INVESTMENT PERFORMANCE COUNCIL (IPC)


 Angelina Oliver
 2 years ago
 Views:
Transcription
1 INVESTMENT PEFOMANCE COUNCIL (IPC) INVITATION TO COMMENT: Global Ivestmet Performace Stadards (GIPS ) Guidace Statemet o Calculatio Methodology The Associatio for Ivestmet Maagemet ad esearch (AIM) seeks commet o the proposed Guidace Statemet addressig calculatio methodology set forth below. For iformatio o the Guidace Statemet process, please see Commets must be submitted i writig ad be received by AIM o later tha 31 October All commets ad replies will be put o the public record uless specifically requested. Commets should be addressed to: Professioal Stadards ad Advocacy Associatio for Ivestmet Maagemet ad esearch P.O. Box 3668 Charlottesville, Virgiia USA e: GIPS Guidace Statemet Fax: AIM accepts resposes by fax or , but it would be helpful if a hardcopy respose is submitted as well. Effective Date This Guidace Statemet will apply to all firms from the Effective Date forward. The proposed Effective Date for this Guidace Statemet is 1 April This is the earliest date that the guidace ca become effective give the estimated time eeded for the public commet ad IPC approval process. O this date, the Guidace Statemet will replace all previous guidace o the subject. Executive Summary The GIPS stadards idicate specific dates i the future whe differet calculatio methodologies will be required. This Guidace Statemet provides clarificatio o the various methodologies for calculatig rates of retur ad assetweightig portfolio returs to calculate composite returs. Commet equested AIM seeks public iput o the proposals set forth i this documet. Issues to cosider i cojuctio with this proposal iclude: Do you agree with the priciples established i the Guidace Statemet? Are all areas of rate of retur ad assetweighted composite calculatio sufficietly covered i this Guidace Statemet? 1
2 Are there other areas of calculatio methodology that should be addressed i this Guidace Statemet? Is it reasoable to expect that firms will be able to value portfolios at the time of ay exteral cash flow begiig 1 Jauary 2010 (excludig real estate, veture capital, ad private equity)? Do you agree with the proposed Effective Date? If ot, whe should the guidace become effective? If commetators suggest other proposals, AIM requests that they explai the ratioale behid their proposal. 2
3 Adoptio Date: Effective Date: 1 April 2003 etroactive Applicatio: No INVESTMENT PEFOMANCE COUNCIL Global Ivestmet Performace Stadards (GIPS ) Guidace Statemet o Calculatio Methodologies Stadard 2.A.1: Total retur, icludig realized ad urealized gais plus icome, must be used. Stadard 2.A.2: Timeweighted rates of retur that adjust for cash flows must be used. Periodic returs must be geometrically liked. Timeweighted rates of retur that adjust for dailyweighted cash flows must be used for periods begiig 1 Jauary Actual valuatios at the time of exteral cash flows will likely be required for periods begiig 1 Jauary Stadard 2.A.3: I both the umerator ad the deomiator, the market values of fixedicome securities must iclude accrued icome. I calculatig the performace of the portfolios withi a composite, the GIPS stadards require firms to use: 1. A total rate of retur. A total retur icludes icome as well as realized ad urealized gais ad losses. Stadard 1.A.5 requires the use of accrual accoutig for fixedicome securities ad all other assets that accrue iterest icome. Stadard 1.A.6 states that accrual accoutig must be used for divideds begiig 1 Jauary A timeweighted rate of retur (T), computed usig a miimum of mothly valuatios ad adjustig for cash flows. Subperiod returs must be geometrically liked. The GIPS stadards require the use of a timeweighted rate of retur because it removes the effects of cash flows, which are geerally clietdrive. By removig the effects of cash flows, a timeweighted rate of retur best reflects the firm s ability to maage the portfolio assets accordig to a specified strategy or objective. Calculatio methodologies that iclude adjustmets to remove the effect of cash flows from the performace retur are cosidered timeweighted rateofretur methods. A example of the total retur formula where o cash flows have occurred is: T ( EMV BMV ) BMV 3
4 T is the total retur, EMV is the market value of the portfolio at the ed of the period, icludig all icome accrued up to the ed of the period, ad BMV is the portfolio's market value at the begiig of the period, icludig all icome accrued up to the ed of the previous period. This formula represets the growth (or declie) i the value of the portfolio, icludig both capital appreciatio ad icome, as a proportio of the begiig market value with o cash flows over a period. However, most portfolios experiece cash flows. A cash flow is a exteral flow of cash ad/or securities (i.e., capital additios or withdrawals). Divided paymets ad iterest icome are ot cosidered cash flows. Uless adjustmets are made, cash flows may skew the portfolio retur. A more accurate method of calculatig idividual portfolio performace is to determie the market value of the portfolio o the date of each cash flow, calculate a rate of retur for the subperiod accordig to the precedig formula, ad geometrically lik the subperiod returs to calculate the portfolio retur for the full period. Adjustmets must, therefore, be made to accout for cash flows. The above formula also represets the same calculatio used to compute subperiod returs usig the Daily Valuatio Method, with subperiod returs geometrically liked to produce the retur for the period. Util 1 Jauary 2010, calculatio methods that approximate the effect of cash flows are acceptable. However, the philosophy of the GIPS stadards is to preset performace returs that are as accurate as practically possible. Just as the Stadards trasitio to more frequet valuatios (See, Stadard 1.A.3.), the Stadards also trasitio to more precise calculatio methodologies. Therefore, the GIPS stadards will require timeweighted rates of retur that adjust for dailyweighted cash flows by 1 Jauary 2005 ad will likely require timeweighted rates of retur with valuatios at the time of exteral cash flows by 1 Jauary Each of these methodologies is