article thumbnail

Addressing Market Volatility and Risk in M&A Agreements

Harvard Corporate Governance

Coates, Darius Palia, and Ge Wu (discussed on the Forum here ); Allocating Risk Through Contract: Evidence from M&A and Policy Implications by John C. Significant volatility continues to disrupt the equity markets, with the major stock indexes swinging multiple percentage points often on a daily basis. Mergers & Acquisitions Practitioner Publications Acquisition agreements Equity securities Market conditions Mergers & acquisitions Risk Risk management Termination

article thumbnail

Arbitrage Pricing Theory (APT) - Can it Enhance Valuation?

Equilest

This theory is based on the idea that several factors, including economic and market conditions, determine a stock's price. The APT is a multi-factor model that seeks to explain the behavior of stock prices based on various economic and market conditions. Arbitrage Pricing Theory (APT) is a financial model that describes how the price of an asset is determined by a number of factors or "risk factors." First, we need to estimate the factor loadings for each risk factor.

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

Decentralized Finance, Crypto Funds, and Value Creation in Tokenized Firms

Reynolds Holding

Decentralized Finance (DeFi) employs blockchain technology and smart contracts with the goal of enabling perfectly disintermediated financial markets. Because CFs are a novel financial intermediary, research assessing their role in DeFi markets is very limited.

Finance 107
article thumbnail

What is the Capital Asset Pricing Model (CAPM)?

Andrew Stolz

It helps an investor understand what to expect to earn in relation to the risk-free rate and the market return. CAPM assumes that the minimum a rational investor would earn is the risk-free rate by buying the risk-free asset. Definition of Capital Asset Pricing Model.

Beta 52
article thumbnail

Is Creating a Risk-Based Internal Audit Plan Just a Myth?

Internal Audit 360

T he idea that audit plans should be risk based is so old and widely accepted that we rarely give it a second thought. Yet, in my 16 years in risk management across four continents, I have seen hundreds of audit plans, and I can assure you none of them were actually risk based.

EBITDA 52
article thumbnail

Wachtell Lipton Discusses Addressing Market Volatility and Risk in M&A Agreements

Reynolds Holding

Significant volatility continues to disrupt the equity markets, with the major stock indexes swinging multiple percentage points often on a daily basis. Many M&A professionals have seen at least one, and in some cases multiple, potential transactions fall victim during the negotiation stage to the effects of economic uncertainty and market volatility over the past few months, and overall M&A is down roughly 25% globally in 2022 as compared to 2021.

article thumbnail

Apple vs. Saudi Aramco – comparing the most valuable companies in the world

Valutico

Aramco traded with a market capitalisation of about $2.43 At the beginning of this year, Apple had a market value of $3 trillion, about $1 trillion more than Aramco. Looking at the Western market, Apple remains the largest stock among US companies, followed by Microsoft Corp.

Beta 52
article thumbnail

Will Crane’s M&A Strategy Lead To Further Value Creation?

Andrew Stolz

Fundamentals, Valuation, Momentum, and Risk (FVMR). Key risk is intensified competition in local markets. Risk of overpaying acquisitions, impairment charges or failure to integrate the business. Highlights: Strategic M&A acquisitions to drive top-line growth.

article thumbnail

SEC Issues Strategic Plan for Fiscal Years 2022-2026

Reynolds Holding

Our Goals Protecting the Investing Public; Maintaining a Robust, Relevant Regulatory Framework; Supporting a Skilled and Diverse Workforce The United States has the largest, most sophisticated, and most innovative capital markets in the world. capital markets.

article thumbnail

Davis Polk Discusses Key Takeaways for Banks of Basel Climate Report

Reynolds Holding

Here are the key takeaways from the Basel Committee’s final Principles for the Effective Management and Supervision of Climate-Related Financial Risks (the “Basel Principles”). The Basel Principles 1 align closely with the climate-related risk management principles proposed by the Office of the Comptroller of the Currency (the “OCC Proposal”) 2 and the Federal Deposit Insurance Company (the “FDIC Proposal”). The principles affirm a tailored approach to climate risk management.

Banking 43
article thumbnail

Long/Short Equity: Full Guide to the Most Accessible Hedge Fund Strategy

Brian DeChesare

The basic idea is simpler than other hedge fund strategies , but it gets more complex when you think about the entire portfolio and risk management: What is Long/Short Equity? Asset Management or Other Buy-Side Markets Roles: 5 (~16%).

