Fair value pricing is a critical issue for mutual funds with international market exposure because trading in the underlying foreign securities is not synchronous with US…
Fair value pricing is a critical issue for mutual funds with international market exposure because trading in the underlying foreign securities is not synchronous with US market trading. Using a sample of Japanese open‐end mutual funds that trade in the USA, this paper explores the potential for exploitation of common mutual fund pricing practices and identifies much larger pricing errors than previously reported. A simple, objective solution to the fair value pricing quandary is proposed. The solution, based on foreign exchange‐traded funds and the S&P 500, provides a timely, objective pricing alternative that is less exploitable than current mutual fund pricing practices.
The purpose of this paper is to develop and test a model that can be used to help students learn the investment analysis process and accurately identify good and bad…
The purpose of this paper is to develop and test a model that can be used to help students learn the investment analysis process and accurately identify good and bad investment opportunities.
The model tested in this research was developed by a former member of the student managed investment fund Coyote Capital Management at the University of South Dakota. The goal of this project was to refine that original model and test it using historical data from a sample of companies during both bull and bear market periods.
During the bull market period (2004‐2006), 81 per cent of the model's recommendations were correct, and during the 2007‐2009 bear market period, approximately 66 per cent of the model's recommends were correct.
While following the model's recommendations could potentially produce returns well above those of the market in the best case scenario and returns in line with the market in the worst case scenario, there are many factors that should go into making an investment decision. This model can be useful as an item in the investor's tool kit, and it has the potential to help students better understand the process of evaluating an investment opportunity.