Expected Investment Return Research Articles

Performance Analysis and Techno-Economic Evaluation of Solar Energy Retrofitting for Coal-Fired Power Plant in Central Kalimantan Province

The power generation sector significantly contributes to climate change. Mitigation efforts are crucial to adhering to the global commitment to limit temperature increases below 2°C. One potential solution is retrofitting existing power plants with technologies that integrate renewable energy. This study explores the integration of solar energy into the operational processes of a coal-fired power plant in Central Kalimantan, replacing the extraction steam turbine in the high-pressure feed water heater No. 7. Using STEAG EBSILON for simulation, this research evaluates the power plant's performance before and after retrofitting in both power-boost (PB) and fuel-save (FS) modes under varying load conditions. The results demonstrate that thermal efficiency in both PB and FS modes increased by up to 2% compared to the base scenario. Specific fuel consumption decreased by 15.05 g/kWh in PB mode and 15.75 g/kWh in FS mode, leading to a reduction in coal consumption and CO2 emissions by 4.69% and 4.94% respectively. Additionally, the study observed that the solar percentage and solar-to-electricity efficiency increased as the load decreased. In FS mode, the solar electricity proportions at VWO, 100%, 75%, and 50% load rates were 5.23%, 5.53%, 7.76%, and 11.92%, respectively. The levelized cost of energy (LCOE) for solar electricity was calculated to be 431.82 IDR/kWh, with an expected investment return period of 5.87 years.

Research on financial risk early warning system model based on second-order blockchain differential equation

A financial risk early warning system (FREWS) is a disclosure and tracking mechanism that provides advance notice of potential issues, hazards, and potentials that might affect the business’s finances. Some elderly individuals living alone may experience financial difficulties, which may hinder their ability to pay for appropriate medical care, property maintenance, and other essential expenses. Financial difficulties can add tension and diminish their quality of life. Financial results, investment risk, and possible insolvencies may all be detected by implementing early warning systems. Management might use the window of opportunity provided by early warning systems to avert or lessen the impact of possible issues. Almost all FREWS rely on some financial statement analysis. Financial measures are combined with the EWS, accounting information, to determine the firm’s success in its field. Organizational success depends on effective financial oversight, which is at the heart of each business. Studying the enhancement of early warning capacities is relevant because there are no adequate risk evaluation methods to generate realistic estimates. To minimize the FREWS, this research provides a systemic model based on a second-order block chain differential equation (SBDE). China’s systemic financial liabilities have also been quantified using the expected investment returns of 64 selected financial enterprises in China between February 2006 and September 2020 as the datasets. The financial risk warning approach is compared and analyzed primarily using analytical and comparative techniques. The suggested method is 96% accurate in experiments. Consequently, the proposed algorithm compares favorably to others regarding both computing efficacy and precision and has strong predictability.

Stock Selection and Analysis Based on Valuation, Growth, Profitability and Payout

Stock investing is an enduring topic in finance. Investors choose stocks in order to obtain expected investment returns, but this investment return comes at the expense of investors taking the corresponding risks. Carrying out stock investment analysis is beneficial to reduce the blindness of investment decisions, thereby improving the scientific nature of investment decisions. Investors choose different stock portfolios through stock investment analysis to help reduce investment risks. This article will take some perspectives from the fundamental analysis school and the technical analysis school to conduct investment analysis on some US stocks, and screen out the best stock. Primarily, this study will determine the principle of stock selection, which is to choose the optimal solution by integrating valuation, growth, profitability and dividend. Then, according to the above principles, different indicators will be chosen. By comparing the pros and cons of indicators, the best stock is identified in the selected sample, Meritage Home Corp. It has also performed as expected, maintaining a good upward trend in the context of the decline in the stock market. According to the analysis in the context of the raging new crown epidemic and the shrinking global economy, combining the theories of the fundamental analysis school and the technical analysis school can be regarded as a good method for stock investment analysis. These results shed light on the best principles of stock selection, which is beneficial to reduce investment risks, and improve the investment behavior of investors.

