International Finance: Putting Theory Into Practice
19.4. THECFO’S SUMMARYRECAPITAL BUDGETING 733 already mentioned, Gultekin, Gultekin, and Penati (1989) provide strong evidence t ...
734 CHAPTER 19. SETTING THE COST OF INTERNATIONAL CAPITAL Table 19.3:Rules for the Capital-Budgeting Process: Overview CoCa mode ...
19.4. THECFO’S SUMMARYRECAPITAL BUDGETING 735 A standard solution is to estimate the risks from returns on industry portfolios r ...
736 CHAPTER 19. SETTING THE COST OF INTERNATIONAL CAPITAL 19.4.3 Estimating the Risk premia Assuming that we have an approximate ...
19.5. TECHNICAL NOTES 737 19.5 Technical Notes xx CONTENTS Technical Note 19.1 The efficiency condition Let the desirability of ...
738 CHAPTER 19. SETTING THE COST OF INTERNATIONAL CAPITAL Technical Note 19.2 Using Ito’s Lemma to transcribe the fc efficiency ...
19.5. TECHNICAL NOTES 739 Technical Note 19.3 Aggregating the two efficiency conditions. We want to aggregate, and obtain the wo ...
740 CHAPTER 19. SETTING THE COST OF INTERNATIONAL CAPITAL Technical Note 19.4 Identifyingλandκ. Write the equation in matrix for ...
19.5. TECHNICAL NOTES 741 Technical Note 19.5 The best-replication reading of the i-CAPM The claim can be shown as follows. In t ...
742 CHAPTER 19. SETTING THE COST OF INTERNATIONAL CAPITAL 19.6 Test Your Understanding: basics of theCAPM 12.4.1 Quiz Questions ...
19.6. TEST YOUR UNDERSTANDING: BASICS OF THECAPM 743 Expected Covariances excess return HBC BTT HBC 0.11 0.04 0.01 BTT 0.08 0.01 ...
744 CHAPTER 19. SETTING THE COST OF INTERNATIONAL CAPITAL 19.7 Test Your Understanding: iCAPM 13.5.1 Quiz Questions True-False Q ...
19.7. TEST YOUR UNDERSTANDING: ICAPM 745 If you translate at the forward rate, you can entirely omit exchange rate ex- pectatio ...
746 CHAPTER 19. SETTING THE COST OF INTERNATIONAL CAPITAL Additional Quiz Questions Suppose that you observe an efficient portf ...
19.7. TEST YOUR UNDERSTANDING: ICAPM 747 (e) The single-marketCAPM, where the market portfolio is measured by the index of all s ...
748 CHAPTER 19. SETTING THE COST OF INTERNATIONAL CAPITAL Suppose that the world beta for a German stock (in euro) equals 1.5, ...
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