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Risk premium approach |
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Risk premium approachA common approach for tactical asset allocation to determine the relative valuation of asset classes based on expected returns.Risk premium approach Similar MatchesAsset approachAsset approachA theory of determination of the exchange rate that focuses on its role as the price of an asset. With high capital mobility, equilibrium requires that expected returns on comparable domestic and foreign assets be the same. Absorption approachAbsorption approachA way of understanding the determinants of the balance of trade, noting that it is equal to income minus absorption. Due to Alexander (1952) Elasticities approachElasticities approach1. The method of analyzing the determination of the balance of trade, especially due to a devaluation, that focuses on the price elasticities of exports and imports. According to this approach, the effect depends criticalliy on the Marshall-Lerner Condition. 2. The explanation of exchange rates using supply and demand curves. Portfolio approachPortfolio approachAn approach to explaining exchange rates that stresses their role in changing the proportions of different currency-denominated assets in portfolios. The exchange rate adjusts to equate these proportions to desired levels. Monetary approachMonetary approachA framework for analyzing exchange rates and the balance of payments that focuses on supply and demand for money in different countries. A floating exchange rate is assumed to equate supply and demand and thus to reflect relative growth rates of money supplies and determinants of demand. Under a pegged exchange rate, the balance of payments surplus or deficit equals the excess demand or supply, respectively, for a country's money. Further SuggestionsDebt service parity approachFormula approach Residual dividend approach Stratified sampling approach to indexing Variance minimization approach to tracking Optimization approach to indexing Signaling approach Top down approach Cross sectional approach Market Value Approach |
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