The Way to Invest: Trading Strategies Based on ARIMA and Investor Personality

In the field of financial investment, accurate prediction of financial market values can increase investor profits. Investor personality affects specific portfolio solutions, which keeps them symmetrical in the process of investment competition. However, information is often asymmetric in financial markets, and this information bias often results in different future returns for investors. Nowadays, machine learning algorithms are widely used in the field of financial investment. Many advanced machine learning algorithms can effectively predict future market changes and provide a scientific basis for investor decisions. The purpose of this paper is to study the problem of optimal matching of financial investment by using machine learning algorithms combined with finance and to reduce the impact of information asymmetry for investors effectively. Moreover, based on the model results, we study the effects of different investor personalities on factors such as expected investment returns and the number of transactions. Based on the time-series characteristics of price data, through multi-model comparison, we select the ARIMA model combined with particle swarm algorithm to determine the optimal prediction model and introduce the concepts of mean-variance model, Sharpe ratio, and efficient frontier to find the balance point of risk and return. In this study, we use gold and bitcoin price data from 2016–2021 to develop optimal investment strategies and study the impact of investor behavior on trading strategies.

The origins of political institutions and property rights

We study the possible cooperation between nonelites exerting an unobservable effort and elites unable to commit to direct transfers and, thus, always assure the nonelites’ participation. The elites can, however, incentivize investment by granting to the nonelites strong property rights to the input and a more inclusive political process, which entrusts them with control over fiscal policies. Adverse production conditions force the elites to enact strong nonelites’ political and property rights to convince them that a sufficient part of the returns on joint investments will be shared via public good provision. These reforms assure cooperation. When, instead, the expected investment return is large, the elites keep control over fiscal policies but refrain from weakening the nonelites’ property rights, while strengthening their own, if the production conditions are sufficiently opaque. Then, the expected cost of providing the extra public good guaranteeing the nonelites’ participation is too large. These predictions are consistent with novel data on 44 major Mesopotamian polities observed for each half-century from 3050 to 1750 BCE. While a lower growing season temperature favored a larger division of the decision-making power and stronger farmers’ use rights to land, only the latter are related to the diffusion of the very opaque viticulture. In addition, only the inclusiveness of the political process fostered the provision of public and ritual buildings as well as conscripted armies. Crucially, our results are robust to considering the trade potential, the severity of conflicts, and the degree of urbanization.

POLYVARIANCE OF SCIENTIFIC APPROACHES TO UNDERSTANDING THE ESSENCE OF THE CONCEPT «INVESTMENT SERVICES»

The article reflects the results of scientific research of alternative approaches to the interpretation of the definition of investment services. The advantages and disadvantages of the target, production, product, process, instrumental, infrastructural, resource and opportunistic approaches to understanding the essence of the concept of “investment service” are identified and systematized. An improved definition of the concept of an investment service is the result of the choice of an investment idea, analysis of investment information and the use of investment technologies by investment firms in order to realize the financial interests of clients - individual and institutional investors, taking into account their investment profile (expected investment return, maximum losses, risk tolerance and the duration of the investment horizon). The proposed author's approach to the interpretation of the concept of an investment service takes into account the totality of such attributive features as complementarity, substitutionality, analyticity, manufacturability, personification, riskiness and timing. It was found that the providers of investment financial services are investment firms - legal and non-legal entities that on an ongoing basis provide at least one type of investment services to third parties and / or carry out at least one type of investment activity. The recipients of investment services are clients of investment companies - individual and institutional investors. The circle of financial interests of investors was determined, including: increase and mobilization of additional financial resources; accumulation of savings; formation of an optimal investment portfolio in terms of profitability, risk, liquidity, etc .; reducing the negative impact of information asymmetry on investment choice; reduction of transaction costs of investment operations; expanding the list of investment alternatives and deepening the diversification of investment assets; redistribution of risks associated with the provision of investment services. It is established that the definition of an investment service is derived from the generic concept of a financial service. However, if the concept of a financial service is always associated with cash flow, then in the case of the provision of investment services, cash flow is conditioned by the formation and use of investment capital.

