Author Archives: selimhasagasioglu

Solution to Management Science Series-3: Learn Finance💹

Learn Finance. 💹

At least the basics.

Whether you use it for your retirement, financial independence or investment plans, you are required to know the basics of finance. 💰

Up for a quick test ⬇️

-You plan to retire within 20 years from now.

-You need to cover first 5 years of your retirement through your own savings.

-You think that during these first 5 years of your retirement, your expenses will run $200,000 per year.

-You have found an investment vehicle that will help you earn 9% annually on your savings throughout the following decades.

Question:

How much money should you save each year on average, i.e. in terms of equal amounts per year, until your retirement so that you will solely rely on these savings without running out of money throughout the first 5 years of your retirement?

On disposable income being less and less meaningful 🪙

Disposable income as a measure of one’s earning power loses its meaning given the rampant inflation and new taxation schemes.

One observation is that there has been a tendency of wages converging to one another. Tenured employees are more likely to take the brunt of this convergence, feeling more insecure.

Wage earners who are identical in their hourly rates and salaries may differ greatly in their real purchasing power; nonetheless, many are sleepwalking.

Corporate salarymen are in distress. Furthermore, this seems to be only the beginning.

Management Science Series #155: Solution to the Introduction to Portfolio Theory: Part 19 Hard 🧠

A portfolio that combines the risk-free asset and the market portfolio has an expected return of 9% and a standard deviation of 13%.

The risk-free rate is 5% and the expected return on the market portfolio is 14%.

Assume that the CAPM holds in that market!

What expected return should a security earn if it has a 0.53 correlation with the market portfolio and a standard deviation of 61%?

Management Science Series #154: Solution to the Introduction to Portfolio Theory: Part 18 Medium 🧠

Introduction to Portfolio Theory: Part 18 Medium 🧠

Could you answer the following questions correctly?

-According to the CAPM, can a stock have a negative expected return?

-Why would you invest in a risky security with an expected return that is lower than the risk-free rate?

-Can a security have a low beta and a high standard deviation?

-What would you say about the expected return on a security with low beta and high SD?

Management Science Series #153: Solution to the Introduction to Portfolio Theory: Part 17 Medium 🧠

Introduction to Portfolio Theory: Part 17 Medium 🧠

Calculate the expected return on Walmart stock, using CAPM!

Rely on the publicly available information to calculate the necessary input values!

1-Y US Treasury bill will be the proxy for the risk-free asset.

The relevant market will be S&P 500!

Use the information for the last 3 years!

Resources are limited and customers are smarter. So, marketing efforts should change, too! 🔔On the importance of customer reviews

Resources are limited and customers are smarter.
So, marketing efforts should change, too! 🔔

A consumer, who is trained and smart enough to distinguish between what is fake and what is wrong, will continue to rely on online reviews throughout the decision journey and is less likely to be affected by traditional marketing activities.

Their numbers are increasing and in a world where businesses try hard to decommodify products and services and differentiate them, spend your marketing budget wisely.

Management Science Series #152: Solution to the Introduction to Portfolio Theory: Part 16 Hard 🧠

Introduction to Portfolio Theory: Part 16 Hard 🧠

Calculate beta of the Amazon public stock! Use publicly available data and rely on the information for the last 3 years.

The relevant market will be NASDAQ.

Can you estimate the beta without calculating it exactly?

Using the results of your calculation, explain what beta means and compare the value you calculated with the values publicly available for the Amazon stock (are they the same or different and why?)!