Equity 75
article thumbnail

Convertible Arbitrage Hedge Funds: The Perfect Combination of Investment Banking and Sales & Trading?

Brian DeChesare

If you’re using a strategy like long/short equity , you could long or short a company’s stock, and your results would depend heavily on the stock market’s overall direction. You disagree with the market’s assessment and believe the stock’s volatility is closer to 45%.

article thumbnail

Appraiser Newsroom - Untitled Article

Appraiser Newsroom

Dr. Henry has over 20 years of diverse experience in the fields of business economics, consulting/advisory services, interest rate and market risk modeling, and government affairs. He has delivered more than 375 speeches and presentations on the status and outlook of the nation’s economy, monetary policy, and the residential real estate market; and has received multiple merit awards and recognition for outstanding service.

article thumbnail

Appraiser Newsroom - Untitled Article

Appraiser Newsroom

Dr. Henry has over 20 years of diverse experience in the fields of business economics, consulting/advisory services, interest rate and market risk modeling, and government affairs. He has delivered more than 375 speeches and presentations on the status and outlook of the nation’s economy, monetary policy, and the residential real estate market; and has received multiple merit awards and recognition for outstanding service. Tweet.

article thumbnail

Discounted-Cash-Flow-Analysis: Your Complete Guide with Examples

Valutico

But here, we use what interest we could get from an alternative investment in the market, called the Market Rate. Discount Factor (using Market Rate: r=10%). Rf = Risk-free Rate. Rm – Rf) = Equity Market Risk Premium. Market Return.

article thumbnail

Arnold & Porter Discusses Today’s SEC Examination Priorities, Tomorrow’s SEC Enforcement Actions

Reynolds Holding

These priorities reflect SEC Chair Gary Gensler’s stated view that the examinations program is crucial to the SEC’s work to protect investors and instill trust in markets. Exams intends to review advisers’ conflicts and disclosures around portfolio strategies, risk management, and investment recommendations and allocations, including investments in Special Purpose Acquisition Companies (SPACs) and particularly where the private fund adviser is also the SPAC sponsor.

article thumbnail

Review the concept of WACC

Andrew Stolz

The cost of equity (Ke) is an expected return that a firm pays to an equity investor to compensate for the risk of investing capital. The formula implies the return an investor expects from a risk-free investment plus the return from the stock in relation to market volatility.

Beta 52
article thumbnail

A DIY (Do-It-Yourself) Valuation of Zomato

Musings on Markets

Just over a week ago, I valued Zomato ahead of its market debut, and as with almost every valuation that I do on this forum, I heard from many of you. That said, the market seems to be pricing in the expectation that it will be a great company, and in my view, that judgment is premature.

article thumbnail

Appraiser Newsroom - Untitled Article

Appraiser Newsroom

Dr. Henry has over 20 years of diverse experience in the fields of business economics, consulting/advisory services, interest rate and market risk modeling, and government affairs. He has delivered more than 375 speeches and presentations on the status and outlook of the nation’s economy, monetary policy, and the residential real estate market; and has received multiple merit awards and recognition for outstanding service. Tweet.

article thumbnail

Data Update 4 for 2021: The Hurdle Rate Question!

Musings on Markets

In making these allocation or investment decisions, businesses have to make judgments on the minimum return that they would accept on an investment, given its risk, and that minimum return is referenced as the hurdle rate. as mature markets. Data Update 2 for 2021: The Price of Risk!

article thumbnail

SEC Chair Gensler Speaks Further on Climate-Risk Disclosure Proposal

Reynolds Holding

As you all likely know by now, in March, the Commission voted on a proposal to mandate climate-risk disclosures by public companies. The core bargain from the 1930s is that investors get to decide which risks to take, as long as public companies provide full and fair disclosure and are truthful in those disclosures. In addition to such historical information, though, investors want to assess potential risks. Disclosures — Strategy, Governance, Risk Management, and Targets.

article thumbnail

Sullivan & Cromwell Discusses the Implications for Financial Institutions of Proposed SEC Climate Disclosure Rules

Reynolds Holding

financial regulators have indicated that they are increasingly focused on incorporating climate risks into their regulatory and supervisory practices. financial stability and has recommended increased disclosure of climate risks. Treasury’s Federal Insurance Office (FIO) issued a request for information on its future work relating to climate-related financial risks. 7] CFTC, Climate-Related Market Risk Subcommittee, Managing Climate Risk in the U.S.

Banking 43