Abstract This paper describes the JICAN Fund investment project, explaining the overall investment strategy, the primary factors considered when formulating the investment strategy, and the approach taken to accurately assess the performance of the Fund. The paper also discusses total risk and recommendations if JICAN Fund is being considered as a sole investment or as part of a bigger portfolio of investments. Lastly, the paper discusses the key lessons learned from the project which include that diversification is crucial for successful portfolio management and that assetallocation plays the primary role in determining the portfolio return when compared to securities selection or market timing.
Table of Contents:
Executive Summary
Portfolio Investment Strategy
Investment Strategy
Strategic AssetAllocation Systematic Security Selection and Market Timing
Risk Controls and Realization Guidelines
Sector Analysis and Execution
North American Equities
Energy
Financials
Materials
Retail
Telecom/Technology
Emerging Market Equities
Exchange Traded Funds (ETFs)
Portfolio Performance Measurements
Overview
Performance Analysis
After-thoughts and Lessons Learned
Appendix 1: Stock Selection Criteria
Appendix 2: Economic Outlook
Appendix 3: Additional Selection Criteria
Appendix 4: Performance Measurement
From the Paper "AMX is a provider of wireless telecommunications services in Latin America. As of December 31, 2007, it had 153.4 million subscribers in 17 countries which include 50 million subscribers in Mexico through Telcel. Also, AMX operates through Americel in Brazil and through Comcel in Colombia. Furthermore, it provides wireless services in Uruguay, Paraguay, Argentina and Chile. It provides fixed-line and wireless services in Guatemala, El Salvador and Nicaragua. We believe that AMX's domination of the Mexican wireless telecom market and other markets such as the Brazilian's and Colombian's will position AMX in a strong position to take advantage of its investments in the 3G technology."
Abstract This paper briefly describes how one company can use cost allocation procedures. It also shows a schedule with comparison to determine what level of growth can be expected for the future which is part of the cost allocations process.
From the Paper "All companies have a desire to know where and how much they are spending. Of course the outflow of cash for the valuation of costs is directly incurred by cost centers, divisions or areas that have regular costs for doing business. For example a doctor's office may allocate a cost to each patient visit. However in real world business this is not practical and in the case of IBM they have allocated in general terms on the basis of departmental sales. IBM is a leader in the information technologies industry and as such has spent many years trying to maintain its position and advance in the industry (IBM, 2005). By reviewing the statements of earnings for IBM (year 2004 and 2003) on the following page, we can easily see which areas have assessed costs and how much that costs was in actual dollars. "
Abstract The paper states that the Financial Accounting Standards Board (FASB ) Financial Accounting Standards Board report entitled "Selected Issues Relating to Assets and Liabilities with Uncertainties" was based on a joint 2004 project between FASB and IASB with the purpose of improving the organization's conceptual framework and concerns the ethical obligations of the accountant's reporting requirements. The paper notes that the areas the report seeks to improve focuses on establishing objectives for better financial reporting by creating qualitative characteristics to be used when conducting financial reporting. The paper comments that the main area of interest in the report is assets and liabilities, primarily the role of probability and uncertainty in defining, recognizing and measuring assets and liabilities. Thus the paper highlights that the goal of the report is to establish an objective framework to be used when reporting on the financial issue of probability and uncertainty and its role in measuring assets and liabilities.
From the Paper "According to the current conceptual frameworks, uncertainty is acknowledged as part of the proper definitions of both assets and liabilities. However, neither of the organization's frameworks impose a necessary "threshold level of probability or expectation of cash inflows or outflows in order for an item to satisfy the definition of an asset or liability." Further, the current IASB framework does include a probability threshold criterion as part of its recognition criteria, whereas no such criteria exist in the current FASB conceptual framework."
Abstract This paper is an examination of the Trust Company of the West, otherwise know as TCW, an asset management firm based in Los Angeles, California. The author talks about why the World Trade Center attack had a large effect on the asset management industry as a whole and more specifically, on the Trust Company of the West's syndicated loans group.
From the Paper "Although September 11th will forever be the day associated with dramatic change, our economy was already in a downward spiral. The markets were weak and consumers and business owners were already preparing for the uncertainties that were predicted. Just a short while before September 11th, the dot-com industry spiraled downward and took the market with it. There were already massive corporate layoffs, business bankruptcies, corporate downsizing and restructuring, an energy crisis and over-consumption in the marketplace."
Abstract This paper analyzes the Capital Asset Pricing Model, describing some of its numerous benefits. With the CAPM, traders can avoid much of the risk they incur through diversification. Therefore, only unavoidable risk should be compensated. Nevertheless, even after a trader diversifies his portfolio, some risk remains. Because some risk is associated with the market as a whole, this risk cannot be neutralized through diversification, and CAPM explains that.
