...portfolios. The duration of portfolio A is 3.659 and the duration of portfolio B is 3.541. Since that the investor is kind of concerned about the volatility in the market, portfolio B is more adequate because it has a short duration, which means it’s less sensitive to the changes in interest rate. 2. A. The durations of Portfolio A and B are 3.659 and 3.541. Multiplying their duration with their prices, which are both 100 millions, gives us the dollar duration of these two portfolios. The dollar durations are 365929587.04 and $354071810.21. B. The loss of the value of portfolio A cause by 1 basis point up in the interest rate is -$365929587.04 *0.0001=-$36592.96. The loss of the value of portfolio B cause by 1 basis point change in the interest rate is -$$354071810.21*0.0001=-$35407.18 C. The conclusion reached in this part is consistent with that in exercise 1. With 1 basis point change in interest rate, the value of portfolio B decrease less that portfolio A, which means portfolio B is better immune to the risk of interest rate. 3. A. The price of the 7-year bonds paying 2.5% semiannually is $81.12. The price of the 7-year bonds paying 10% semiannually is $122.78. The number of the 7-year bonds paying 2.5% semiannually the investor has to short is ($50 million-$100 million*0.25)/ $81.12=308185. The number of the 7-year bonds paying 10% semiannually the investor has to short is ($50 million-$100 million*0.4)/$112.78=88668 B. The new weights for the instruments...
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...MATH 275: Calculus III Lecture Notes by Angel V. Kumchev Contents Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lecture 1. Lecture 2. Lecture 3. Lecture 4. Lecture 5. Lecture 6. Lecture 7. Lecture 8. Lecture 9. Lecture 10. Lecture 11. Lecture 12. Lecture 13. Lecture 14. Lecture 15. Lecture 16. Lecture 17. Lecture 18. Lecture 19. Lecture 20. Lecture 21. Lecture 22. Lecture 23. Three-Dimensional Coordinate Systems . . . . . . . . . . . . . . . . . . . . . iii 1 Vectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Lines and Planes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Vector Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Space Curves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Multivariable Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Surfaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Partial Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Directional Derivatives and Gradients . . . . . . . . . . . . . . . . . . . . . . . 77 Tangent Planes and Normal Vectors . . . . . . . . . . . . . . . . . . . . . . . 81 Extremal Values of Multivariable Functions . . . . . . . . . . . . . . . . . . . 91 Lagrange Multipliers* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Double Integrals...
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... Operator [Operator Instructions]. And our first question comes from Tim Casey with BMO. Please go ahead. Q - Tim Casey Thanks. Question for Stephane, could you talk a little bit about the progression of growth you’re expecting through the quarters this year, particularly in light of some of the macro trends you talked about, but also in terms of price increases which had been offset by some adjustments you had to make last year, just curious of how those will float through to ‘16? A - Stephane Bello Good morning and thanks for the question. Just to remind where we start from, we achieved organic growth of about 1.5% and our guidance for next year is for growth of 2% to 3% excluding recovery, so that would be a 50 to 150 basis point step-up on the growth performance we achieved this year. Now as you look at the progression of growth over the course of the year, there is a couple factors to keep in mind, one is exactly what you mentioned Tim is this commercial adjustments as we continue to make as we are migrating or legacy foreign exchange desktops to our new platform. The bulk of that impact is behind us, --...
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...Slide19.12 Lets take for example Bank A which is a TRIPLE AAA RATED international bank in UK. They wish to raise 10M to finance their floating or variable Eurodollar loans. They have 2 options ■ issuing 5 year fixed bonds at 10% or Floating rate at LIBOR. ■ It would make more sense for them to issue floating rate LIBOR because the loans that they have are floating rate. Slide 19.13 Lets look at Firm B it’s a BBB rated US company, it needs 10M to finance an investment with a 5 year economic life. They have 2 options for financing - Issuing 5 year fixed rate bond at 11.75 ( BBB rated , higher risk then AAA) - Alternatively they can issue 5 year floating-rate notes at LIBOR + .5% percent. They would prefer the fix because they would want stability Slide 19.14 Here is the summary of their borrowing opportunities, Bank A would prefer LIBOR and Firm B 11.75 Fix Slide 19.15 Speculating that interest rates will go up in the future, Bank A starts to look at better opportunities , it gets the following offer from SWAP BANK. Slide 19.16 Instead of paying rates at LIBOR , pay us LIBOR less (.125) and in the meantime deposit with us 10M and we will pay you 10.375 rate interest for 5 years. Remember Bank A has excellent credit and it can burrow from outside at 10% fix. So what Bank A does is burrow 10M from outside at 10 % fix and get 10.375 and in the meantime have an extra .125 discount on their LIBOR rate this will...
