soddy1979

1. Correlations between assets within each layer are not considered when you allocate by “pyramiding” . This is going to create sub-optimal or sub-utilitarian portfolios
2. Numerator cannot be zero .There is always a portion left over that has unrealized capital gains.
3. Share prices reflect the effect of pension risk. But company balance sheets frequently do not . For example calculating the WACC using balance sheet data ( i.e. asses and liabilities and therefore equity capital ) may understate or overstate risk taken if     pension allocation is heavily in risky assets versus not.
4. dual class shares  are how the founders implement differential voting rights. Even when the founders proprtional share of risky capital is smaller ,  they can excercise effective control by using dual class provisions