Public-sector pension plans and the discount rate assumption: The role of political incentives

We provide evidence that political pressure creates incentives for defined benefit pension plans to use higher discount rates, thus artificially reducing the reported cost of these benefit promises. We generate our inferences using a unique panel dataset for all local pension plans from Pennsylvania for 2003–2013, and by comparing the differential response of plans managed by appointed versus elected officials during a period where there was downward pressure on expected investment returns. The differential response we document is 29 basis points, which equates to a reduction in the reported liability of approximately 4.1% due to political incentives.

The Marginal Profit-to-Q Ratio: Reassessing the Cash-Flow Channel

We study a production-based present-value relation that implies that fluctuations in the marginal profit-to-marginal Q ratio (mq) are driven by variations in the expected growth of marginal profits (cash-flow channel), expected investment return changes (discount-rate channel), or both. We find that in contrast to the aggregate dividend-to-price ratio, mq strongly predicts marginal profits growth at both short and long horizons, but not investment returns. mq also predicts (negatively) the growth rates of aggregate earnings, industrial production, and non-farm payrolls. Our findings can guide modeling in which the expected growth rate of marginal profits (at multiple horizons) is time-varying.

Locus of Control and Investment in Training

This paper extends standard models of work-related training by explicitly incorporating workers' locus of control into the investment decision. Our model both differentiates between general and specific training and accounts for the role of workers and firms in training decisions. Workers with an internal locus of control are predicted to engage in more general training than are their external co-workers because their subjective expected investment returns are higher. In contrast, we expect little relationship between specific training and locus of control because training returns largely accrue to firms rather than workers. We then empirically test the predictions of our model using data from the German Socioeconomic Panel (SOEP).

Consumption and portfolio decisions with uncertain lifetimes

We study the consumption and portfolio decisions by incorporating mortality risk and altruistic factor in the classical model of Merton (Rev Econ Stat 51:247–257, 1969; J Econ Theory 3:373–413, 1971) and Yaari (Rev Econ Stud 32(2):137–150, 1965). We find that besides the present-biased preference, the process of updating mortality information may be another underlying cause of dynamically time-inconsistent consumption behavior. We use the game-theoretic approach to obtain the extended Hamilton–Jacobi–Bellman equation. Furthermore, we obtain the closed-form solution for the logarithmic utility and explore comparative statics and implications for dynamic behavior. We present numerical results for the power utility that shows the sophisticated individual enjoys higher expected discounted utility than the naive. Our analytical solution enables us to generate a set of testable predictions that are consistent with existing empirical evidence. In particular, we show that for a moderate range of expected investment return, individuals will exhibit a “hump-shaped” consumption pattern, as widely documented in the empirical literature.

The Rise of Inclusive Political Institutions and Stronger Property Rights: Time Inconsistency Vs. Opacity.

Despite the economic relevance of strong political and property rights, we still lack an organic and empirically sound theory of their origins and interaction. In our model, the elite can elicit the nonelite's cooperation in investment by enacting a more inclusive political process, which allows the latter to select the tax rate and organize public good provision, and by punishing suspected shirking through the restriction of private rights. When the expected investment return is small, cooperation can only be attained under strong political and property rights and full taxation. When it is intermediate, the elite keeps control over fiscal policies and can implement partial taxation. When, finally, the expected investment return is large, the elite can also weaken the nonelite's private rights. Embracing the stick, however, is optimal only if production is sufficiently transparent and, thus, punishment effectively disciplines a shirking nonelite. These predictions are consistent with novel data on the division of the decision-making power, strength of the farmers' rights to land, provision of public goods and geographic conditions determining the expected return on farming and its opacity in a panel of 44 major Mesopotamian polities spanning each half-century between 3050 and 1750 BCE. Crucially, our estimates are similar when we also control for trade potential, severity of external and internal conflicts and degree of urbanization.

