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Statistical Tool for Financial - Research Paper Example

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The implications of a rolling portfolio in case of IPOs are the subject of this work. After assessing the risk return values, we have focused our attention on the role of portfolio executives as well as on the necessity adopt a frequent revision policy in particular market conditions.
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Statistical Tool for Financial Research
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Download file to see previous pages However IPOs problems affect not simply corporations but also start-up companies facing plenty of obstacles, including the cost of Compliance with Sarbanes Oxley. Modern corporate finance however unanimously points to a formidable hurdle: Portfolio executives. Considering that the timing of an IPO will be driven by company growth and market conditions, we have based our assumptions for an efficient portfolio strategy on improving capital markets with IPOs hoping to maximise their wealth. With a rapid growth of issuers' activity on the cable markets, expected to continue in the next few years, we have used Time Warner Cable unit for this case study. If Section 1 illustrates and develops the implications of a newly created portfolio detailing executive level strategic financial decisions for the following year, Section 2 is more focused on the concept of decision planning as well as on its effects in case of poor corporate governance decisions. We have based the risk-return characteristics of our rolling portfolio investment strategy on stocks bought and held for up to one year. Although the average long-run portfolio return is low and in line with market reactions to security offer announcements, this IPO stocks appear as long-shots, securing a buy-and-hold returns of 1,000 percent. In line with average NASDAQ market capitalization our IPO firm exhibits relatively high stock turnover and low leverage, contributing to lower systematic risk exposures. To analyse the implications of these strategic decisions, we have based our assessment on globally acknowledged peer-reviewed research and theory. Our conclusions are finally presented in Section 3.
1. Newly created portfolio strategy and executive-level strategic financial decision making
The acknowledgement that flipping is useful in helping to create liquidity may convince an executive team that focusing resources almost exclusively on a few late-stage assets is a wise move. Measuring value and risk at portfolio level can contribute to appropriately capture the portfolio strategic risk and induce executives dissatisfied with the current status quo to analyse if they intend to leave corporate strategic risk management and diversification completely to shareholders and markets or how an independent growth path can be possible in their high-risk business. To analyse these issues it is important to develop a structured approach that helps senior executives better understand the impact of portfolio decisions on risk and value of the corporate or therapy area level portfolios. Therefore we have based our approach on assessing a strategy of purchasing and holding successive IPO stocks receives an expected return commensurable with risk. Usually this can be achieved by creating different market scenarios reflecting uncertainty around the product profile and resulting in a Risk and Value plot at the portfolio level. In consideration of the above, we have assessed this portfolio by using the Markowitz two assets portfolio model. Clearly when managing a very active investment portfolio against a well-defined benchmark, the goal of the manager should be to generate a return that exceeds that of the benchmark while minimizing the portfolio's return volatility relative to the benchmark. Assuming a portfolio of assets ...Download file to see next pagesRead More
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