assumptions
circumstances taken for granted. For example, in calculating annuity values, a particular interest rate is assumed.
These are assumptions made by actuaries regarding mortality, morbidity, interest, expense and other forecasts. In insurance, they are used to set insurance reserves.
Ideological assumptions
Ideological assumptions are the foundations of the sciences as practiced. They are the bases of the often conflicting theories.
Perfect market assumptions
Definition: [crh] Conditions under which the law of one price holds. The assumptions include frictionless markets, rational Definition: s"investors, and equal access to market prices and information.
Assumptions
Variables applied to data used to project expected outcomes. In the life insurance business this might include assumptions on average life expectancy or policy surrender rates.
Assurance ...
Assumptions of CAPM
All investors:
Aim to maximize economic utility.
Are rational and risk-averse.
Are broadly diversified across a range of investments.
Are price takers, i.e., they cannot influence prices.
Your assumptions drive business valuation results
It makes a big difference to the business appraisal result if the business is to be sold on a going concern basis rather than being liquidated at an auction.
[edit] Assumptions
This model assumes that a company has a certain amount of zero-coupon debt that will become due at a future time T. The company defaults if the value of its assets is less than the promised debt repayment at time T.
ASSUMPTIONS, CLASSICAL ECONOMICS: Classical economics, especially as directed toward macroeconomics, relies on three key assumptions--flexible prices, Say's law, and saving-investment equality.
Assumptions: $2,000 after-tax contributions at the beginning of each year, hypothetical 8 percent annual return, 28 percent federal tax rate on the taxable income. Earnings are taxed at 28 percent federal tax rate at time of withdrawal.
Assumptions: Bond A pays a risk-free $1000 in one year. Banks take deposits and make loans at a 10% interest rate.
Assumptions - The act of assuming/undertaking another's debts or obligations.
Auction - A public sale of goods to the highest bidder.
Assumptions, methodologies and frameworks used in the study and application of financial principles.
Assumptions of CVP
This chapter has presented information on how to apply CVP for business analysis. Most of this analysis is keyed to a model of how profitability is impacted by changes in business volume.
Assumptions made and 'out-of-sample' testing
Some of the assumptions made in this study may not hold true in the real world. Dividend yield is not an exact proxy for dividend paid.
Other assumptions may be made. These include using money as a measure of utility so, by definition, the utility of wealth increases at a fixed rate as wealth increases.
Economic assumptions
Economic environment a firm expects to operate in over the life of the financial plan.
Economic defeasance ...
Economic assumptions
General market environment a firm expects to operate in over the life of a financial plan.
Economic defeasance
See: In-substance defeasance ...
Under the assumptions of CAPM, the capital market line is the line in risk-return space passing through points for the risk-free asset and the market portfolio.
Change in assumptions
A change in assumptions is when an actuarial revaluation is done and forward-looking assumptions are changed, which results in the overall pension liability increasing or decreasing.
Economic Assumptions: The assumptions about future economic performance underlying the government's projections of its revenues, expenditures and deficit -- such as assumptions about growth, interest rates and inflation.
Classical Assumptions
In regression analysis, the LRM is based on certain assumptions that must be met in order for the OLS estimators to be the best available or BLU. These assumptions include:
1.
The following assumptions have been made:
The author will be paid an advance of US$ 750.
Clearly, these assumptions were at odds with both common sense and the reality of market conditions. Under real competition, which is what capitalism delivered, companies are rivals for sales and profits.
Rate anticipation swaps An exchange of bonds in a portfolio for new bonds that will achieve the target portfolio duration, given the investor's assumptions about future changes in interest rates.
Economic assumptions Economic environment in which the firm expects to reside over the life of the financial plan. Economic defeasance See: in-substance defeasance.
Under certain assumptions, this is the condition for a depreciation to improve the trade balance, for the exchange market to be stable, and for international barter exchange to be stable.
Marshall Plan
A U.S.
inverted economic cycle: the company collects revenues well before supporting and knowing the exact amount of its costs2. The activities of an insurance company develop along the following lines:
a) quantify the premiums on the basis of assumptions ...
method, comparables and appropriate adjustments thereto, critical assumptions as to future events) for the determination of the transfer pricing for those transactions over a fixed period of time.
