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Summary Alternative Investments

Course
- Alternative Investments
- Ben Smith
- 2018 - 2019
- Erasmus Universiteit Rotterdam (Erasmus Universiteit Rotterdam, Rotterdam)
- Economie en Bedrijfseconomie
120 Flashcards & Notes
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A snapshot of the summary - Alternative Investments

  • alternative investments HC1

  • What are financial assets?
    Financial assets are claims to the income generated
    by real assets.
  • What is productive capacity a function of?
    Real assets (land, building, machines etc)
  • How do governments finance their activities?
    Government bonds
  • What are characteristics of equity?
    1) Ownership share in corporation
    2) Income determined by dividends or by increase/decrease stock price
    3) Tend to be riskier than debt securities
  • What is available on the primary market?
    1) Newly issued securities
    2) Stocks ; IPO, Seasoned/secondary equity offering
    3) Investment bankers and underwriting
    4) Underpricing
  • What does the Firm-Foundation theory mean? Name 4 characteristics
    1) Intrinsic value (IV)
    2) Present and past conditions, and future prospects
    3) When market price < IV then buy, otherwise sell
    4) Difficult to correctly assess IV
  • What does the Castle-In-The-Air Theory mean? Name 3 characteristics
    1) Behaviour of investors
    2) When E(future price) > current price then buy, otherwise sell
    3) Difficult to assess the behaviour
  • How do you measure stock return?
    Rt = 100 * ((Divt +Pt -P(t-1))/P(t-1))
  • Alternative Investment HC2

  • What is the weak form of EMH?
    Security prices reflect all price history information
  • Alternative Investments HC4

  • Name 4 ways to measure the performance of an investment?
    1. Sharpe ratio
    2. Comparison with benchmark
    3. Comparison against a static strategy
    4. Using asset pricing model
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