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...Accrual Basis versus Cash Basis After external transactions and events are recorded for an accounting period, several ac- counts still need adjustments before their balances appear in financial statements. This need arises because internal transactions and events remain unrecorded. Accrual basis account- ing uses the adjusting process to recognize revenues when earned and to match expenses with revenues. Cash basis accounting recognizes revenues when cash is received and records expenses when cash is paid. This means that cash basis net income for a period is the difference between cash receipts and cash payments. Cash basis accounting is not consistent with generally accepted accounting principles. It is commonly held that accrual accounting better reflects business performance than in- formation about cash receipts and payments. Accrual accounting also increases the compar- ability of financial statements from one period to another. Yet cash basis accounting is use- ful for several business decisions—which is the reason companies must report a statement of cash flows. To see the difference between these two accounting systems, let’s consider FastForward’s Prepaid Insurance account. FastForward paid $2,400 for 24 months of insurance coverage beginning on December 1, 2004. Accrual accounting requires that $100 of insurance expense be reported on December’s income statement. Another $1,200 of expense is reported in year 2005, and the remaining $1,100 is reported as expense...
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...Topic: Cash basis versus Accrual basis of accounting The cash basis of accounting, sometimes called cash accounting, is still used by some small companies whose business activity is uniform throughout the year--receiving and disbursing roughly the same amount of cash each month. Many individuals also use cash accounting.( Edmonds, McNair, Milam, and Olds, Fundamental Financial Accounting Concepts, 4th edition, McGraw-Hill Irwin, 2002) In the cash basis of accounting, the business records are "cash in" (deposits to the bank account) called cash receipts, and "cash out" (checks) called cash disbursements. Cash receipts - Cash disbursement = Cash flow. Each month's cash flow is added to the preceding month's cash balance yielding the current month’s cash balance. The cash basis of accounting is more likely to be used by service businesses than by retail or manufacturing businesses. Service businesses usually do not need equipment and can sell a service they perform with nothing more than their own hands and minds. Think of people who are lawyers, writers, public relations and advertising personnel, and accountants. There are two problems with cash accounting: 1) A business has difficulty in determining if it is earning a profit unless it is a small service business that does not own any property or equipment and does not have a number of contracts in progress, and 2) A business cannot keep track of any asset except cash. The cash basis of accounting does a poor job of...
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...Basis of Power Brian R. Gates BCOM 230 November 14, 2011 Katalin Ogle Power—in a business environment—is defined as the potential for one individual to exercise influence over another individual. That potential may never be realized, but for an individual to possess power one can infer that other individuals are dependent upon the person who holds the power. Power can be derived from two basic sources: personal and formal. There are five bases of power that exist, and the base of the power ultimately affects how people react to that power. Formal Power Formal power stems from an individual’s place in the hierarchy of an organization, and includes three bases of power: coercive power, reward power, and legitimate power. Coercive power results from the potential negative impact upon the dependent individual from the person holding power. Reward power is the exact opposite—with the power derived from the ability of the individual holding power to positively impact the dependent person. These two bases of power very often occur simultaneously. If a manager tells a subordinate to perform a certain action, there are potential outcomes derived from each of these power bases. If the subordinate successfully performs the action, the manager could give the subordinate a bonus, a raise, or a better position within the organization (reward power). If the subordinate does not successfully execute the directive, the manager can demote the subordinate or withhold bonuses...
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...Basis of Depreciation 1 Basis of Depreciation A Comparison Between Generally Accepted Accounting Principles (GAAP) and Income Tax Basis Basis of Depreciation 2 Abstract The basic concept of depreciation is based on the assumption that most property, plant, and equipment assets or depreciable assets have a useful life over which they are consumed. The portion of these depreciable assets consumed through usage or obsolescence is what accountant refers to as depreciation. The measurement of depreciation according to Generally Accepted Accounting Principles (GAAP) follow the “cost principle” and “matching principle”; in that depreciable assets cost should be valued at their original or historical cost, and that depreciation expense is recognized in the same period the benefit was derived from the consumption of the said asset. On the other hand, Income Tax Basis follows the concept of “recovery period”; in that businesses recover the cost of the depreciable assets faster because the period (useful life) is accelerated. This paper will compare and contrast Income Tax Basis for depreciation and GAAP basis for depreciation. Basis of Depreciation ...
