Public finance Public finance is the study of the role of the government in the economy.[1] It is the branch of economics which assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones.[2] The purview of public finance is considered to be threefold: governmental effects on (1) efficient allocation of resources, (2) distribution of income, and (3) macroeconomic stabilization. Overview[edit] The proper role of government provides a starting point for the analysis of public finance. "Market failure" occurs when private markets do not allocate goods or services efficiently. Government can pay for spending by borrowing (for example, with government bonds), although borrowing is a method of distributing tax burdens through time rather than a replacement for taxes. Public finance is closely connected to issues of income distribution and social equity. Public finance management[edit]
Modern portfolio theory Economist Harry Markowitz introduced MPT in a 1952 essay,[2] for which he was later awarded a Nobel Prize in Economics. Mathematical model[edit] Risk and expected return[edit] MPT assumes that investors are risk averse, meaning that given two portfolios that offer the same expected return, investors will prefer the less risky one. Thus, an investor will take on increased risk only if compensated by higher expected returns. Under the model: Portfolio return is the proportion-weighted combination of the constituent assets' returns.Portfolio volatility is a function of the correlations ρij of the component assets, for all asset pairs (i, j). ,where for , or,where is the (sample) covariance of the periodic returns on the two assets, or alternatively denoted as , or .Portfolio return volatility (standard deviation):For a two asset portfolio: Portfolio return: Portfolio variance: For a three asset portfolio: Portfolio return: Portfolio variance: Diversification[edit] Efficient Frontier.
Marginal REVOLUTION - Small Steps Toward A Much Better World Personal finance Personal financial planning process[edit] The key component of personal finance is financial planning, which is a dynamic process that requires regular monitoring and reevaluation. In general, it involves five steps:[2] Typical goals most adults and young adults have are paying off credit card and/or student loan debt, investing for retirement, investing for college costs for children, paying medical expenses, and planning for passing on their property to their heirs (which is known as estate planning).[citation needed] Areas of focus[edit] The six key areas of personal financial planning, as suggested by the Financial Planning Standards Board, are:[3] Financial position: is concerned with understanding the personal resources available by examining net worth and household cash flow. See also[edit] References[edit] Further reading[edit] Kwok, H., Milevsky, M., and Robinson, C. (1994) Asset Allocation, Life Expectancy, and Shortfall, Financial Services Review, 1994, vol 3(2), pg. 109-126.
Kenneth R. French - Data Library Because of changes in the treatment of deferred taxes described in FASB 109, files produced after August 2016 no longer add Deferred Taxes and Investment Tax Credit to BE for fiscal years ending in 1993 or later. U.S. Research Returns Data (Downloadable Files) Univariate sorts on Size, B/M, OP, and Inv Portfolios Formed on Size TXT CSV Details Portfolios Formed on Size [ex.Dividends] TXT CSV Details Portfolios Formed on Size [Daily] TXT CSV Details Portfolios Formed on Book-to-Market TXT CSV Details Portfolios Formed on Book-to-Market [ex. Portfolios Formed on Operating Profitability TXT CSV Details Portfolios Formed on Operating Profitability [ex. Portfolios Formed on Investment TXT CSV Details Portfolios Formed on Investment [ex. Bivariate sorts on Size, B/M, OP, and Inv 6 Portfolios Formed on Size and Book-to-Market (2 x 3) TXT CSV Details 6 Portfolios Formed on Size and Book-to-Market (2 x 3) [ex. Three-way sorts on Size, B/M, OP, and Inv Univariate sorts on E/P, CF/P, and D/P U.S.
Musings on Markets Mathematical finance Mathematical finance also overlaps heavily with the field of computational finance (as well as financial engineering). The latter focuses on application, while the former focuses on modeling and derivation (see: Quantitative analyst), often by help of stochastic asset models. In general, there exist two separate branches of finance that require advanced quantitative techniques: derivatives pricing on the one hand, and risk- and portfolio management on the other.[2] Many universities offer degree and research programs in mathematical finance; see Master of Mathematical Finance. History: Q versus P[edit] There exist two separate branches of finance that require advanced quantitative techniques: derivatives pricing and risk and portfolio management. Derivatives pricing: the Q world[edit] Once a fair price has been determined, the sell-side trader can make a market on the security. A process satisfying (1) is called a "martingale". Risk and portfolio management: the P world[edit] See also[edit]
Investor Home - Fundamental Anomalies Gary Karz, CFA (email) Host of InvestorHome Principal, Proficient Investment Management, LLC Value Value investing is probably the most publicized anomaly and is frequently touted as the best strategy for equity investing. There is a large body of evidence documenting the fact that historically, investors mistakenly overestimate the prospects of growth companies and underestimate value companies. Professors Josef Lakonishok, Robert W. Vishny, and Andrei Shleifer (of LSV Asset Management) concluded that "value strategies yield higher returns because these strategies exploit the mistakes of the typical investor and not because these strategies are fundamentally riskier." 1 In Value and Growth Investing: Review and Update (or in the Financial Analysts Journal here January/February 2004) Louis K.C. Low Price to Book A classic study on the performance of low price to book value stocks was by Eugene Fama and Kenneth R. High Dividend Yield Low Price to Sales (P/S) Low Price to Earnings (P/E) 1.
Aswath Damodaran: Valuation, Books, Blog, Articles, Videos “A brand name is one of those competitive advantages you can hang on to for a long time.” — Aswath Damodaran Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues Q1 2020 hedge fund letters, conferences and more Aswath Damodaran: Background & bio Aswath Damodaran is the Professor of Finance at the Stern School of Business at New York University. Aswath Damodaran had a spate teaching at the University of California, Berkeley, from 1984 to 1986, where he received the Earl Cheit Outstanding Teaching Award in 1985. Aswath has published research papers in the Journal of Financial and Quantitative Analysis, the Journal of Finance, the Journal of Financial Economics and the Review of Financial Studies. Aswath Damodaran: Blog Musings on Markets Not-so-profound thoughts about valuation, corporate finance and the news of the day! Tools Taken from Aswath Damodaran’s website: Damodaran Online Spreadsheets Webcasts Mr. Papers
International finance International finance (also referred to as international monetary economics or international macroeconomics) is the branch of financial economics broadly concerned with monetary and macroeconomic interrelations between two or more countries.[1][2] International finance examines the dynamics of the global financial system, international monetary systems, balance of payments, exchange rates, foreign direct investment, and how these topics relate to international trade.[1][2][3] Sometimes referred to as multinational finance, international finance is additionally concerned with matters of international financial management. Investors and multinational corporations must assess and manage international risks such as political risk and foreign exchange risk, including transaction exposure, economic exposure, and translation exposure.[4][5] See also[edit] Notes and references[edit] ^ Jump up to: a b Gandolfo, Giancarlo (2002). External links[edit]