Abstract This is a paper about asset valuation. We are assuming that we have a start up Retail Company that sells computers parts and accessories. The company inventory policy is to use the class FIFO "First In First out" (or LIFO) as a valuation method for inventory. Also this company uses the capitalization policy to determine the type of items that need to be capitalized and the threshold of the capitalization. The paper lists justifications for each of the policies and to show how the policies will assist the company in meeting its goals. The paper also includes a discussion of alternative methods of valuations and why those methods were not chosen
From the Paper "It is important for a company to follow a uniform policy with respect to the acquisition capitalization management and disposition of equipment and other capital assets for financial statement purposes. Assets acquired by a company are either expensed or capitalized. Companies develop specific guidelines about which purchases of assets will be expensed and which must be capitalized. Typically a company will develop a formula that will be used to determine which asset acquisitions are to be capitalized. The variables that are considered in determining whether or not to capitalize an ..."
Tags:asset valuation, inventory valuation, lifo, fifo, income statement, capitalization of acquisitions, rationale.
Abstract This paper discusses issues and problems related to the allocation of costs for an organization. It fist describes an organization's three-step process of allocating costs and how this is carried out. The paper then discusses the significant impact that the allocation of costs has on informal decision making in an organization. It also looks at the impact of not allocating common costs for informal decision making.
From the Paper "Decision making in the organization is affected by the manner in which costs are allocated. The decision makers typically must answer to stakeholder groups. Those groups only see the financial statements. They evaluate the work of the decision makers based on those results. The decision makers will naturally make their decisions based on what makes them look most effective. So the manner in which costs are allocated will thus drive the decision makers, and their choices may not be best for the organization unless costs are allocated accurately. For example, suppose a manager is faced with a choice between two projects, both funded jointly by the organization and a branch of government. If Project A has an allocation formula that places 70% of costs on the organization and Project B has an allocation formula that places 50% of the costs on the organization, the manager will choose Project B. The lower cost base gives the manager a higher likelihood of success. If the reality is that the costs are closer to 50/50 in both cases, then the manager has not necessarily made the best decision for the organization, but rather the decision that will look best for himself."
Abstract This paper explains that major changes in recent years in one of the primary institutions of society and the family have changed the theories of household economics. The author pointed out that one of the hypothesis is that women's power and status within the household are associated with their income-earning ability. The paper relates that many economists have developed bargaining models, which include the formation, function and dissolution of marriage, and family behavior by including information from evolutionary biology, anthropology, game theory, and economic research of family resource allocation and behavior.
Table of Contents
Introduction
Background of Study
Linking Household Economics with Anthropology and Biology
Hypotheses on Household Allocation Processes
Income Pooling
Family Expenditure Patterns and the Attachment Theory
Control over Income: Self-esteem, Power, and Decision-making
Interdependence of the Market and Household Economies
Economic Perspectives
Human Capital
Household and Family
Patterns of Money Management
Sociological Implications of Income Distribution
Social Perspectives
Extending Beyond Parents
Testing Economic Models
Conclusion
From the Paper "In summary, this study shows that fathers have the capacity for responsiveness and care-giving equivalent to that of mothers, but that in most cultures the mother is traditionally the primary caregiver. This pattern is slowly changing in Westernized societies. As of now, however, the mother remains the most responsive party to the child's needs, and therefore may be more likely than the father to spend money to meet those needs. This expenditure depends greatly on her access to resources, whether through decision-making power in the household or through control over her own source of funds. Who makes decisions about expenditures within the family, then, may have a significant impact on the use of resources for meeting the immediate needs of infants and young children."
This paper is a research proposal to study the international management of cross-border risks and capital allocation decisions in a high risk environment.
Abstract This paper explains that, besides the risks inherent in domestic operations, banks, which are engaged in international activities also are exposed to "country risk," or the risk that economic, social and political conditions and events in a foreign country will adversely affect an institution's financial interests. The author points out that, from a practical perspective, accurate and timely country risk assessment is important not only because it affects individual investors but also because it can be systemic; one of the primary purposes of financial regulation is to manage systemic risk. The paper states that the research will be done using a case study methodology to study various country risk/cross border risk management models adopted by a sample of international banks and to assess their robustness and how well they are associated with a framework of planned management actions and capital allocation decisions.
Table of Contents
Introduction
Statement of the Problem
Overview of Study
Purpose of Study
Key Term Definitions
Capital Allocation Decision
Country Risk Ratings
Risk
Preliminary Literature Review
Background and Overview
Current and Future Trends
The Countries' Performance in International Trade
Leverage
Various measures of liquidity
Methodology
Description of the Study Approach
Data-gathering Method and Database of Study
From the Paper "A significant amount of cross-border lending takes place through offices in a bank's home country (or even one of its subsidiaries located in a third country), with no subsidiary (or even branch presence) located in the country in which the borrowing firm is headquartered. Retail banking requires a physical presence of some sort to provide points of contact with customers; by contrast, wholesale banking requires a much smaller investment. "For example, banks with no physical presence in a country can lend substantial volumes of funds to firms and governmental entities of that country through project finance and loan participations." The composition of borrowers will differ, though, depending on whether a foreign bank has a physical presence in a country or manages its loans from offshore locations."
This paper discuses the problems created by the International Accounting Standard (IAS) 38, which prescribes the accounting treatment for intangible assets such as products of the company's research.
