investing
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When inflation is very high, it becomes difficult to make forecasts in both real and nominal terms. Therefore, it becomes necessary to involve hybrid mechanisms. The table shows which version provides better results in relation to which item in the forecasts: We cannot make accurate tax forecasts with real figures because taxes depend on nominal…
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In the vast majority of cases, ROIC is a good measure of efficiency, but there are instances where it doesn’t work well, and it is replaced by the CFROI (Cash Flow Return on Investment) metric. What causes the difference? Ideally, ROIC should represent (reflect) the IRR of an organization’s projects for all investments made. Since…
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Despite the common perception that the development sector is highly profitable, this is not the case. In reality, margins range around 10%-12%, and the high ROI is driven by the fact that most projects are characterized by extremely high leverage (and by leverage, I don’t just mean bank loans). From a purely financial perspective, it…
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The structure and process of pricing have an extremely significant impact on the success of a residential development project. Proper management of prices not only achieves the targeted profit but also regulates the project’s financial risks (such as cost inflation and liquidity). A pricing system usually has two conflicting goals: 1. Maximizing prices and 2.…
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Why insurance is not profitable in the direct sense and the source of profit is an investment activity? There is such a term – Combined Ratio – which reflects the share of losses, bonuses and insurance dividends issued in insurance premiums… https://www.statista.com/statistics/502232/combined-ratio-in-p-c-insurance-industry-usa/ In my opinion, the fact is that in the US this figure in…
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Market Timing as a long-term investing opposition strategy, but there was a time when mutual fund managers were making not bed money. The point is that sometimes the share prices of such funds are not matching to their NAV (Net Asset Value – which is calculated at the market prices of assets hold by a…
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List of risks from the book – Financial Markets and Institutions – By Anthony Saunders, Marcia Cornett and Otgo Erhemjamts: Here’s the corrected list of risks from the image, starting with Credit Risk: Source: Financial Markets and Institutions – by A. Saunders, M. Cornett & O. Erhemjamts