described below. Firms are permitted to iclude portfolios with differet calculatio methodologies i the same composite (provided the methodologies are permitted accordig the dates stated above). Firms must be cosistet i the methodology used for each portfolio withi the composite (e.g., firms caot chage the methodology from mothtomoth depedig o which methodology produces the highest retur). T that adjust for cash flows (Permitted util 1 Jauary 2005) Various methods that approximate a T are curretly acceptable. The purpose of these methods is to produce as good a estimate as possible i circumstaces where daily valuatios are ot readily available. Oe example of a acceptable method is the Origial Dietz Method. Origial Dietz Method. This method approximates whe cash flows are received ito a portfolio by assumig that all cash flows occur at the midpoit of the period ad halfweights the total flows for the period. EMV BMV CF Dietz BMV CF 4
5 where BMV ad EMV are defied as above ad CF is the et cash flow for the period (cotributios to the portfolio are positive flows, ad withdrawals or distributios are egative flows). T that adjusts for dailyweighted cash flows (equired for periods after 1 Jauary 2005) Begiig 1 Jauary 2005, approximatio methods of T must iclude a dailyweighted adjustmet for cash flows that occur durig the measuremet period. Firms should calculate the retur for each period usig a deomiator that reflects the weightig of cash flows for the time they have bee ivested durig the period. This method cotrasts with other approximatio methods that may, for example, assume that all cash flows are spread evely through the moth. Examples of acceptable dailyweighted methods iclude the Modified Dietz ad Modified Iteral ate of etur (I) Methods. These methods weight each cash flow by the amout of time it is held i the portfolio. These are a estimate of the true T. Modified Dietz Method. The Modified Dietz Method improves upo the Origial Dietz Method by assumig a costat rate of retur o the portfolio durig the period, thereby elimiatig the eed to kow the value of the portfolio o the date of each cash flow. The Origial Dietz Method assumes that all cash flows occur durig the midpoit of the period. I a attempt to determie a more accurate retur, the Modified Dietz Method weights each cash flow by the amout of time it is actually held i the portfolio. The formula for estimatig the timeweighted rate of retur usig the Modified Dietz Method is MDietz EMV BMV CF BMV + i 1 ( CF ) i i where EMV ad BMV are as defied previously, CF is the et cash flows withi the period (cotributios to the portfolio are positive flows, ad withdrawals or distributios are egative flows), ad 1 ( CF i i ) is the sum of each cash flow, CF i, multiplied by its weight, i. i The weight ( i ) is the proportio of the total umber of days i the period that cash flow CF i has bee held i (or out of) the portfolio. The formula for i is i CD D CD i where CD is the total umber of caledar days i the period ad D i is the umber of caledar days sice the begiig of the period i which cash flow CF i occurred. The umerator is based o the assumptio that the cash flows occur at the ed of the day. If cash flows were assumed to occur at the begiig of the day, the umerator would be (CDD i ) + 1. Some firms adjust for cash iflows at the begiig of the day ad cash outflows at the ed of the day. The key is for each firm to establish a policy ad treat cash flows cosistetly. 5
6 The chief advatage of the Modified Dietz Method is that it does ot require portfolio valuatio o the date of each cash flow. Its chief disadvatage is that it provides a less accurate estimate of the true timeweighted rate of retur. The estimate suffers most whe a combiatio of the followig coditios exists: (1) oe or more large cash flows occur; (2) cash flows occur durig periods of high market volatility i.e., the portfolio's returs are sigificatly oliear. Firms should ote that approximatio methods such as the Modified Dietz Method will ot coform with the GIPS stadards begiig 1 Jauary 2010 whe the Stadards will likely require the use of calculatios methods that use actual valuatios at the time of exteral cash flows. Modified I Method. The Modified I Method (also kow as the Modified Bakers Admiistratio Istitute (BAI) Method) alters the Iteral ate of etur (I) formula by takig ito accout the timig of each cash flow, thus trasformig it from a moeyweighted calculatio method to a timeweighted method. I the Modified I approach, the I is that value of that satisfies the followig equatio: i 0 EMV F 1 + i ( ) i where EMV ad i are the same as for the Modified Dietz Method. The cash flows, F i, are also the same as with the Modified Dietz Method with oe importat exceptio: The market value at the start of the period is also treated as a cash flow; i.e., BMV F 0. The I is obtaied by selectig values for ad solvig the equatio util the result equals EMV. For example, if three cash flows (icludig the market value at the begiig of the period as the cash flow) have occurred, the computatioal formula will have three terms: 0 1 ( 1 + ) + F ( 1 + ) + F ( ) 2 EMV F The first term deals with the first cash flow, F 0, which is the value of the portfolio at the begiig of the period; i is the proportio of the period that the cash flow F i was held i (or out of) the portfolio. Because F 0 is i for the whole period, 0 1. The larger the value of F i i the term, the more it will cotribute to the total, but the smaller the expoet (i.e., the value of i ), the less the term will cotribute to the sum. The usual effect is that the first term, with a large F 0 ad 0 equal to 1, will cotribute far more tha the other terms. The advatages ad disadvatages of the Modified I Method are the same as those of the Modified Dietz Method. The Modified I Method has the additioal disadvatage of requirig a iterative process solutio ad is thus less desirable tha the Modified Dietz Method whe maual calculatio is required. It is also possible to have multiple aswers if there are both positive ad egative cash flows. Calculator ad computer programs are available, however, for solvig for the Modified I. 6