Simplistic Assumptions Simplistic assumptions are closely related to unrealistic projections. Avoid the ‘all the tea in china' syndrome.
It is very important to understand that this calculation is generally based upon current assumptions including interest rates and dividends on par policies.
The value-based management movement is based on two assumptions. The first is that the main aim of any business in a market economy is to maximize shareholder value.
The syndicalist starts from the assumptions common to most schools of socialist thought.
When economists make a number of simplified assumptions about how the economy, or some part of it, behaves, and then see what this implies in various different scenarios.
An assumption, or set of assumptions, used to describe future changes in interest rates over a range of maturities. The most simple term structure model is a parallel shift in rates, e.g. all rates rise by 1 percent.
You will need to rely on the assumptions presented at the bottom of page 1046. Also, note the following:
Cash Collections: examine the Schedule of Expected Collections from Customers, which appears as a supporting document on page 1047.
I have calculated the justifiable present value of shares to an investor using certain assumptions. I use an assumption that an unusually high growth rate can be sustained for ten years.
The break-even analysis uses three assumptions to determine a break-even point: fixed costs, variable costs, and unit price. Fixed costs and variable costs are both included in this glossary, and unit price is the average revenue per unit of sales.
Note that this ratio makes several assumptions that you should be aware of.
As long as the investment assumptions are met theendowment should provide a lump sum sufficient to repay the mortgage at theend of the term.
A third section of the RFQ is the 'Assumptions and Agreements' section.
Equally important is to question any assumptions, estimates or perceptions you might have about the other person. Such assumptions can be completely incorrect and needlessly limit opportunities.
Wall Street was quick to adopt the Black-Scholes Option Pricing Model in the early 1970s although key assumptions of the Black-Scholes Option Pricing Model are obviously violated in the real world.
GAAP is exceedingly useful because it attempts to standardize and regulate accounting definitions, assumptions, and methods.
The method involves many assumptions for both production costs and future end product prices. These variables are susceptible to manipulation.
The assumptions include frictionless markets, rational investors, and equal access to market prices and information. Perfect market view (of capital structure) ...
Under the first test, a plan is deemed to be at risk if it is less than 70% funded under the "worst case scenario" assumptions that (1) the sponsor is not permitted to use credit balances to reduce its cash contributions and (2) employees will ...
A financial forecast is based on the responsible party's assumptions reflecting conditions it expects to exist and the course of action it expects to take.
examination is evaluating the preparation of prospective statements, support underlying assumptions, and presentation.
took the lead in mobilizing the human and non-human resources to make it a reality, the entrepreneur often takes on the role of operational management of the new enterprise as well, especially during the lean early years before the basic assumptions ...
In game theory, one of the most common assumptions made is that every player/participant is rational. In its mildest form, rationality implies that every player is motivated by maximizing his own payoff.
Actuarial risk is the danger that the computations used to generate insurance probability estimates are based on inaccurate assumptions.
Rejecting pure laissez-faire assumptions, binary economics holds that a truly free and just global market requires (1) effective broad-based ownership of capital, (2) the restoration of and universalized access to the full rights of private property, ...
Traditional international trade models do not take market imperfections fully into account, but are based on assumptions that perfect competition and constant returns to scale prevail in every market.
ACCOUNTING CONCEPTS - are the assumptions underlying the preparation of financial
ACCOUNTING CONVENTION - see CONVENTION.
ACCOUNTING CYCLE - the sequence of steps in preparing the financial statements for a given period.
Accounting concepts - Are the basic underlying assumptions that are adhered to in the preparation of financial statements, i.e., theses include the assumptions of accruals, going concern, consistency and prudence.
The yield to worst is calculated by making worst-case scenario assumptions on the issue by calculating the returns that would be received if provisions, including prepayment, call or sinking fund, are used by the issuer.
With so much debt, under reasonable assumptions, this calls into question the government's ability and willingness to repay the loans.
To perform this calculation assumptions are made as to the mortality table the life will follow. Life expectancies have been increasing steadily over the past century and may continue to increase in the future.
Actuarial risk is the risk borne by an insurer that the critical assumptions of the expected net present value model used to price the insurance contract are substantially incorrect. Actuarial risk is a form of model risk.
Actuarially Fair Premium ...
 See also: Values, Banks, Expense, Yield curve, Funding
  
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