A loan-to-value (LTV) ratio divides your loan amount by the home’s value; 80% is a good LTV. Lenders use LTV to determine your loan amount, risk, insurance, and interest rate.
Risk tolerance levels expand a company’s risk appetite limit, increasing its overall risk capacity, which also increases its risk-taking strategy. A conservative risk culture, however, is always safest. Better to be risk-averse and more inclined to strengthen internal controls than to make compens...
High tolerance (e.g. .84) = low multicollinearity Low tolerance (e.g. .19) = high (serious) multicollinearity It is calculated as follows: Regress each independent variable on all of the other independent variables. Subtract eachR2value from 1. ...
5. Calculate the Tolerance of the Variance Steps: Find the tolerance of the variance using the following formula inF5. =(--(ABS(E5)<120)) Drag down the Fill Handle to see the result in the rest of the cells. If the variance is below the tolerance level1is displayed. Otherwise,0. ...
The goal of rational investors is to maximize total return under a given set of constraints. Constraints include: Risk tolerance Current income needs Ethical concerns (no tobacco stocks, as an example) This article shows exactly how to calculate expected total returns. Note: The Dividend Aristocrats...
Return on investment (ROI) is calculated by dividing the profit earned on an investment by the cost of that investment. For instance, an investment with a profit of $100 and a cost of $100 would have an ROI of 1, or 100% when expressed as a percentage. Although ROI is a quick and ...
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Cost basis comparison can be an important consideration. Assume that an investor made the following consecutive fund purchases in a taxable account: 1,500 shares at $20, 1,000 shares at $10, and 1,250 shares at $8. The investor’s average cost basis is calculated by dividing $50,000 by...
However, if the coupon payments were made every six months, the semi-annual YTM would be 5.979%. The BEY is a simple annualized version of the semi-annual YTM and is calculated by multiplying the YTM by two. In this example, the BEY of a bond that pays semi-annual coupon payments of...
While correlation is essential inconstructing a balanced portfolio, a well-rounded strategy also considers asset allocation, risk tolerance, time horizon, and financial goals. For example, while low or negative correlations can help cut portfolio volatility, they may also limit potential returns should...