Abstract This paper explains that the balance sheet provides next to no use in reporting the increasingly significant intangible assets of business entities. The author points out that intangible assets, such as a highly-talented workforce who generate more revenue, represent the major value-drivers of today's economy. The paper relates that attempts to modify the traditional accounting approach have not kept pace with the changes brought bought by these intangibles. The author believes that the new rules penalize the companies, which have experienced a loss of value in their intangible assets through write-offs that immediately reduce earnings. The paper states that the best solution is to recognize intangible assets in the financial statement including the ones developed in-house; however, entities must report the future performance of their intangible assets or their earning potential before they are tested for possible impairment.
Table of Contents:
IAS 38: Intangible Assets Accounting Rules Fell Short in Valuing Intangibles
Goodwill & Intangibles
Consequences of New Rules
Summary
From the Paper "Most companies have avoided to report in a comprehensive way about their intangible assets as well as the total performance which includes any significant decrease in the value of the intangibles. These rights and the obligation to regularly valuate goodwill and intangible assets represent a major change in disclosure practice and will affect the behavior of both the managers and investors. When America Online and Time Warner merged, this merger quickly showed how goodwill accounting changes can affect shareholders' interest, and exposed the misjudgments of managers."
Abstract This paper explains that behavioral asset pricing models, based on real life behavior, are becoming more relevant and important. The author identifies the salient features of this model and compares traditional, capital (CAPM), arbitrage-pricing (APT), consumption capital (CCAPM), Fama-French 3 factor, fundamentalist and chartist and behavioral asset pricing models. The paper concludes that the behavioral asset pricing model appears to provide one of the better approaches to addressing confounding issues particularly when compared to traditional models. The paper includes detailed summary charts.
Table of Contents:
Introduction
Review and Discussion
Evolution of Asset Pricing Theories
Table: Comparison of Asset Pricing Models
Summary and Conclusion
From the Paper "These new concepts concerning how "real people" make decisions have fueled the rapidly growing fields of behavioral finance. This emphasis on developing a better understanding of real-world decisions made by real people, then, is the essence of behavioral finance. Therefore, from a behavioral finance perspective, economic theory should not necessarily result in the expectation that financial markets are efficient; to the contrary, significant and systematic fluctuations from efficiency can be reasonably expected to endure for lengthy periods of time."
Abstract This paper focuses on the effects of an aging population on financial asset (stocks and bonds) returns in the U.S. for the post-World War II period. The first part of the paper provides a brief review of demographic changes that will confront a selected country during the next half century. The next part presents a review of the empirical literature on demographics and financial asset demands. Next, the paper develops a conceptual framework for analyzing how an aging population triggered by falling birth rates and rising life expectancies affects the demand for financial assets. A discussion of the ideal data set and an outline of the challenges that arise in estimating how population aging will alter aggregate demand follows. Next, the paper builds up the actual models used in this paper and discusses actual data and proxies. Finally, the paper presents new findings and tests empirically the relation between aging and asset returns in the U.S. The conclusion summarizes the main findings and notes areas for future study.
Outline
The Demographic Transition in the U.S. and Other Nations
Theoretical Background and Literature Review
Conceptual Model
Ideal Data
Actual Model
Results and Analysis
From the Paper "Sell? Sell to whom? This dilemma might haunt the Baby Boomers in the next century as they attempt to unload their assets to pay for retirement. The rising number of middle-aged workers today is the direct result of the Baby Boom generation, those born in roughly the two decades following World War II. It is this high working population ratio, which has often been identified as an important factor for rises in productivity (see Shimer (1998)). As these boomers age, they will have profound social and economic implications for much of the developed world. The large increase in the ratio of retired workers to those in the labor force during the next three decades will place substantial strains on public pension programs. Just in the U.S. anticipated social security expenditures will outstrip income by 2020. In many other developed nations the fiscal prospect is even more daunting than it is in the United States."
Abstract This paper explores various methods for allocating limited resources, particularly with regard to limited medical resources and more specifically, human organs. The various methods looked at include distribution based on such things as greatest need, odds for success and the social worth of the individual. The supply side of transplantable organs and the pros and cons of incorporating market forces into the procurement and distribution of organs are also discussed.
From the Paper "John Stuart Mill makes the claim that the distribution of wealth is ?a matter of human institution solely,? because even what a person produces himself, he cannot keep unless human institutions protect his right to keep it from those who would steal it from him (133-134). One might assume that utilitarians such as Mill would naturally prefer an egalitarian approach to allocating resources because of the law of diminishing returns, which simply put is that the more one has, the less enjoyment he gets from getting even more. Therefore a more equal distribution would increase the happiness of society as a whole (Shaw 108). A Rawlsian view might also lead one to an egalitarian approach as people, choosing their fate behind a veil of ignorance, would prefer to "maximize the minimum" that they would receive by choosing a society that shares things equally (Shaw 117)."
Abstract This paper attempts to incorporate several stakeholders, as well as a range of cities, in a discussion of the urban allocation of resources. The historical aspect constitutes part of the analysis, while contemporary data and near-future speculations will complete the picture.
