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The precise formula is a function of the central moments of the return distribution. [ 5 ] ) The mathematics behind the volatility tax is such that a very large portfolio loss has a disproportionate impact on the volatility tax that it pays and, as Spitznagel wrote, this is why the most effective risk mitigation focuses on large losses:
Companies create value whenever they are able to generate returns on capital above the weighted average cost of capital (WACC). [3] A business which owns much land will have a smaller ROCE compared to a business which owns little land but makes the same profit.
Compound annual growth rate (CAGR) is a business, economics and investing term representing the mean annualized growth rate for compounding values over a given time period. [ 1 ] [ 2 ] CAGR smoothes the effect of volatility of periodic values that can render arithmetic means less meaningful.
Actuarial notation is a shorthand method to allow actuaries to record mathematical formulas that deal with interest rates and life tables.. Traditional notation uses a halo system, where symbols are placed as superscript or subscript before or after the main letter.
It does not account for other risks associated with the underlying property. It is essentially a simple interest calculation and ignores the effect of compounding interest . The implication for investors is that an investment with a lower nominal rate of compound interest may be superior, in the long run, to an investment with a higher cash-on ...
Richard Witt's book Arithmeticall Questions, published in 1613, was a landmark in the history of compound interest. It was wholly devoted to the subject (previously called anatocism), whereas previous writers had usually treated compound interest briefly in just one chapter in a mathematical textbook. Witt's book gave tables based on 10% (the ...
For example, $100,000 mortgaged (without fees, since they add into the calculation in a different way) over 15 years costs a total of $193,429.80 (interest is 93.430% of principal), but over 30 years, costs a total of $315,925.20 (interest is 215.925% of principal).
Total costs = fixed costs + (unit variable cost × number of units) Total revenue = sales price × number of unit These are linear because of the assumptions of constant costs and prices, and there is no distinction between units produced and units sold, as these are assumed to be equal.