Continued publications by health science PhDs, 5 years post PhD-Defence

There is an increased focus on the outcomes of Health Science PhD-education, particularly if PhD-graduates remain active in research. There is a gap in our knowledge about the extent the investment in Health Science PhDs is moving science forward and no definition of expected investment return from PhD exists. We explore the research production of Danish Health Science PhDs, 5–9 years post PhD-defence, to find the fraction of PhD-graduates that are still actively publishing internationally. Secondary endpoints include analyses of the number of publications over time, identification of consecutive publishers, gender differences, and differences between medical doctors with a PhD (MDs) and non-MDs with a PhD. PhD-theses defended in 2005 and 2006 were identified and collected using the Danish National Research Database and via the four Danish universities offering Health Science PhD-programmes. Publication data were collected from Years 5 to 9 post PhD-defence to allow publications produced during the PhD-period to be washed out. Total 532 unique PhD-graduates (300 female and 232 male) produced a total of 4,530 PubMed-indexed publications. Results show zero publishers represented 31.2% (n = 166), while 25.8% (n = 137) of PhD-graduates published 10 or more publications during the 5-year observation window. Overall publication count increased from post PhD Years 5–9 with 68% (from 720 to 1,049). Number of publications did not differ between MDs and non-MDs. Our results evidence that not all graduates continue in research. Consequently, we need to identify early factors that make graduates remain in research, to identify future PhD-candidates that will continue publication post PhD.

Financier Search and Boundaries of the Angel and VC Markets

This paper studies how critical entrepreneurial finance outcomes such as the investment return and equity division are shaped by venture characteristics, financier risk preferences, and competitive searching. Our analysis uses a double-hazard agency model in which financiers determine the equity division to maximize the expected utility of their investment return while entrepreneurs search for the best deal. Model results provide new theoretical insights on the venture funding cycle, the coexistence of angels/venture capitalists (VCs) with heterogeneous risk aversion, and risk separation in the entrepreneurial finance market. The model predicts that financiers with higher funding capacity and advisory capabilities (e.g., VC firms) will prefer to fund at later stages as their expected investment return rises with the venture’s initial value and financier productivity. Competitive searching by entrepreneurs enables financiers with a diverse set of risk preferences to coexist profitably by reducing the advantage (disadvantage) of lower (higher) risk aversion financiers and making investment returns more similar. Further, the model shows the emergence of a risk separation cutoff beyond which only angels/VCs with lower levels of risk aversion can profitably fund riskier ventures.

Expected investment and the cross-section of stock returns

In this paper, we show that the relation between expected investment and future stock returns (i.e., the expected investment–return relation) is negative and inconsistent with the multiperiod q theory. Further analysis reveals that the expected investment change measure of Hou et al. (2018a) is a poor proxy for future investment because of the mismatch of investment characteristics and the incorrect constraint imposed on the regression.

Locus of Control and Investment in Training

This paper extends standard models of work-related training by explicitly incorporating workers' locus of control into the investment decision. Our model both differentiates between general and specific training and accounts for the role of workers and firms in training decisions. Workers with an internal locus of control are predicted to engage in more general training than are their external co-workers because their subjective expected investment returns are higher. In contrast, we expect little relationship between specific training and locus of control because training returns largely accrue to firms rather than workers. We then empirically test the predictions of our model using data from the German Socioeconomic Panel (SOEP). We find that, consistent with our model, locus of control is related to participation in general but not specific training. Moreover, we provide evidence that locus of control influences participation in general training through its effect on workers' expectations about future wage increases. Specifically, general training is associated with a much larger increase in the expected likelihood of receiving a future pay raise for those with an internal rather than external locus of control, while we do not find any relationship in the case of specific training. Actual post-training wages for those who receive general or specific training do not depend on locus of control.

Entrepreneurial Finance: Role of Financier Risk Aversion Heterogeneity & Search by Entrepreneurs

This paper studies how critical entrepreneurial finance outcomes such as the investment return and equity division are shaped by venture characteristics, financier risk preferences and competitive searching. Our analysis uses a double-hazard agency model in which financiers determine the equity division to maximize the expected utility of their investment return while entrepreneurs search for the best deal. Model results provide several novel insights on the role of risk, the venture funding cycle and coexistence of angels/VCs. The model provides theoretical justification for the pattern of venture funding activity by predicting that financiers with higher funding capacity (e.g. VC firms) will benefit by funding ventures at later stages of development as their expected investment return rises with the venture’s initial value and financier productivity. Its also shows that competitive searching by entrepreneurs enables financiers with a diverse set of risk preferences to coexist profitably by reducing the advantage (disadvantage) of lower (higher) risk-aversion financiers and making investment returns more similar. Lastly, the model’s prediction that the financier expected investment return will decline with venture risk means that only angels and VCs with lower levels of risk-aversion can profitably finance riskier projects (for risk-neutral financiers, venture risk has no affect on the equity division and expected return).

