Fergus
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Latest activity by Fergus
Fergus created an article,
Joining a Zoom training session
Web Login To login using a web browser, click on the link that has been sent to you or you can copy and paste the URL into a web browser of your choice. You will be prompted to either open t...

Fergus created an article,
Can you please explain why key rate duration may be negative?
Fixed Income  Key Rate Duration There is no quick explanation! This is a very technical, academic aspect. It all depends on the notion of the par bond (on the Cognition slides, this is a 5% coup...

Fergus created an article,
How do you calculate Fixed Capital Investment using gross assets instead of net book value?
Equity Valuation  FC Inv't using gross assets value FC Inv't is the change in gross assets where gross assets is the NBV + Deprec. Let's do a simple example: Opening NBV 100, deprec for the year...

Fergus created an article,
Do we need to add back preference dividends when calculating FCFF?
FCFF needs to NOT include pref div. Whether you add them back or not depends upon whether they have been deducted or not in the first place. e.g. if we are starting with "Earnings available to o...

Fergus created an article,
How we calculate fixed capital investment when there is an asset disposal?
Equity Value Let's try an example. Firstly we'll ignore any disposals. You can either get FC Inv by reconciling opening to closing gross PPE (NBV + accumulated deprec) or use net PPE but then dedu...

Fergus created an article,
How do we know when to use the highest Sharpe ratio portfolio?
Corner Portfolios If the highest SR portfolio has a return that is equal or higher than the required return then we will always use this portfolio. If the required return is lower, then we will inv...

Fergus created an article,
Can you explain the difference between US GAAP and IFRS in the calculation of the interest cost of a defined benefit pension plan?
For US GAAP interest cost (which we see in the reconciliation of PBO) is the same as the interest cost we see in I/S. Both use opening PBO x r. However for IFRS these two are NOT the same. The rec...

Fergus created an article,
Why does higher economic growth lead to a higher interest rate?
Marginal utility of consumption and interest rates The incentive fee referred to here is the interest rate. The wealthier you are, the less you value marginal consumption which means the utility ...

Fergus created an article,
What is the p value and how do we calculate it?
Lets assume we are doing a 5% twotailed test, so the critical Z score will be +/ 1.96. If our test stat = 1.8 then we could not reject the null at 5% significance (or 95% confidence) If instead ...

Fergus created an article,
Can you explain the significance of capital mobility in the MundellFleming model
The Mundell–Fleming model If you remember your level 1 stuff there are two main elements that make up the Balance of Payments: current account (trade in goods and services) and the financial accou...