<t>Hi,I have been asked this question by a non finance student,which confused me. He said:since the yearly interest has a small value and is compounded daily or weekly, it is reasonable to assume that exponential (rt)-1 approximately equals rt where r is interest and t is time.First of all to my kno...

Hi,why do we take log of stock returns in regressions? does the results differ in this case from the results of a regression without log?

<t>Hi,Any textbook or website write the relationship between interest rates and inflation as:[(1+interest rate (local))/(1+interest rate(dollar) ]=[(1+inflation(local))/(1+inflation (dollar))]the question that I fail to find its answer is the following:what if I am trying to find an interest rate in...

<t>I had always the impression is that the arithmetic risk premium is nothing but the sum of risk premiums over the years divided by the number of years. I was reading Mckinsey (look at the attachment) and I have no clue about the meaning of their formulas. They don't make sense to me.why 1+arithmet...

<t>First you need to determine which ratio you want to use in your relative valuation (PE ratio, Price to book, firm value multiple etc...) then you need to look at the factors that affect this multiple, for example risk, growth, payout ratio etc... Run regressions using the sector or market data th...

is anyone aware of any forum that discusses valuation practices (how to value firms)?. There are too many questions to be asked about this topic and I couldn't find any forum that deals with it,which is strange. if anyone is aware of any descent forum please let me know.

<t>I was reading a business expansion plan and I could decipher the meaning of one paragraph related to the investments in th firm:the paragraph reads as:"Investors will be expected to provide loan guarantees where required for the facility in which they are invested. Monetization of the investment ...

Thanks but I already know this. The question is mainly about whether the returns are annualized or not and how to transform them to continuous compounding returns. Should I take the ln(1+HML) for example to make the return of HML continuously compounded.

<r>Hi,I want to use Fama and French's 3 factor model. I retrieved the monthly data from French's data library ( <URL url="http://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.html"><LINK_TEXT text="http://mba.tuck.dartmouth.edu/pages/fac ... brary.html">http://mba.tuck.dartmouth.edu/p...

I don't see the difference between the two . m/tau is my t and the exponential is inside the bracket (exp(-t) is multiplied by b2)

I am a bit worried by exp(-S/2)*t for discount rates gives an answer close to the observed one whereas the exp(-s)*t discount is giving me an answer far from the observed price. Can you double check whether the spot should be divided by two or not when I want to compute the bond price?

the NS parameters were given to me. they give spot rates with continuous compounding. But i am wondering if I can price a bond using them as it was described in my previous thread

<t>i have spot rates derived from the nelson and siegel approach:s = b0 + b1*(1 - exp(-t))./(t) + b2*((1 - exp(-t)) ./(t) - exp(-t)) ;for simplicity assume the bond is maturing after 0.8 yearsThe question is if I want to price the semi annual coupon bond with these spot rates. what would the price b...

<t>Hi,The question might be simple but I didn't find any reference about it on Google:if I want to compute the bond daily return should it be: [(Accrued interest + clean price (day t) - clean price(day t-1))]/clean price (day t-1)?mainly I am not sure whether I should divide by clean or dirty price ...

Thanks guys. I am trying to see how the board structure affects the VaR of banks by running a cross sectional regression of a sample of banks.It is a homework project and I am trying to prove that well managed banks in terms of agency problems and control have a lower VaR.