7 T that uses actual valuatios at the time of exteral cash flows (Likely required begiig 1 Jauary 2010) The actual valuatio of the portfolio each time there is a exteral cash flow will result i the most accurate T calculatio. I practice, this requiremet ca oly be met by havig the ability to obtai daily valuatios o all portfolio holdigs o a cotiuous basis. Daily Valuatio Method. The Daily Valuatio Method calculates the true T rather tha a estimate. The Daily Valuatio Method breaks the total performace period ito subperiods, based o the occurrece of cash flows, i order to remove the effects of the cash flows. The formula for calculatig the subperiod retur is: ( EMV BMV ) BMV where EMV is the market value of the portfolio at the ed of the subperiod, before ay cash flows i the period, but icludig accrued icome for the period. BMV is the market value at the ed of the previous subperiod (i.e., the begiig of the curret subperiod), icludig ay cash flows at the ed of the previous subperiod ad icludig accrued icome up to the ed of the previous period. The subperiod returs are the geometrically liked accordig to the followig formula: T (( 1 + ) ( 1 + )...( 1 + )) where T is the total retur ad 1, 2 are the subperiod returs for subperiod 1 through respectively. Subperiod 1 exteds from the first day of the period up to ad icludig the date of the first cash flow. Subperiod 2 begis the ext day ad exteds to the date of the secod cash flow, ad so forth. The fial subperiod exteds from the day after the fial cash flow through the last day of the period. This method assumes that the cash flow is ot available for ivestmet util the begiig of the ext day. Accordigly, whe the portfolio is revalued o the date of a cash flow, the cash flow is ot reflected i the Edig Market Value, but is added to the Edig Market Value to determie the Begiig Market Value for the ext day. The chief advatage of this method is that it calculates the true timeweighted rate of retur rather tha a estimate. The major disadvatage is that it requires precise valuatio of the portfolio o the date of each cash flow, somethig that may ot be practical for some firms at this time. I practice, this meas that firms must have the ability to value portfolios o a daily basis. If all securities are ot accurately priced for each subperiod valuatio, errors geerated i the retur calculatio usig the daily valuatio method may be greater tha the errors caused by usig the approximatio methods. I such cases, it is importat to be able to correct for errors, 7
8 such as missed security splits, mispricigs, ad improperly booked trasactios, because daytoday compoudig will ot correct for them automatically if there are cash flows. Sice a timeweighted rate of retur usig actual valuatios at the time of exteral cash flows will likely be required for periods begiig 1 Jauary 2010, firms usig a approximatio method will have to chage their calculatio method by that time. Geometric Likig If mothly portfolio returs are calculated, the mothly returs are liked geometrically to compute a quarterly retur usig this formula: QT (( + ) ( 1 + ) ( 1 + )) 1 1 MO1 MO2 MO3 where QT is the portfolio quarterly retur ad MO1, MO2, ad MO3 are the portfolio returs for moths 1, 2, ad 3, respectively. Similarly, to compute the aual rate of retur for portfolio returs calculated quarterly, the formula to use is (( + ) ( 1 + ) ( 1 + ) ( 1 + )) 1 Y 1 QT1 QT 2 QT 3 QT 4 where QT1, QT2, QT3, ad QT4 are composite returs for Quarters 1, 2, 3, ad 4, respectively. Alteratively, firms could geometrically lik the twelve mothly returs to calculate the aual retur. Applicatio: Example 1: Give the followig iformatio, calculate the rate of retur for this portfolio for Jauary, February, March, ad the first quarter of 1998, usig the Modified Dietz Method: Date Market Value ( ) Cash ( ) Market Value Post Cash ( ) 12/31/97 200,000 1/31/98 208,000 2/16/98 217, , ,000 2/28/98 263,000 3/22/98 270,00030, ,000 3/31/98 245,000 8
9 Solutio: Jauary Ja ( 208, ,000) 200, % February ( 28 16) Feb ( 263, ,000 40,000) ( 208,000 + ( 40, ) ) 6.66% March ( 31 22) Mar ( 245, ,000 ( 30,000) ) ( 263,000 + ( 30, ) ) 4.72% Quarter 1 QT (( ) ( ) ( ) ) % 1 Example 2: Give the followig iformatio, calculate the rate of retur for this portfolio for Jauary, February, March, ad the first quarter of 2000, usig the Daily Valuatio Method: Date Market Value ( ) Cash ( ) Market Value Post Cash ( ) 12/31/99 500,000 1/31/00 509,000 2/19/00 513, , ,000 2/28/00 575,000 3/12/00 585,00020, ,000 3/31/00 570,000 Solutio: Jauary ( 509, ,000) 500, % 9
10 February 1/31/00 2/19/00 ( 513, ,000) 509, % 2/19/00 2/28/00 ( 575, ,000) 563, % 1/31/002/28/00 (( ) ( ) ) % March FEB 2/28/00 3/12/00 ( 585, ,000) 575, % 3/12/00 3/31/00 ( 570, ,000) 565, % 2/28/003/31/00 (( ) ( ) ) % Quarter 1 QT Mar (( ) ( ) ( ) ) % 1 10
11 Stadard 2.A.4: Composites must be asset weighted usig begiigofperiod weightigs or aother method that reflects both begiig market value ad cash flows. Discussio: A composite is a aggregatio of idividual portfolios or asset classes represetig similar ivestmet objectives or strategies. The objective i calculatig the composite returs is to use a method that will produce the same value as if the assets of all the idividual portfolios i the composite were aggregated ad a retur is calculated for oe master portfolio. The GIPS stadards are based o the priciple of assetweighted returs. For example, if a composite cotais two portfolios, oe of which is te times the size of the other, the rate of retur for the larger portfolio should have more impact o the composite retur tha that of the smaller portfolio. The assetweighted retur method accomplishes this by weightig each portfolio s cotributio to the composite rate of retur by its begiig market value (as a percetage of the composite s begiig market value). The Stadards require asset weightig of the portfolio returs withi a composite usig begiigofperiod weightigs, begiigofperiod market values plus weighted cash flows, or by aggregatig portfolio assets ad cash flows to calculate performace as a sigle master portfolio. The begiig market valueweighted composite retur, BMV, ca be calculated usig the formula ( BMV ) i i 1 BMV BMVTOTAL i where BMV i is the begiig market value (at the start