So in the question with the repo rates etc...they state a) Average client portfolio had a return of 7.40%, they had a 40% leverage ratio and the repo rate was 4.25%
Their guideline answer is
7.40% + [40/100 * (7.40 - 4.25)] = 8.66%
but isn't the equation Ri + (D/E *(Ri - Rd)
that would give us 7.40% + [40/60 * (7.40 - 4.25)] = 9.5%
am i misinterpreting the leverage ratio?作者: Darien 时间: 2011-7-11 19:10
40/60 would give you a leverage of 66.67% as opposed to 40%.作者: Analyze_This 时间: 2011-7-11 19:10
Figured as much.
This is why the "experts" recommend Friday as a rest day.
