVALUATION
1. a. Possibly. Alpha alone does not determine which portfolio has a larger Sharpe ratio.
Sharpe measure is th
Chapter 21 - Taxes, Inflation, and Investment Strategy
CHAPTER 21 TAXES, INFLATION, AND INVESTMENT STRATEGY
1. Moral hazard. The owner now has an incentive to cause a loss and file a claim. 2. The own
Abstract
EMERSON ELECTRIC CO., v. MARSH & McLENNAN COMPANIES
Marsh is the largest provider of insurance brokerage services in the world. It holds itself
out to its clients as a fiduciary that will act
CHAPTER 7
Operating Transactions-Revenues, Expenses, and
Working Capital
TEXT/LECTURE OUTLINE
I.
IncomeStatement:DisclosureandPresentation.
A.
B.
Other revenues and expenses.
C.
Interest expense, net.
CHAPTER 1
Value Creation, Financial Statements, and the
Environment of Financial Reporting
TEXT/LECTURE OUTLINE
Value Creation, Financial Statements, and the Environment of Financial Reporting.
I.
Val
CHAPTER 8
Long-Term Producing Assets and Investments in
Equity Securities
TEXT/LECTURE OUTLINE
I.
InvestmentsinLongTermProducingAssets.
II.
AccountingforProducingAssets:AnOverview.
A.
Acquisition: wha
CHAPTER 9
Accounting for Financing Activities
TEXT/LECTURE OUTLINE
I.
DebtandEquityDistinguished.
A.
Debt.
1.
2.
Fixed maturity date.
3.
Contractual interest.
4.
Security in case of default.
5.
B.
For
CHAPTER 6
Earnings Management
Case and Review Questions: WorldCom, Inc. Earnings Management (p 187)
1. The company was profitable. Their liquidity is questionable, with current liabilities
exceeding c
CHAPTER 5
Return on Equity, Value Creation, and Firm Value
WEIS MARKETS
ROE Analysis
2005
Net income
Beginning shareholders' equity
Ending shareholders' equity
Average shareholders' equity
Return on e
CHAPTER 4
Using Financial Statements to Analyze Value Creation
SILICON LABORATORIES INC.
ROE Analysis
2006
Net income
Beginning shareholders' equity
Ending shareholders' equity
Average shareholders' e
Chapter 09 - Behavioral Finance and Technical Analysis
CHAPTER 09 BEHAVIORAL FINANCE AND TECHNICAL ANALYSIS
1. Note the following matches Disposition effect d Representativeness bias e Regret avoidanc
Chapter 12 - Macroeconomic and Industry Analysis
CHAPTER 12 MACROECONOMIC AND INDUSTRY ANALYSIS
1. A top-down approach to security valuation begins with an analysis of the global and domestic economy.
Chapter 07 - Capital Asset Pricing and Arbitrage Pricing Theory
CHAPTER 07 CAPITAL ASSET PRICING AND ARBITRAGE PRICING THEORY
1. The required rate of return on a stock is related to the required rate
Loan Types and Loan Amortization
Pure Discount Loans
Treasury bills (T-bills) are excellent examples of pure discount loans.
The principal amount is repaid at some future date, without any periodic in
Effective Annual Rate2 (EAR)
This is the actual rate paid (or received) after accounting for compounding that occurs
during the year.
For example, with an EAR of 5%, an investment of $1,000 will grow
Computing EARs from APRs
Remember that the APR is the quoted annual rate, and
m is the number of compounding periods
Computing APRs from EARs
If you have an effective rate, how can you compute the APR
Discount Rate
Often we will want to know what the implied interest rate is on an investment
Rearrange the basic PV equation and solve for r
FV = PV(1 + r)t
r = (FV / PV)1/t 1
If you are using formulas
Computing Payments with APRs
Suppose you want to buy a new computer system and the store is willing to sell it to
allow you to make monthly payments.
The entire computer system costs $3,500. The loan
Annuity Sweepstakes Example
Suppose you win the Publishers Clearinghouse $20 million sweepstakes. You have the
choice of receiving $12.5M today or having the money paid in equal semi-annual
installmen