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|ASSETS |

|2000 |1999 |1998 |1997 |1996 |1995 |1994 |1993 |1992 |1991 |1990 | |Sales |8,629 |7,757 |7,510 |7,379 |7,218 |7,058 |6,331 |5,754 |5,814 |5,673 |5,889 | |Cost of Goods Sold |5,334 |4,696 |4,476 |4,397 |4,340 |4,212 |3,866 |3,633 |3,695 |3,676 |. | |Selling, General, and Administrative Expense |1,646 |1,514 |1,404 |1,318 |1,243 |1,214 |1,137 |1,073 |1,083 |1,079 |1,079 | |Operating Income Before Depreciation |1,649 |1,547 |1,630 |1,664 |1,634 |1,632 |1,329 |1,048 |1,036 |918 |. | |Depreciation and Amortization |447 |415 |354 |348 |340 |332 |318 |331 |352 |351 |. | |Interest Expense |193 |142 |119 |115 |108 |93 |91 |109 |148 |169 |. | |Nonoperating Income (Expense) and Special Items |8 |-17 |137 |-26 |. |. |-64 |-63 |. |-44 |. | |Pretax Income |1,017 |973 |1,294 |1,175 |1,240 |1,262 |856 |544 |542 |354 |353 | |Income Taxes - Total |369 |377 |466 |435 |471 |480 |325 |236 |218 |147 |147 | |Minority Interest |28 |28 |27 |26 |25 |15 |16 |13 |4 |5 |5 | |Income Before Extraordinary Items |620 |568 |801 |714 |744 |768 |515 |295 |319 |201 |201 | |Extraordinary Items and Discontinued Operations |0 |0 |0 |0 |0 |0 |0 |-273 |0 |75 |75 | |Net Income (Loss) |620 |568 |801 |714 |744 |767.6 |514.6 |22.2 |319.4 |276.2 |276 | |Cash Dividends |276 |264 |252 |239 |237 |239 |238 |221 |200 |183 | | |Retained |344 |304 |549 |475 |507 |529 |277 |-199 |120 |94 | | | | | | | | | | | | | | | |Dividends per share |1.60 |1.52 |1.42 |1.33 |1.26 |1.18 |1.12 |1.04 |0.94 |0.86 |0 | | | | | | | | | | | | | | |Earnings Per Share (Primary) - Excluding Extraordinary Items |3.6 |3.27 |4.52 |3.97 |3.96 |3.8 |2.43 |2.78 |3.01 |1.9 |0.95 |…...

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...--- Modern portfolio theory (MPT) is a theory of investment which attempts to maximize portfolio expected return for a given amount of portfolio risk, or equivalently minimize risk for a given level of expected return, by carefully choosing the proportions of various assets. Although MPT is widely used in practice in the financial industry and several of its creators won a Nobel prize for the theory, in recent years the basic assumptions of MPT have been widely challenged by fields such as behavioral economics. MPT is a mathematical formulation of the concept of diversification in investing, with the aim of selecting a collection of investment assets that has collectively lower risk than any individual asset. That this is possible can be seen intuitively because different types of assets often change in value in opposite ways. For example, when prices in the stock market fall, prices in the bond market often increase, and vice versa[citation needed]. A collection of both types of assets can therefore have lower overall risk than either individually. But diversification lowers risk even if assets' returns are not negatively correlated—indeed, even if they are positively correlated. More technically, MPT models an asset's return as a normally distributed (or more generally as an elliptically distributed random variable), defines risk as the standard deviation of return, and models a portfolio as a weighted combination of assets so that the return of a portfolio is the......

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...These on "Fundamental" size mean-variance company aremore efficient those cap. indexeswerefound to deliverconsistent,significantbenefitsrelativeto standard cap-weighted The Graham: the In indexes. trueimportance thedifference havebeenbestnotedbyBenjamin of may but shortrun,themarket a votingmachine, in thelongrun,it is a weighing is machine. T he capital asset pricing model (CAPM) says that the "market portfolio" is meanvariance optimal. Although the model is predicated on an array of assumptions, most of which are arguably not accurate, it leads to the conclusion that a passive investor/manager can do no better than holding a market portfolio. The finance industry, with considerable inspiration and perspiration from Markowitz (1952, 1959), Sharpe (1965), and many others, has translated that investment advice into trillions of dollars invested in or benchmarked to capitalizationweighted market indexes such as the S&P 500 Index or the Russell 1000 Index. Many academic papers, however, have rejected the idea that cap-weighted indexes are good CAPM market proxies, which is equivalent to rejecting the mean-variance efficiency of those indexes.1 It also suggests that more efficient indexes exist. The effort to identify a better index may be moot, however, if ex ante identification is impossible or if cap-weighted equity market indexes are almost optimal.2 The ex ante construction of a mean-varianceefficient portfolio is a difficult problem; forecasting expected stock......

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