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...Activity 8.5 - Discussion: International Aviation I. Answer at least one of the following discussion questions in the respective thread of the Module 8 - International Aviation Discussion Board forum. * Topic 1 – NextGen and Unmanned Air Vehicles Describe the advantages of NextGen Technology and why it is important that it be implemented in our National Airspace. * Topic 2 - Treaties Discuss one of the primary Conventions, Protocols, or Treaties that affect international aviation today. * Topic 3 - ICAO Explain the purposes and accomplishments of the International Civil Aviation Organization (ICAO). II. Read and comment on the answers posted by your classmates. You are only required to answer one of the two discussion questions, but please do read the thoughts of your classmates on both topics and engage one another in lively discussions. The ICAO The International Civil Aviation Organization (ICAO) was a result of the Chicago Convention becoming officially in 1947. The mission statement of the ICAO was to its aims and objectives are to develop the principles and techniques of international aviation and to foster the planning and development of international air transport, to as to meet the needs of the international civil aviation community. The ICAO has different purposes: 1) Safe and orderly growth of civil aviation 2) Aircraft design and operation for peaceful services 3) Development of airports, airways, and air navigation facilities for...
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...The two main methods of recording accounting transactions are cash basis accounting and accrual basis accounting. Each method has both advantages and disadvantages. However, only one method is approved by GAAP. Cash basis accounting is the method in which cash receipts and cash payments are recorded during the period in which they occur (Spiceland et. al., p. 7). Under the cash basis accounting method, the revenue is recognized when the cash is received and the expense is recognized when the cash is disbursed. In addition, there is no inventory account under the cash basis method. Goods and materials purchased for sale are recorded as direct costs in the period that payment is made for those goods and materials (Berry). Cash basis accounting is a simple and inexpensive method to implement and utilize. It also provides an accurate representation of cash flow. Additionally, the cash basis method provides the opportunity to "defer taxable income by delaying billing so that payment is not received in the current year.Cash basis accounting does not comply with two important accounting principles: the revenue recognition principle and the matching principle. Since the cash basis technique does not recognize receivables or payables, it is not an accurate method of measuring profit (Nelson). Accrual basis accounting is the method in which revenue is recognized when earned, and expenses are recognized when incurred. Additional accounts must be created to record the difference between...
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...YOUR LOGO HERE PRESS RELEASE The 24th Official Great Aussie Pie Competition The 24th Official Great Aussie Pie Competition is on again, being held this year on the 9-12th September 2013 at Fine Food Australia at the Sydney Exhibition Centre. GOURMET PIES is excited to be participating, entering ten categories ranging from beef (plain and chunky), chicken, vegetables, seafood, breakfast, with one of their highly popular and well-loved pies. “Our specialty is pies, we have many recipes and each one has a secret to reveal. We have spent hours baking and perfecting the ultimate gourmet pie, we realize steaks are high”. “The days when onion in a pie was considered gourmet are gone, there is a new level of pie excellence” As the original and biggest nationally recognised pie competition in Australia, the Official Great Aussie Pie Competition is highly regarded by the baking industry and represents the pinnacle of pie making excellence. Winning a medal at the Competition is the ultimate goal of many pie making professionals and, as a result the standard of entries are high, with the awards being hotly contested. The annual Competition, which is held at Fine Food Australia, is open to all pie making professionals and attracts thousands of entries from bakers across Australia. Last year the Official Great Aussie Pie Competition launched its own App, where all medal winning bakeries will be listed, along with their award winning pies so that everyone can easily...