of the period) for Portfolio i, i is the rate of retur for Portfolio i, ad BMV TOTAL is the total market value at the begiig of the period for all the portfolios i the composite. The begiig market value plus cash flowweighted method represets a refiemet to the assetweighted approach. Cosider the case i which oe of two portfolios i a composite doubles i market value as the result of a cotributio o the third day of a performace period. Uder the assetweighted approach, this portfolio will be weighted i the composite based solely o its begiig market value (i.e., ot icludig the cotributio). The begiig market value plus cash flowweighted method resolves this problem by icludig the effect of cash flows i the weightig calculatio as well as i the market values. The weightig factor is calculated usig a similar formula as the Modified Dietz Method: i, j ( CD D ) CD i, j where CD is the total umber of caledar days i the period ad D i,j is the umber of caledar days sice the begiig of the period i which cash flow j occurred i portfolio i. 11
12 The begiig market value plus cash flowweighted composite retur, BMV+CF, ca be calculated as follows: BMV + CF i m ( BMVi + ( CF ) ) j i, j i j i m ( BMVi + ( CFi, j i j ) 1 1, i 1 j 1, where CF i,j is cash flow j withi the period for portfolio i (cotributios to the portfolio are positive flows, ad withdrawals or distributios are egative flows) ad i is the retur for portfolio i. The aggregate retur method combies all of the composite assets ad cash flows to calculate performace as if the composite were oe portfolio. The method is also acceptable as a assetweighted approach. Applicatio: Calculate the composite retur usig each of the three methods based o the followig data: Portfolio 1 Date Market Value ($) Cash ($) Market Value Post Cash ($) Mothly etur 11.32% 12/31/99 100,000 1/10/00 103,000 20, ,000 1/22/00 130,000 1/31/00 133,000 12
13 Portfolio 2 Date Market Value ($) Cash ($) Market Value Post Cash ($) Mothly etur 8.26% 12/31/99 500,000 1/10/00 512,000 1/22/00 530,00070, ,000 1/31/00 470,000 Composite etur Begiig Market Value eightig Method: BMV ( 100, ) + ( 500, ) ( 100, ,000) 8.77% Begiig Market Value Plus Cash s Method: ( 31 10) POT1 POT BMV ( ) 2 + CF (( 100,000 + ( 20, ) ) ) + (( 500,000 + ( 70, ) ) ) (( 100,000 + ( 20, ) ) + ( 500,000 + ( 70, ) )) Aggregate Method: (Usig Modified Dietz Method) ( 31 10) Port1 Port 31 ( 31 22) % Jauary (( 133, ,000) ( 100, ,000) ( 20,000 70,000) ) ( 100, ,000 + ( 20, ) + ( 70, ) ) 8.93% 13
INVESTMENT PERFORMANCE COUNCIL (IPC) Guidance Statement on Calculation Methodology
Adoptio Date: 4 March 2004 Effective Date: 1 Jue 2004 Retroactive Applicatio: No Public Commet Period: Aug Nov 2002 INVESTMENT PERFORMANCE COUNCIL (IPC) Preface Guidace Statemet o Calculatio Methodology
More informationHow to read A Mutual Fund shareholder report
Ivestor BulletI How to read A Mutual Fud shareholder report The SEC s Office of Ivestor Educatio ad Advocacy is issuig this Ivestor Bulleti to educate idividual ivestors about mutual fud shareholder reports.
More informationCHAPTER 3 THE TIME VALUE OF MONEY
CHAPTER 3 THE TIME VALUE OF MONEY OVERVIEW A dollar i the had today is worth more tha a dollar to be received i the future because, if you had it ow, you could ivest that dollar ad ear iterest. Of all
More information.04. This means $1000 is multiplied by 1.02 five times, once for each of the remaining sixmonth
Questio 1: What is a ordiary auity? Let s look at a ordiary auity that is certai ad simple. By this, we mea a auity over a fixed term whose paymet period matches the iterest coversio period. Additioally,
More informationIntroducing Your New Wells Fargo Trust and Investment Statement. Your Account Information Simply Stated.
Itroducig Your New Wells Fargo Trust ad Ivestmet Statemet. Your Accout Iformatio Simply Stated. We are pleased to itroduce your ew easytoread statemet. It provides a overview of your accout ad a complete
More informationChapter 5 Unit 1. IET 350 Engineering Economics. Learning Objectives Chapter 5. Learning Objectives Unit 1. Annual Amount and Gradient Functions
Chapter 5 Uit Aual Amout ad Gradiet Fuctios IET 350 Egieerig Ecoomics Learig Objectives Chapter 5 Upo completio of this chapter you should uderstad: Calculatig future values from aual amouts. Calculatig
More informationBond Valuation I. What is a bond? Cash Flows of A Typical Bond. Bond Valuation. Coupon Rate and Current Yield. Cash Flows of A Typical Bond
What is a bod? Bod Valuatio I Bod is a I.O.U. Bod is a borrowig agreemet Bod issuers borrow moey from bod holders Bod is a fixedicome security that typically pays periodic coupo paymets, ad a pricipal
More informationStatement of cash flows
6 Statemet of cash flows this chapter covers... I this chapter we study the statemet of cash flows, which liks profit from the statemet of profit or loss ad other comprehesive icome with chages i assets
More informationPresent Value Tax Expenditure Estimate of Tax Assistance for Retirement Saving
Preset Value Tax Expediture Estimate of Tax Assistace for Retiremet Savig Tax Policy Brach Departmet of Fiace Jue 30, 1998 2 Preset Value Tax Expediture Estimate of Tax Assistace for Retiremet Savig This
More informationI. Why is there a time value to money (TVM)?
Itroductio to the Time Value of Moey Lecture Outlie I. Why is there the cocept of time value? II. Sigle cash flows over multiple periods III. Groups of cash flows IV. Warigs o doig time value calculatios
More informationSavings and Retirement Benefits
60 Baltimore Couty Public Schools offers you several ways to begi savig moey through payroll deductios. Defied Beefit Pesio Pla Tax Sheltered Auities ad Custodial Accouts Defied Beefit Pesio Pla Did you
More informationwhere: T = number of years of cash flow in investment's life n = the year in which the cash flow X n i = IRR = the internal rate of return
EVALUATING ALTERNATIVE CAPITAL INVESTMENT PROGRAMS By Ke D. Duft, Extesio Ecoomist I the March 98 issue of this publicatio we reviewed the procedure by which a capital ivestmet project was assessed. The
More information5.4 Amortization. Question 1: How do you find the present value of an annuity? Question 2: How is a loan amortized?
