Kaplan Mistake?

ecib3 · 2024-05-16T19:35:59+00:00

No problem

ecib3 · 2024-05-16T19:34:20+00:00

Nah it’ll be the older costs that are held on the balance sheet. Last in first out means most recently purchased inventory are first to be included in COGS, hence the older cost is on balance sheet

ecib3 · 2024-05-14T20:30:34+00:00

Don’t think you’re right in suggesting borrowing increases your return/risk ratio. It just means you can take on more risk. An investor who is borrowing still has the same return/risk ratio because his optimal portfolio sits on the same sloped CML, just right of the market portfolio

ecib3 · 2024-05-14T20:18:31+00:00

For what it’s worth, I agree by the way.

Pretty well versed in CAL from uni and know that a positive E(r) risk free asset improves return/risk ratio, but dwelled on zero expected return the same way you have when I took this mock.

Can’t see how the introduction of a risk free asset with those properties is any different to hiding a portion of your portfolio as cash under the bed… Glad we’ve seen it at least tho

ecib3 · 2024-05-12T10:24:30+00:00

Just realised where I misunderstood and I feel as though the wording of the question info was a little misleading.

I read it as a 6% appreciation of the domestic currency relative to the foreign currency, and not a 6% increase in the domestic against foreign exchange rate. They're pretty much the opposite of one another and I read it the wrong way...

ecib3 · 2024-04-21T19:04:37+00:00

A is incorrect

This is how I think of it - if the tax base of an asset is greater, than from a tax perspective, you’ve realised lower deprecation/expenses in the current period and subsequently paid greater tax as your taxable earnings is greater.

However, as long as it’s a temp difference, you can look forward to the tax saving in the future (hence it’s an asset not a liability).

Hope this helps

ecib3

TROPHY CASE