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18 topics badly explained by many Finance Professors by Pablo Fernandez :: SSRN

18 topics badly explained by many Finance Professors by Pablo Fernandez :: SSRN https://ift.tt/2z4n3lO 18 topics badly explained by many Finance Professors 22 Pages Posted: Date Written: October 20, 2018 Abstract This paper addresses 18 finance topics that are badly explained by many Finance Professors. The topics are: 1. Where does the WACC equation come from? 2. The WACC is not a cost. 3. The WACC equation when the value of debt is not equal to its nominal value. 4. The term equity premium is used to designate four different concepts. 5. Textbooks differ a lot on their recommendations regarding […]

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Private Equity Indices Based on Secondary Market Transactions

Private Equity Indices Based on Secondary Market Transactions https://ift.tt/2qvstRO Private Equity Indices Based on Secondary Market Transactions NBER Working Paper No. 25207 Issued in November 2018 NBER Program(s):Asset Pricing, Corporate Finance Measuring the performance of private equity investments (buyout and venture) has historically only been possible over long horizons because the IRR on a fund is only observable following the fund’s final distribution. We propose a new approach to evaluating performance using actual prices paid for limited partner shares of funds in secondary markets. We construct indices of buyout and venture capital performance using a proprietary database of secondary market […]

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The Exorbitant Tax Privilege

The Exorbitant Tax Privilege https://ift.tt/2qGh5me The Exorbitant Tax Privilege NBER Working Paper No. 24983 Issued in September 2018 NBER Program(s):Development of the American Economy, International Finance and Macroeconomics, Public Economics We estimate and attempt to explain the evolution of the taxes paid by U.S. multinationals on their foreign profits since 1966. In the oil sector, taxes paid to oil-producing States have been contained, allowing U.S. firms to earn high after-tax returns. Foreign taxes fell abruptly after the first Gulf War. In sectors other than oil, the effective foreign tax rate has fallen by half since the late 1990s. Almost half […]

Posted in Capital flows, Current account, Economics, Financial Crime, FX, Globalisation, Markets | Tagged , | Leave a comment

International Yield Curves and Currency Puzzles

International Yield Curves and Currency Puzzles https://ift.tt/2JK4UOk International Yield Curves and Currency Puzzles NBER Working Paper No. 25206 Issued in November 2018 NBER Program(s):Asset Pricing, International Finance and Macroeconomics The depreciation rate is often computed as the ratio of foreign and domestic pricing kernels. Using bond prices alone to estimate these kernels leads to currency puzzles: the inability of models to match violations of uncovered interest parity and the volatility of exchange rates. One cannot use information in bonds alone because exchange rates are not spanned by bonds. This view of the puzzles is distinct from market incompleteness. Incorporating exchange […]

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The effectiveness of large-scale asset purchases

The effectiveness of large-scale asset purchases https://ift.tt/2Eeb89V Central banks in the US, Europe, and Japan purchased many trillions of dollars of assets in an effort to hold down their interest rates and stimulate their economies. The Fed described these operations as ‘large-scale asset purchases’, and they were often referred to in the business press as ‘quantitative easing’ (QE). In the US, asset purchases were implemented in three phases between 2009 and 2014, commonly labelled QE1, QE2, and QE3. What did these purchases accomplish? Figure 1 Federal Reserve holdings of securities, 19 November 2008 to 27 December 2017 Notes: Sum of Federal […]

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The Pricing of FX Forward Contracts: Micro Evidence from Banks’ Dollar Hedging

The Pricing of FX Forward Contracts: Micro Evidence from Banks’ Dollar Hedging https://ift.tt/2INEVER The mechanisms that the authors identify are directly relevant to the current policy debate concerning global funding markets and the procyclicality of the U.S. dollar with respect to the broader financial markets and the real economy. In particular, they show that when a shock affects one segment of the funding market it is transmitted to broader financial markets in ways that are shaped by global banks’ foreign-exchange management, including their dollar-hedging behaviors and direct FX funding structures. These findings have important implications for financial-stability-risk monitoring, systemic risk, […]

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Beyond spreads: Measuring sovereign market stress in the euro area

Beyond spreads: Measuring sovereign market stress in the euro area https://ift.tt/2QUOMeT JavaScript is disabled on your browser. Please enable JavaScript to use all the features on this page. Beyond spreads: Measuring sovereign market stress in the euro area☆ Abstract We develop a novel composite indicator to measure sovereign bond market stress in the euro area. The indicator integrates yield and liquidity spreads along with volatility into an overall measure of sovereign market stress. An application to the spillover literature suggests that stress mainly originates from a few countries, but that spillover patterns also vary over time. JEL classification C43 E44 […]

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IMF Fiscal Monitor: Managing Public Wealth, October 2018

IMF Fiscal Monitor: Managing Public Wealth, October 2018 https://ift.tt/2pDJSHV Back to Top Managing Public Wealth Public sector balance sheets bring together the entirety of what the state owns and owes, offering a broader fiscal picture beyond debt and deficits. Once governments understand the size and nature of public assets, they can start managing them more effectively, raising considerable additional revenue. Also, public sector balance sheet analysis allows for better risk management and policymaking. The Fiscal Monitor provides governments the tools to analyze the resilience of public finances. By identifying risks within the balance sheet, governments can act to manage or mitigate […]

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InoueRossiRevised2018.pdf

InoueRossiRevised2018.pdf https://ift.tt/2PS8qbb Publish via Google Docs September 19, 2018 at 08:30PM https://ift.tt/2PS8qbb

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Systemic Banking Crises Revisited

Systemic Banking Crises Revisited https://ift.tt/2CUk0Rr Systemic Banking Crises Revisited Author/Editor: Luc Laeven ; Fabian Valencia Publication Date: September 14, 2018 Electronic Access: Free Full Text. Use the free Adobe Acrobat Reader to view this PDF file Link to data for this title Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management. Summary: This paper updates the database on systemic banking […]

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