debt to equity ratio, degree of operating leverage
... DOL is a function of a company’s capital structure, fixed costs and total costs. As has been mentioned by Damodaran (2001, p202): “A firm that has high fixed costs relative to total costs is said to have high operating leverage. A firm with high operating leverage will also have higher variability i ...
... DOL is a function of a company’s capital structure, fixed costs and total costs. As has been mentioned by Damodaran (2001, p202): “A firm that has high fixed costs relative to total costs is said to have high operating leverage. A firm with high operating leverage will also have higher variability i ...
NBER WORKING PAPER SERIES STOCK MARKETS, BANKS, AND GROWTH: PANEL EVIDENCE
... period. These financial development indicators, however, are frequently divided by the GDP, which is measured over the period. We rectify this problem since it may create substantial mismeasurement in high-inflation countries. Methodologically, we (1) construct a panel with data averaged over five-y ...
... period. These financial development indicators, however, are frequently divided by the GDP, which is measured over the period. We rectify this problem since it may create substantial mismeasurement in high-inflation countries. Methodologically, we (1) construct a panel with data averaged over five-y ...
One Period Binomial Model: The risk
... traded in Ancient Romans against outdoing cargoes from their seaport. The options are the main dynamic segment of the security market, since the origin of the Chicago Board option exchange (CBOF) in April, 1997. It is the largest option exchange in the world with more than one million contracts per ...
... traded in Ancient Romans against outdoing cargoes from their seaport. The options are the main dynamic segment of the security market, since the origin of the Chicago Board option exchange (CBOF) in April, 1997. It is the largest option exchange in the world with more than one million contracts per ...
New Evidence on the Financialization of Commodity Markets*
... CLN issues cause other market participants to make inferences about the issuers’ information. Third, the offering documents include the CLNs’ pricing and determination dates and indicate they were priced at the close of regular trading in the underlying commodity futures. Since the issuers pass inve ...
... CLN issues cause other market participants to make inferences about the issuers’ information. Third, the offering documents include the CLNs’ pricing and determination dates and indicate they were priced at the close of regular trading in the underlying commodity futures. Since the issuers pass inve ...
Market Clearing, Utility Functions, and Securities Prices
... of all the stock prices as well as any information that has been revealed about the terminal period endowment; the stock price must be adjusted to induce her to continue to hold the same amount of the stock. Thus, stocks cannot be priced in isolation from other assets (such as housing) held by agent ...
... of all the stock prices as well as any information that has been revealed about the terminal period endowment; the stock price must be adjusted to induce her to continue to hold the same amount of the stock. Thus, stocks cannot be priced in isolation from other assets (such as housing) held by agent ...
Time-Varying Arrival Rates of Informed and Uninformed Trades
... or disseminated not in its entirety but only in part or as a derivative work this must be clearly indicated. For commercial re-use, please contact [email protected] ...
... or disseminated not in its entirety but only in part or as a derivative work this must be clearly indicated. For commercial re-use, please contact [email protected] ...
OPTION VALUATION
... The Financial Manager must be knowledgeable about derivatives in order to manage the price risk inherent in financial transactions. Price risk refers to the possibility of loss arising from commodity price, interest rate or currency rate fluctuations (interest rate + exchange rates are financial pri ...
... The Financial Manager must be knowledgeable about derivatives in order to manage the price risk inherent in financial transactions. Price risk refers to the possibility of loss arising from commodity price, interest rate or currency rate fluctuations (interest rate + exchange rates are financial pri ...
Optimality in an Adverse Selection Insurance Economy with Private
... agents have an incentive to unbundle the contingent claims in an insurance contract to eliminate arbitrage profits and to improve risk-sharing. As Bisin and Gottardi [5]-[6] and Rustichini and Siconolfi [17] have shown, the problems of existence of competitive equilibria are not mitigated by allowin ...
... agents have an incentive to unbundle the contingent claims in an insurance contract to eliminate arbitrage profits and to improve risk-sharing. As Bisin and Gottardi [5]-[6] and Rustichini and Siconolfi [17] have shown, the problems of existence of competitive equilibria are not mitigated by allowin ...
