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What is the different between financial rate of return and an economic rate of return?
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What is the diffference between an economic internal rate of return - EIRR - and a financial internal rate of return - FIRR?
Economic Internal Rate of Return or "EIRR" includes all financial benefits of a projects and non financial benefits (for example CO2 savings, decreased health care interventions, reduced traffic and many other benefits that a project can have on the observed area) of a project expressed with a monetary unit.
How is the concept of a normal return on investment related to the distinction between business and economic profit?
Economic profit is the profit made on an investment of some sort in which inflation and other economic factors have been considered. Normal return on investment is just the net profit made in the investment (simple subtraction).
What is Risk adjusted return on economic capital?
RAROC is a risk based profitability measurement for analyzing the risk-adjusted financial performance of the company and for providing a consistent view of the profitability across businesses. RAROC is usually used in banking parlance where companies have to handle the risk of losses.In business enterprises, risk is traded off against benefits. RAROC is defined as the ratio of risk adjusted return to economic capital. The economic capital is the amount of money which is required to secure the survival of the organization in a worst case scenario; it is a buffer against expected shocks in the market values. Economic capital is a function of credit risk, market risk and operational risk and is often calculated by VaR (Value at Risk). This use of capital based on risk improves the capital allocation across the different functional areas of banks, insurance companies or any other business in which capital is placed at risk for an expected return above the risk-free rate.Formula:RAROC = Expected Return / Economic Capital orRAROC = Expected Return / Value at Risk
Causes of economic meltdown?
it is caused by the disorder in the economy of a nation which later causes the GDP of the particular nation to decrease.there is a link between this phenonenom and the law of diminishing return.
What do financial intermediaries do?
I have to separate it into to parts. The financial intermedairies which are banks that borrow their customers money and pay interest on that borrowed money to lend to other customers with the plan of making a return on their investments for them and their customers. Domestic to me would be the personal home needs such as, a individual (not business) that is looking for a depository institution where he or she can gain interest on the deposited funds or for a bank to finance them so they can purchase a home, car, etc. I am still researching, but this is what I understand of what I have already researched. Of course I am a student, not an educator, so this is just my opinion.
What is the diffference between an economic internal rate of return - EIRR - and a financial internal rate of return - FIRR?
Economic Internal Rate of Return or "EIRR" includes all financial benefits of a projects and non financial benefits (for example CO2 savings, decreased health care interventions, reduced traffic and many other benefits that a project can have on the observed area) of a project expressed with a monetary unit.
What has the author J Christian Duvigneau written?
J. Christian Duvigneau has written: 'Guidelines for calculating financial and economic rates of return for DFC projects' -- subject(s): Cost effectiveness, Development credit corporations, Economic development projects, Evaluation, Rate of return
What is the relationship between financial decision making and risk and return?
plz quote me the answer of the above question
Discuss the relationship between financial and decision making and risk and return would all financial manageres view risk return tradeoffs similarly?
there is a direct relationship between financial decision making and risk and return. each financial decision made by the financial manager will have implication for the overall risk of the firm and its potential returns. All financial decisions are ultimately subjective in nature regardless of the amount of objective information collected as part of the decision making process. as a result, not all financial managers view risk return trade offs similarly. however it is expected they such decision making will be consistent with the goal of the investors that the financial manager represents. good luck......
What is the relationship between financial decision making and risk and return Would all financial managers view risk-return trade-offs similarly?
return is a reward gained from investing or the reward from employing assets in a company. risk is the degree of uncertainty of possible return generated from an investment
How is the concept of a normal return on investment related to the distinction between business and economic profit?
Economic profit is the profit made on an investment of some sort in which inflation and other economic factors have been considered. Normal return on investment is just the net profit made in the investment (simple subtraction).
Does licensing have a low financial investment and a high potential financial return?
Yes it does.
The risk-return relationship for each financial asset is shown on?
the security market line
Why must risk as well as return be considered by financial manager who is evaluating a decision alternative or action?
why must risk aswell as return, be considered by a financial maneger
True Investment Returns?
The true investor knows the difference between an accounting and an economic return, and the only return that you should be worried about is the economic return, especially with fixed investments. An accounting return does not take into account inflation. An economic return does take that into account. Inflation is very real when it comes to buying power. $50,000 could buy a nice house in any part of the nation in 1980. Now it could buy maybe half as much real estate, and none along more expensive parts like the coastlines. If an advisor says to you that X% is the return, ask if that is an accounting return, and what inflation is expected to be over the life of the investment.
What is the use of savings to earn in financial return?
investing
An entrepreneur risks in return for financial gain?
failure
