Corporate Finance Tutors in New York and London – CFA Tutors

Private tutoring lessons for Corporate Finance, Managerial Finance, Financial Markets and Valuation Techniques.

$ROE = \dfrac{net income}{equity} =\underbrace{\frac{assets}{equity}}_\text{leverage ratio} \times \underbrace{\frac{sales}{assets}}_\text{asset turnover} \times \underbrace{\frac{after tax interest + net income}{sales}}_\text{operating profit margin} \times \underbrace{\frac{net income}{after tax interest + net income}}_\text{debt burden}$

Key concepts: Return
Holding-Period Returns
Return statistics
Key concepts: Risk
Risk-free assets, returns and risk premia
The relationship between risk and return
More on average returns
Key concepts for analyzing risk and return in individual securities

We have a couple of benchmarks to assess risk and return. You know the discount rate for safe projects, and you have an estimate of the rate for average-risk projects. But you don’t know yet how to estimate discount rates for assets that do not fit these simple cases. To do that, you have to learn (1) how to measure risk and (2) the relationship between risks borne and risk premiums demanded.

The standard statistical measures of spread are variance and standard deviation. The variance of the market return is the expected squared deviation from the expected return.