Loan collateral, corporate investment, and business cycle

Abstract Collateral and loan rates are observed to be highly cyclical in their use for bank lending. The effects of such cyclicality on corporate investment are analyzed in this paper using a dynamic model. We find that more collateral causes firms to select riskier (/safer) projects if the loan rate rises above (/falls below) the expected investment return. We show that the incentive effect of loan rates becomes stronger with greater collateral, with the two credit terms having larger incentive effects on lower-quality firms. These results offer a new explanation for why lenient collateral policies are associated with rising loan rates in economic upturns but stricter collateral requirements come with falling loan rates during downturns.

Factor Model Based Clustering Approach for Cardinality Constrained Portfolio Selection

Portfolio selection concerns identifying an optimal composition of various risky assets and their corresponding holding amounts such that the corresponding investment strategy strikes a balance between maximizing the expected investment return and minimizing investment risk. While market frictions make full diversification impractical, cardinality constrained mean-variance (CCMV) portfolio selection problem emerges as a natural remedy: Given an asset pool with total n assets and a given cardinality s < n , optimally choose s assets from the entire asset pool such as to achieve a mean-variance efficiency. Unfortunately, CCMV has been proved to be NP hard and has been posted in front of optimization society as a long-standing challenge. By invoking structural market information and utilizing fast clustering algorithm for classification, we develop in this paper an effective heuristic scheme to identify approximate solutions for large-scale CCMV problems. More specifically, by constructing grouping constraints generated from factor-model based clustering algorithm and attaching them to the mixed integer programming formulation associated with the CCMV problem, we are able to significantly reduce the computational complexity, thus offering a fast algorithm with relatively high quality solution.

Loan Collateral, Corporate Investment, and Business Cycle

Collateral and loan rates are observed to be highly cyclical in their use for debt financing. The effects of such cyclicality on corporate investment are analyzed in this paper using a dynamic model. We find that more collateral causes firms to select riskier (safer) projects if the loan rate rises above (falls below) the expected investment return. We show that the incentive effect of loan rates becomes stronger with greater collateral, with the two credit terms having larger incentive effects on lower-quality firms. These results offer a compelling explanation for why lenient collateral policies are associated with rising loan rates in economic upturns but stricter collateral requirements come with falling loan rates during downturns. We demonstrate that lower expected returns and high loan rates increase firms’ incentive for risk taking as a business cycle is reaching its peak. This accounts well for why lending policy errors are usually rooted in booms but get exposed once the economy plunges into a slump.

Investment risk and return under renewable decarbonization of a power market

How does financial performance risk affect investments in low-carbon electricity-generating technologies to achieve climate policy targets? A detailed risk simulation of price formation in the Great Britain wholesale power market is used to show that the increasing replacement of fossil facilities with wind, ceteris paribus, may cause a deterioration of the financial risk–return performance metrics for incremental investments. Low-carbon investments appear to be high risk, low return, and as such may require a progressively higher level of support over time than envisaged by the conventional degression trajectories. The increasing riskiness of the wholesale market will to some extent offset the benefits of lower capital costs and operational efficiencies if investors need to satisfy cautious debt coverage ratios alongside positive expected returns. This increased risk is additional to the well-known ‘merit order effect’ of low-carbon investments progressively depressing wholesale prices and hence their expected investment returns. Policy relevance Policy support for renewable technologies such as wind is usually based upon levelized costs and is expected to reduce over time as capital costs and operational efficiencies improve. However, levelized costs do not take full account of the risk aversion that investors may have in practice. Expected policy support reductions may be moderated to some extent by the increased financial performance risk that intermittent technologies bring to the power market. The annual risk-return profiles for incremental investments deteriorate for all technologies as wind replaces fossil fuels. This extra risk premium will need to be incorporated into evaluating policy incentives for new investments in a decarbonizing power market.