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...Cash Basis or Accrual Basis? Andy Courtney ACC/497 November 30, 2015 Robert Davis Case Study: Cash Basis or Accrual Basis? Question 1) Based on the FARS, standard-setters have said that accrual accounting is superior to cash basis accounting. Accrual accounting reflects the true financial obligations of an organization when compared to cash basis accounting. Thus, portraying a more accurate description of the organization’s financial position and financial status. Question 2) This statement was included in the FASB pronouncement Statement of Financial Accounting Standard No. 106 which covers 'Employers' Accounting for Postretirement Benefits Other Than Pensions' which was released in the year 1990. Question 3) The cash basis method is used often by small businesses, including non-profits. Allowing the use of cash basis accounting for smaller businesses is more effective and preferable to accrual accounting. Any business with smaller and simpler transaction processes does not need a complex accounting system like accrual accounting. Question 4) Cash basis accounting is much easier to audit than accrual basis accounting because the audit trail is easier to verify and review for accuracy. Also, there are no adjusting entries to create and review. Question 5) Yes, the FARS suggests the existence of guidance that sponsors the idea that certain earnings may be accounted for on an accrual basis while the related income taxes are accounted for on a cash basis. For...
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...Accrual Basis of Accounting versus Cash Basis of Accounting Danielle Spraker ACC/290 February 12th, 2013 Michael Olsen Accrual Basis of Accounting versus Cash Basis of Accounting Financial scandals that have severely damaged public faith in information provided by organizations have lead to more stringent regulations. A standardized basis of accounting allows for regulators to ensure information is presented ethically and legally. Accrual based accounting is required for all corporations that trade publicly as this basis is generally considered to provide a more accurate image of the financial standing of a company than that of cash based accounting. Accrual based accounting requires that an organization report expenses and revenues in the time period in which they occur rather than when cash physically changes hands. The text, Financial Accounting: Tools for business decision making, describes accrual accounting as, “Accrual-basis accounting means that transactions that change a company's financial statements are recorded in the periods in which the events occur, even if cash was not exchanged. For example, using the accrual basis means that companies recognize revenues when earned (the revenue recognition principle), even if cash was not received. Likewise, under the accrual basis, companies recognize expenses when incurred (the matching principle), even if cash was not paid.” (Kimmel, 2010). For example, if a rental company bills a hotel for chairs used in September...
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...the transaction of a company, which are cash basis accounting and accrual basis accounting. In this essay, I will talk about the differences between the two accounting systems. Then the advantages and disadvantages of cash basis and accrual basis accounting will be discussed. The statement in the third sentence about how to calculate profit uses accrual basis accounting method instead of cash basis accounting. Rich et al. (2009, p.115) says “ under cash basis accounting, revenue is recorded when cash is received, regardless of when it is actually earned. Similarly, an expense is recorded when cash is paid, regardless of when it is actually incurred.” It means that cach basis accounting only records transactions when the cash has been received or paid out. Accrual basis accounting (also called accrual accouting) is another system of transaction recording for a organization. It is an alternative system to cash basis accounting. “ under accual accounting, a company records recenues in the accounting period in which they are earned and realized, and records expenses in the accounting period they are incured.” (Nikolai, Bazley & Jones, 2009, p.105) It means that the corporation records the transaction in the period in which the events occur without consider when the cash is received or paid out. There are some differences between cash basis and accrual basis accounting. In order to distinguish cash basis accounting from accrual basis accounting, it is necessary to know the time...
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...Case Study: Cash Basis or Accrual Basis? Selina Sanchez Acc 497 February 11, 2016 Donald Autrey Case Study: Cash Basis or Accrual Basis? Use FARS to identify what standard-setters have said as to the superiority of accrual accounting relative to a cash basis. Do you agree with the justification offered for accrual accounting? Explain. The basic goals have not been completely supported in their statements. Accrual accounting and cash basis both have a reason to be in grated. Accrual accounting is favored by FASB as it shows a more specific accounting transcript than cash basis accounting does. Bonus Question: Identify which accounting pronouncement specifically observes: “This Statement relies on a basic premise of generally accepted accounting principles that accrual accounting provides more relevant and useful information than does cash basis accounting.” “This statement relies on a basic premise of generally accepted accounting principles that accrued accounting provides more relevant and useful information than does cash basis” is located on the FASB pronouncement Summary of Statement No. 106 discussing the “Employers’ Accounting for Postretirement Benefits Other Than Pensions Accounting Theory Issue: When is a “cash-basis method” used within the accounting literature? Do you view such a method as complementary or preferable to accrual accounting in the settings you have identified? The cash-basis-method is only used for small...
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