5.4 Amortizatio Questio 1: How do you fid the preset value of a auity? Questio 2: How is a loa amortized? Questio 3: How do you make a amortizatio table? Oe of the most commo fiacial istrumets a perso
More informationSubject CT5 Contingencies Core Technical Syllabus
Subject CT5 Cotigecies Core Techical Syllabus for the 2015 exams 1 Jue 2014 Aim The aim of the Cotigecies subject is to provide a groudig i the mathematical techiques which ca be used to model ad value
More informationLearning objectives. Duc K. Nguyen  Corporate Finance 21/10/2014
1 Lecture 3 Time Value of Moey ad Project Valuatio The timelie Three rules of time travels NPV of a stream of cash flows Perpetuities, auities ad other special cases Learig objectives 2 Uderstad the timevalue
More informationCDs Bought at a Bank verses CD s Bought from a Brokerage. Floyd Vest
CDs Bought at a Bak verses CD s Bought from a Brokerage Floyd Vest CDs bought at a bak. CD stads for Certificate of Deposit with the CD origiatig i a FDIC isured bak so that the CD is isured by the Uited
More informationBENEFITCOST ANALYSIS Financial and Economic Appraisal using Spreadsheets
BENEITCST ANALYSIS iacial ad Ecoomic Appraisal usig Spreadsheets Ch. 2: Ivestmet Appraisal  Priciples Harry Campbell & Richard Brow School of Ecoomics The Uiversity of Queeslad Review of basic cocepts
More informationMainStay Funds IRA/SEP/Roth IRA Distribution Form
MaiStay Fuds IRA/SEP/Roth IRA Distributio Form Do ot use for IRA Trasfers or SIMPLE IRA INSTRUCTIONS Before completig this form, please refer to the applicable Custodial Agreemet ad Disclosure Statemet
More informationConfidence Intervals for One Mean with Tolerance Probability
Chapter 421 Cofidece Itervals for Oe Mea with Tolerace Probability Itroductio This procedure calculates the sample size ecessary to achieve a specified distace from the mea to the cofidece limit(s) with
More informationSolving Logarithms and Exponential Equations
Solvig Logarithms ad Epoetial Equatios Logarithmic Equatios There are two major ideas required whe solvig Logarithmic Equatios. The first is the Defiitio of a Logarithm. You may recall from a earlier topic:
More informationTime Value of Money, NPV and IRR equation solving with the TI86
Time Value of Moey NPV ad IRR Equatio Solvig with the TI86 (may work with TI85) (similar process works with TI83, TI83 Plus ad may work with TI82) Time Value of Moey, NPV ad IRR equatio solvig with
More informationDefinition. A variable X that takes on values X 1, X 2, X 3,...X k with respective frequencies f 1, f 2, f 3,...f k has mean
1 Social Studies 201 October 13, 2004 Note: The examples i these otes may be differet tha used i class. However, the examples are similar ad the methods used are idetical to what was preseted i class.
More informationInstitute of Actuaries of India Subject CT1 Financial Mathematics
Istitute of Actuaries of Idia Subject CT1 Fiacial Mathematics For 2014 Examiatios Subject CT1 Fiacial Mathematics Core Techical Aim The aim of the Fiacial Mathematics subject is to provide a groudig i
More informationTerminology for Bonds and Loans
³ ² ± Termiology for Bods ad Loas Pricipal give to borrower whe loa is made Simple loa: pricipal plus iterest repaid at oe date Fixedpaymet loa: series of (ofte equal) repaymets Bod is issued at some
More informationAmendments to employer debt Regulations
March 2008 Pesios Legal Alert Amedmets to employer debt Regulatios The Govermet has at last issued Regulatios which will amed the law as to employer debts uder s75 Pesios Act 1995. The amedig Regulatios
More informationI. Chisquared Distributions
1 M 358K Supplemet to Chapter 23: CHISQUARED DISTRIBUTIONS, TDISTRIBUTIONS, AND DEGREES OF FREEDOM To uderstad tdistributios, we first eed to look at aother family of distributios, the chisquared distributios.
More information1 Computing the Standard Deviation of Sample Means
Computig the Stadard Deviatio of Sample Meas Quality cotrol charts are based o sample meas ot o idividual values withi a sample. A sample is a group of items, which are cosidered all together for our aalysis.
More informationA Resource for Freestanding Mathematics Qualifications Working with %
Ca you aswer these questios? A savigs accout gives % iterest per aum.. If 000 is ivested i this accout, how much will be i the accout at the ed of years? A ew car costs 16 000 ad its value falls by 1%
More informationPerformance Attribution in Private Equity
Performace Attributio i Private Equity Austi M. Log, III MPA, CPA, JD Parter Aligmet Capital Group 4500 Steier Rach Blvd., Ste. 806 Austi, TX 78732 Phoe 512.506.8299 Fax 512.996.0970 Email alog@aligmetcapital.com
More informationSoving Recurrence Relations
Sovig Recurrece Relatios Part 1. Homogeeous liear 2d degree relatios with costat coefficiets. Cosider the recurrece relatio ( ) T () + at ( 1) + bt ( 2) = 0 This is called a homogeeous liear 2d degree
More informationCHAPTER 11 Financial mathematics
CHAPTER 11 Fiacial mathematics I this chapter you will: Calculate iterest usig the simple iterest formula ( ) Use the simple iterest formula to calculate the pricipal (P) Use the simple iterest formula
More informationGeometric Sequences and Series. Geometric Sequences. Definition of Geometric Sequence. such that. a2 4
3330_0903qxd /5/05 :3 AM Page 663 Sectio 93 93 Geometric Sequeces ad Series 663 Geometric Sequeces ad Series What you should lear Recogize, write, ad fid the th terms of geometric sequeces Fid th partial
More informationSimple Annuities Present Value.
Simple Auities Preset Value. OBJECTIVES (i) To uderstad the uderlyig priciple of a preset value auity. (ii) To use a CASIO CFX9850GB PLUS to efficietly compute values associated with preset value auities.