Declaration on the selected option for the annual fee for the
... exchange market for physical execution on the Balancing Market. 5. The use of the Shared Scheduling Units by the Operating Party must not infringe upon the principles applicable to the operation of the Operating Party on the exchange market. 6. The Sharing Party is responsible for the correct notifi ...
... exchange market for physical execution on the Balancing Market. 5. The use of the Shared Scheduling Units by the Operating Party must not infringe upon the principles applicable to the operation of the Operating Party on the exchange market. 6. The Sharing Party is responsible for the correct notifi ...
Does Supply Curve Inelasticity Explain Abnormal Long
... remove supply and thereby raise equilibrium prices has been used to explain price changes around Dutch auctions (Bagwell (1992)). This is the first paper to explore whether open market repurchases have the same effect. Our dataset allows much more extensive analysis of repurchases than previous stud ...
... remove supply and thereby raise equilibrium prices has been used to explain price changes around Dutch auctions (Bagwell (1992)). This is the first paper to explore whether open market repurchases have the same effect. Our dataset allows much more extensive analysis of repurchases than previous stud ...
The Objective in Corporate Finance
... potential acquirer's existing stake, at a price much greater than the price paid by the raider, in return for the signing of a 'standstill' agreement. • Golden Parachutes: Provisions in employment contracts, that allows for the payment of a lump-sum or cash flows over a period, if managers covered b ...
... potential acquirer's existing stake, at a price much greater than the price paid by the raider, in return for the signing of a 'standstill' agreement. • Golden Parachutes: Provisions in employment contracts, that allows for the payment of a lump-sum or cash flows over a period, if managers covered b ...
2010 Flash Crash
The May 6, 2010, Flash Crash also known as The Crash of 2:45, the 2010 Flash Crash or simply the Flash Crash, was a United States trillion-dollar stock market crash, which started at 2:32 and lasted for approximately 36 minutes. Stock indexes, such as the S&P 500, Dow Jones Industrial Average and Nasdaq 100, collapsed and rebounded very rapidly.The Dow Jones Industrial Average had its biggest intraday point drop (from the opening) up to that point, plunging 998.5 points (about 9%), most within minutes, only to recover a large part of the loss. It was also the second-largest intraday point swing (difference between intraday high and intraday low) up to that point, at 1,010.14 points. The prices of stocks, stock index futures, options and ETFs were volatile, thus trading volume spiked. A CFTC 2014 report described it as one of the most turbulent periods in the history of financial markets.On April 21, 2015, nearly five years after the incident, the U.S. Department of Justice laid ""22 criminal counts, including fraud and market manipulation"" against Navinder Singh Sarao, a trader. Among the charges included was the use of spoofing algorithms; just prior to the Flash Crash, he placed thousands of E-mini S&P 500 stock index futures contracts which he planned on canceling later. These orders amounting to about ""$200 million worth of bets that the market would fall"" were ""replaced or modified 19,000 times"" before they were canceled. Spoofing, layering and front-running are now banned.The Commodity Futures Trading Commission (CFTC) investigation concluded that Sarao ""was at least significantly responsible for the order imbalances"" in the derivatives market which affected stock markets and exacerbated the flash crash. Sarao began his alleged market manipulation in 2009 with commercially available trading software whose code he modified ""so he could rapidly place and cancel orders automatically."" Traders Magazine journalist, John Bates, argued that blaming a 36-year-old small-time trader who worked from his parents' modest stucco house in suburban west London for sparking a trillion-dollar stock market crash is a little bit like blaming lightning for starting a fire"" and that the investigation was lengthened because regulators used ""bicycles to try and catch Ferraris."" Furthermore, he concluded that by April 2015, traders can still manipulate and impact markets in spite of regulators and banks' new, improved monitoring of automated trade systems.As recently as May 2014, a CFTC report concluded that high-frequency traders ""did not cause the Flash Crash, but contributed to it by demanding immediacy ahead of other market participants.""Recent research shows that Flash Crashes are not isolated occurrences, but have occurred quite often over the past century. For instance, Irene Aldridge, the author of High-Frequency Trading: A Practical Guide to Algorithmic Strategies and Trading Systems, 2nd ed., Wiley & Sons, shows that Flash Crashes have been frequent and their causes predictable in market microstructure analysis.