Investment Assets: Mutual Funds, Equity, and Risk
Types of Mutual Funds
Open-Ended Schemes
In this scheme, there is an uninterrupted entry and exit into the funds. The open-ended scheme has no maturity period, and they are not listed on the stock exchanges. The open-ended fund provides liquidity to the investors since repurchase is available.
Closed-Ended Funds
The closed-ended funds have a fixed maturity period. The first-time investments are made when the closed-ended scheme is kept open for a limited period. Once closed, the units are listed on
Read MoreWACC, NPV, IRR, Cost of Equity & Capital Structure Formulas
1. Cost of Equity (Dividend Growth Model)
Use when given the last dividend, growth rate, and price
Steps
Find next year’s dividend
Next dividend = Last dividend × (1 + growth rate)
Cost of equity = (Next dividend ÷ Stock price) + Growth rate
Excel
=(D0*(1+g)/Price) + g
2. Cost of Debt (Yield to Maturity)
Your system almost always uses annual coupons, even if the bond states semiannual.
Steps
Coupon payment = Coupon rate × Par value.
Discount each payment using a trial interest rate until the present value
Portfolio Management: Markowitz, CAPM, CML, APT & Returns
Key Topics
- Portfolio Management – Concept and Markowitz Model
- Portfolio Selection – Capital Market Line, Security Market Line, Capital Asset Pricing Model and Arbitrage Pricing Theory
- Portfolio Performance Evaluation – Sharpe, Treynor and Jensen Models
To provide a helpful overview, I can explain the core concepts of each section.
💰 Portfolio Management Concepts
Portfolio Management and Markowitz Model
- Portfolio Management: The art and science of making decisions about investment mix and policy,
Asset Pricing Models and Bond Valuation Essentials
Capital Asset Pricing Model (CAPM)
The Capital Asset Pricing Model (CAPM) defines the relationship between systematic risk and expected return for assets, particularly stocks.
- Expected Return of Asset: Risk-Free Rate + Beta × (Market Return – Risk-Free Rate)
- Beta Formula: Beta = Covariance(Asset Return, Market Return) / Variance(Market Return)
- CAPM Regression: (Asset Return – Risk-Free Rate) = Alpha + Beta × (Market Return – Risk-Free Rate)
- Alpha Formula: Alpha = Actual Expected Return – CAPM Predicted
NPV, IRR, Discounting and Amortisation Concepts for Finance
ST226 Written Answer Cheat Sheet (Plain Text)
Net Present Value (NPV) and Its Interpretation
NPV represents the present value of all future net cash flows minus the initial cost. A positive NPV indicates value creation at the chosen discount rate. A negative NPV indicates value destruction.
Why Discounting Is Required
Discounting is required because money received in the future is worth less than money now. Discounting converts future amounts into their equivalent today. The discount rate reflects the
Read MoreCálculos Financieros Hoteleros y de Restaurante: BEP, EBITDA y Cash Flow
Cuadro de Premisas
- 1 – Days
- 2 – Available rooms per month o puede ser directamente 365 dependiendo de cómo lo desglose = Número de rooms * days
- 3 – %OCC
- 4 – Rooms sold = Available rooms * OCC
- 5 – ADR → Si no me lo da es = ingreso por hab / hab vendidas
- 6 – Room Revenue = ADR * Rooms sold
- 7 – Additional revenues / incomes = Room revenue * el porcentaje de other income o sales
- 8 – Total Revenues / incomes = Add. revenues + Room revenue
Cálculo de los Costes Variables
Ahora se calculan los total variable