More informationPresent Values, Investment Returns and Discount Rates
Preset Values, Ivestmet Returs ad Discout Rates Dimitry Midli, ASA, MAAA, PhD Presidet CDI Advisors LLC dmidli@cdiadvisors.com May 2, 203 Copyright 20, CDI Advisors LLC The cocept of preset value lies
More informationA Guide to the Pricing Conventions of SFE Interest Rate Products
A Guide to the Pricig Covetios of SFE Iterest Rate Products SFE 30 Day Iterbak Cash Rate Futures Physical 90 Day Bak Bills SFE 90 Day Bak Bill Futures SFE 90 Day Bak Bill Futures Tick Value Calculatios
More informationComparing Credit Card Finance Charges
Comparig Credit Card Fiace Charges Comparig Credit Card Fiace Charges Decidig if a particular credit card is right for you ivolves uderstadig what it costs ad what it offers you i retur. To determie how
More informationSECTION 1.5 : SUMMATION NOTATION + WORK WITH SEQUENCES
SECTION 1.5 : SUMMATION NOTATION + WORK WITH SEQUENCES Read Sectio 1.5 (pages 5 9) Overview I Sectio 1.5 we lear to work with summatio otatio ad formulas. We will also itroduce a brief overview of sequeces,
More informationBond Pricing Theorems. Floyd Vest
Bod Pricig Theorems Floyd Vest The followig Bod Pricig Theorems develop mathematically such facts as, whe market iterest rates rise, the price of existig bods falls. If a perso wats to sell a bod i this
More informationAnalyzing Longitudinal Data from Complex Surveys Using SUDAAN
Aalyzig Logitudial Data from Complex Surveys Usig SUDAAN Darryl Creel Statistics ad Epidemiology, RTI Iteratioal, 312 Trotter Farm Drive, Rockville, MD, 20850 Abstract SUDAAN: Software for the Statistical
More informationTime Value of Money. First some technical stuff. HP10B II users
Time Value of Moey Basis for the course Power of compoud iterest $3,600 each year ito a 401(k) pla yields $2,390,000 i 40 years First some techical stuff You will use your fiacial calculator i every sigle
More informationFM4 CREDIT AND BORROWING
FM4 CREDIT AND BORROWING Whe you purchase big ticket items such as cars, boats, televisios ad the like, retailers ad fiacial istitutios have various terms ad coditios that are implemeted for the cosumer
More informationCorporation tax trading profits
2 Corporatio tax tradig profits this chapter covers... I this chapter we provide a brief review of the Corporatio Tax computatio, ad examie the step by step procedures for compilig the computatio, before
More informationStatistical Confidence Levels for Estimating Error Probability
HFTA5. Rev 2; 11/7 Statistical Cofidece Levels for Estimatig Error Probability ote: This article has bee previously published i Lightwave Magazie (April 2), ad i the Maxim Egieerig Joural (volume 37).
More informationChapter Gaussian Elimination
Chapter 04.06 Gaussia Elimiatio After readig this chapter, you should be able to:. solve a set of simultaeous liear equatios usig Naïve Gauss elimiatio,. lear the pitfalls of the Naïve Gauss elimiatio
More informationPENSION ANNUITY. Policy Conditions Document reference: PPAS1(7) This is an important document. Please keep it in a safe place.
PENSION ANNUITY Policy Coditios Documet referece: PPAS1(7) This is a importat documet. Please keep it i a safe place. Pesio Auity Policy Coditios Welcome to LV=, ad thak you for choosig our Pesio Auity.
More information*The most important feature of MRP as compared with ordinary inventory control analysis is its time phasing feature.
Itegrated Productio ad Ivetory Cotrol System MRP ad MRP II Framework of Maufacturig System Ivetory cotrol, productio schedulig, capacity plaig ad fiacial ad busiess decisios i a productio system are iterrelated.
More informationZTEST / ZSTATISTIC: used to test hypotheses about. µ when the population standard deviation is unknown
ZTEST / ZSTATISTIC: used to test hypotheses about µ whe the populatio stadard deviatio is kow ad populatio distributio is ormal or sample size is large TTEST / TSTATISTIC: used to test hypotheses about
More informationYour grandmother and her financial counselor
Sectio 10. Arithmetic Sequeces 963 Objectives Sectio 10. Fid the commo differece for a arithmetic sequece. Write s of a arithmetic sequece. Use the formula for the geeral of a arithmetic sequece. Use the
More informationDomain 1: Designing a SQL Server Instance and a Database Solution
Maual SQL Server 2008 Desig, Optimize ad Maitai (70450) 18004186789 Domai 1: Desigig a SQL Server Istace ad a Database Solutio Desigig for CPU, Memory ad Storage Capacity Requiremets Whe desigig a
More informationI apply to subscribe for a Stocks & Shares ISA for the tax year 20 /20 and each subsequent year until further notice.
IFSL Brooks Macdoald Fud Stocks & Shares ISA Trasfer Applicatio Form IFSL Brooks Macdoald Fud Stocks & Shares ISA Trasfer Applicatio Form Please complete usig BLOCK CAPITALS ad retur the completed form
More informationExample: Probability ($1 million in S&P 500 Index will decline by more than 20% within a
Value at Risk For a give portfolio, ValueatRisk (VAR) is defied as the umber VAR such that: Pr( Portfolio loses more tha VAR withi time period t)
More informationDivide and Conquer, Solving Recurrences, Integer Multiplication Scribe: Juliana Cook (2015), V. Williams Date: April 6, 2016
CS 6, Lecture 3 Divide ad Coquer, Solvig Recurreces, Iteger Multiplicatio Scribe: Juliaa Cook (05, V Williams Date: April 6, 06 Itroductio Today we will cotiue to talk about divide ad coquer, ad go ito
More informationInvesting in Stocks WHAT ARE THE DIFFERENT CLASSIFICATIONS OF STOCKS? WHY INVEST IN STOCKS? CAN YOU LOSE MONEY?
Ivestig i Stocks Ivestig i Stocks Busiesses sell shares of stock to ivestors as a way to raise moey to fiace expasio, pay off debt ad provide operatig capital. Ecoomic coditios: Employmet, iflatio, ivetory
More informationLesson 12. Sequences and Series
Retur to List of Lessos Lesso. Sequeces ad Series A ifiite sequece { a, a, a,... a,...} ca be thought of as a list of umbers writte i defiite order ad certai patter. It is usually deoted by { a } =, or
More informationEnhance Your Financial Legacy Variable Annuities with Death Benefits from Pacific Life
Ehace Your Fiacial Legacy Variable Auities with Death Beefits from Pacific Life 9/15 2018815C FOR CALIFORNIA As You Pla for Retiremet, Protect Your Loved Oes A Pacific Life variable auity ca offer three
More informationCurrent Year Income Assessment Form
Curret Year Icome Assessmet Form Academic Year 2015/16 Persoal details Perso 1 Your Customer Referece Number Your Customer Referece Number Name Name Date of birth Address / / Date of birth / / Address
More informationFrance caters to innovative companies and offers the best research tax credit in Europe
1/5 The Frech Govermet has three objectives : > improve Frace s fiscal competitiveess > cosolidate R&D activities > make Frace a attractive coutry for iovatio Tax icetives have become a key elemet of public
More informationEnhance Your Financial Legacy Variable Annuity Death Benefits from Pacific Life
Ehace Your Fiacial Legacy Variable Auity Death Beefits from Pacific Life 7/15 2017215B As You Pla for Retiremet, Protect Your Loved Oes A Pacific Life variable auity ca offer three death beefits that
More informationTHE FAMILY BUSINESS. The Jones Family Business CASESTUDY
THE FAMILY BUSINESS The Joes Family Busiess CASESTUDY Workig with cliets to trasitio a family busiess i the cotext of overall estate plaig ca be very emotioal ad dautig for a variety of reasos. It is ofte
More informationFACTSHEET 1: DEVELOPING A STRATEGIC MANAGEMENT PLAN
FACTSHEET 1: DEVELOPING A STRATEGIC MANAGEMENT PLAN THIS FACTSHEET RELATES TO QUESTION 2.3 OF THE MSPI (MUSEUM STANDARDS PROGRAMME FOR IRELAND) 1. Itroductio Writig a Strategic Maagemet Pla ca provide
More information2 Time Value of Money
2 Time Value of Moey BASIC CONCEPTS AND FORMULAE 1. Time Value of Moey It meas moey has time value. A rupee today is more valuable tha a rupee a year hece. We use rate of iterest to express the time value
More informationCHAPTER 3 DIGITAL CODING OF SIGNALS
CHAPTER 3 DIGITAL CODING OF SIGNALS Computers are ofte used to automate the recordig of measuremets. The trasducers ad sigal coditioig circuits produce a voltage sigal that is proportioal to a quatity
More informationPresent Value Factor To bring one dollar in the future back to present, one uses the Present Value Factor (PVF): Concept 9: Present Value
Cocept 9: Preset Value Is the value of a dollar received today the same as received a year from today? A dollar today is worth more tha a dollar tomorrow because of iflatio, opportuity cost, ad risk Brigig
More informationCase Study. Normal and t Distributions. Density Plot. Normal Distributions
Case Study Normal ad t Distributios Bret Halo ad Bret Larget Departmet of Statistics Uiversity of Wiscosi Madiso October 11 13, 2011 Case Study Body temperature varies withi idividuals over time (it ca
More informationInformation about Bankruptcy
Iformatio about Bakruptcy Isolvecy Service of Irelad Seirbhís Dócmhaieachta a héirea Isolvecy Service of Irelad Seirbhís Dócmhaieachta a héirea What is the? The Isolvecy Service of Irelad () is a idepedet
More informationEngineering 323 Beautiful Homework Set 3 1 of 7 Kuszmar Problem 2.51
Egieerig 33 eautiful Homewor et 3 of 7 Kuszmar roblem.5.5 large departmet store sells sport shirts i three sizes small, medium, ad large, three patters plaid, prit, ad stripe, ad two sleeve legths log
More informationSole trader financial statements
3 Sole trader fiacial statemets this chapter covers... I this chapter we look at preparig the year ed fiacial statemets of sole traders (that is, oe perso ruig their ow busiess). We preset the fiacial
More informationMy first gold holdings. My first bank. Simple. Transparent. Individual. Our investment solutions for clients abroad.
My first gold holdigs. My first bak. Simple. Trasparet. Idividual. Our ivestmet solutios for cliets abroad. The perfect basis for workig together successfully The wheel of time is turig faster tha ever
More informationStandard Errors and Confidence Intervals
Stadard Errors ad Cofidece Itervals Itroductio I the documet Data Descriptio, Populatios ad the Normal Distributio a sample had bee obtaied from the populatio of heights of 5yearold boys. If we assume
More informationFLEXIBLE GUARANTEE BOND SERIES 2
FLEXIBLE GUARANTEE BOND SERIES 2 Key features of the Flexible Guaratee Bod Series 2 The Fiacial Coduct Authority is a fiacial services regulator. It requires us, LV=, to give you this importat iformatio
More informationCenter, Spread, and Shape in Inference: Claims, Caveats, and Insights
Ceter, Spread, ad Shape i Iferece: Claims, Caveats, ad Isights Dr. Nacy Pfeig (Uiversity of Pittsburgh) AMATYC November 2008 Prelimiary Activities 1. I would like to produce a iterval estimate for the
More informationHypergeometric Distributions
7.4 Hypergeometric Distributios Whe choosig the startig lieup for a game, a coach obviously has to choose a differet player for each positio. Similarly, whe a uio elects delegates for a covetio or you
More informationConfidence Intervals for One Mean
Chapter 420 Cofidece Itervals for Oe Mea Itroductio This routie calculates the sample size ecessary to achieve a specified distace from the mea to the cofidece limit(s) at a stated cofidece level for a
More informationTO: Users of the ACTEX Review Seminar on DVD for SOA Exam FM/CAS Exam 2
TO: Users of the ACTEX Review Semiar o DVD for SOA Exam FM/CAS Exam FROM: Richard L. (Dick) Lodo, FSA Dear Studets, Thak you for purchasig the DVD recordig of the ACTEX Review Semiar for SOA Exam FM (CAS
More informationPreSuit Collection Strategies
PreSuit Collectio Strategies Writte by Charles PT Phoeix How to Decide Whether to Pursue Collectio Calculatig the Value of Collectio As with ay busiess litigatio, all factors associated with the process
More information5: Introduction to Estimation
5: Itroductio to Estimatio Cotets Acroyms ad symbols... 1 Statistical iferece... Estimatig µ with cofidece... 3 Samplig distributio of the mea... 3 Cofidece Iterval for μ whe σ is kow before had... 4 Sample
More informationHow deductible plans work
Idividual ad Family Plas DEDUCTIBLE PLANS How deductible plas work Deductible plas geerally offer lower mothly premiums i exchage for payig more out of your ow pocket for services covered by your health
More informationRepeating Decimals are decimal numbers that have number(s) after the decimal point that repeat in a pattern.
5.5 Fractios ad Decimals Steps for Chagig a Fractio to a Decimal. Simplify the fractio, if possible. 2. Divide the umerator by the deomiator. d d Repeatig Decimals Repeatig Decimals are decimal umbers
More informationConfidence Intervals. CI for a population mean (σ is known and n > 30 or the variable is normally distributed in the.
Cofidece Itervals A cofidece iterval is a iterval whose purpose is to estimate a parameter (a umber that could, i theory, be calculated from the populatio, if measuremets were available for the whole populatio).
More informationFI A CIAL MATHEMATICS
CHAPTER 7 FI A CIAL MATHEMATICS Page Cotets 7.1 Compoud Value 117 7.2 Compoud Value of a Auity 118 7.3 Sikig Fuds 119 7.4 Preset Value 122 7.5 Preset Value of a Auity 122 7.6 Term Loas ad Amortizatio 123
More informationTrading the randomness  Designing an optimal trading strategy under a drifted random walk price model
Tradig the radomess  Desigig a optimal tradig strategy uder a drifted radom walk price model Yuao Wu Math 20 Project Paper Professor Zachary Hamaker Abstract: I this paper the author iteds to explore
More informationLecture Notes CMSC 251
We have this messy summatio to solve though First observe that the value remais costat throughout the sum, ad so we ca pull it out frot Also ote that we ca write 3 i / i ad (3/) i T () = log 3 (log ) 1
More informationExample 2 Find the square root of 0. The only square root of 0 is 0 (since 0 is not positive or negative, so those choices don t exist here).
BEGINNING ALGEBRA Roots ad Radicals (revised summer, 00 Olso) Packet to Supplemet the Curret Textbook  Part Review of Square Roots & Irratioals (This portio ca be ay time before Part ad should mostly
More informationCCH Accountants Starter Pack
CCH Accoutats Starter Pack We may be a bit smaller, but fudametally we re o differet to ay other accoutig practice. Util ow, smaller firms have faced a stark choice: Buy cheaply, kowig that the practice
More informationHow does my pension scheme work?
How does my pesio scheme work? A guide for members of occupatioal pesio schemes www.pesiosauthority.ie The Pesios Authority Verschoyle House 28/30 Lower Mout Street Dubli 2 Tel: (01) 613 1900 LoCall: 1890
More informationUnderstanding Financial Management: A Practical Guide Guideline Answers to the Concept Check Questions
Udestadig Fiacial Maagemet: A Pactical Guide Guidelie Aswes to the Cocept Check Questios Chapte 4 The Time Value of Moey Cocept Check 4.. What is the meaig of the tems isketu tadeoff ad time value of
More informationWithdrawals with SunAmerica Income Plus 6% SM
Guaratee cliets Withdrawals with SuAmerica Icome Plus 6% SM More Now More Later More Flexibility Growth with SuAmerica Icome Builder 8% SM For fiacial professioal use oly. Not for distributio to the public.
More informationHypothesis Tests Applied to Means
The Samplig Distributio of the Mea Hypothesis Tests Applied to Meas Recall that the samplig distributio of the mea is the distributio of sample meas that would be obtaied from a particular populatio (with
More informationNEW HIGH PERFORMANCE COMPUTATIONAL METHODS FOR MORTGAGES AND ANNUITIES. Yuri Shestopaloff,
NEW HIGH PERFORMNCE COMPUTTIONL METHODS FOR MORTGGES ND NNUITIES Yuri Shestopaloff, Geerally, mortgage ad auity equatios do ot have aalytical solutios for ukow iterest rate, which has to be foud usig umerical
More informationI apply to subscribe for a Stocks & Shares NISA for the tax year 2015/2016 and each subsequent year until further notice.
IFSL Brooks Macdoald Fud Stocks & Shares NISA trasfer applicatio form IFSL Brooks Macdoald Fud Stocks & Shares NISA trasfer applicatio form Please complete usig BLOCK CAPITALS ad retur the completed form
More informationUnit 20 Hypotheses Testing
Uit 2 Hypotheses Testig Objectives: To uderstad how to formulate a ull hypothesis ad a alterative hypothesis about a populatio proportio, ad how to choose a sigificace level To uderstad how to collect
More informationGround rules. Guide to Calculation Methods for the FTSE Fixed Income Indexes v1.3
Groud rules Guide to Calculatio Methods for the FTSE Fixed Icome Idexes v1.3 ftserussell.com October 2015 Cotets 1.0 Itroductio... 3 2.0 Idex level calculatios... 5 3.0 Bod level calculatios... 10 Appedix
More informationKey Ideas Section 81: Overview hypothesis testing Hypothesis Hypothesis Test Section 82: Basics of Hypothesis Testing Null Hypothesis
Chapter 8 Key Ideas Hypothesis (Null ad Alterative), Hypothesis Test, Test Statistic, Pvalue Type I Error, Type II Error, Sigificace Level, Power Sectio 81: Overview Cofidece Itervals (Chapter 7) are
More informationModule 4: Mathematical Induction
Module 4: Mathematical Iductio Theme 1: Priciple of Mathematical Iductio Mathematical iductio is used to prove statemets about atural umbers. As studets may remember, we ca write such a statemet as a predicate
More informationODBC. Getting Started With Sage Timberline Office ODBC
ODBC Gettig Started With Sage Timberlie Office ODBC NOTICE This documet ad the Sage Timberlie Office software may be used oly i accordace with the accompayig Sage Timberlie Office Ed User Licese Agreemet.
More informationwhen n = 1, 2, 3, 4, 5, 6, This list represents the amount of dollars you have after n days. Note: The use of is read as and so on.
Geometric eries Before we defie what is meat by a series, we eed to itroduce a related topic, that of sequeces. Formally, a sequece is a fuctio that computes a ordered list. uppose that o day 1, you have
More informationsummary of cover CONTRACT WORKS INSURANCE
1 SUMMARY OF COVER CONTRACT WORKS summary of cover CONTRACT WORKS INSURANCE This documet details the cover we ca provide for our commercial or church policyholders whe udertakig buildig or reovatio works.
More informationDetermining the sample size
Determiig the sample size Oe of the most commo questios ay statisticia gets asked is How large a sample size do I eed? Researchers are ofte surprised to fid out that the aswer depeds o a umber of factors
More informationQuestion 2: How is a loan amortized?
Questio 2: How is a loa amortized? Decreasig auities may be used i auto or home loas. I these types of loas, some amout of moey is borrowed. Fixed paymets are made to pay off the loa as well as ay accrued
More informationOne Goal. 18Months. Unlimited Opportunities.
18 fasttrack 18Moth BACHELOR S DEGREE completio PROGRAMS Oe Goal. 18Moths. Ulimited Opportuities. www.ortheaster.edu/cps FastTrack Your Bachelor s Degree ad Career Goals Complete your bachelor s degree
More information