The insurance policy...


13.15 The insurance policy accumulates $2 million x (1 + 10%)10 = $5,187,485. The after-tax return on the hedge fund is 10% x (100% ­ 35%) = 6.5%. The hedge fund outside the insurance policy would accumulate $2 million x (1 + 6.5%)10 = $3,754,275.

Index

Absolute returns, 6, 16
Accountant, functions of, 150­151
Accounting
accrual vs. cash method, 138
accruals, 142­146
capital accounts, 150
conservatism, 136
consistency, 135­136
control issues, 150­151
derivatives, 148­149
disclosure, 136
double-entry bookkeeping, 138­139
financial statements, 146­147
flow-through equity, 147­148
futures, 148­149
inventory, 148
lower of cost or market rule, 137­138
mark to market, 148
matching principle, 137
materiality, 136
nonledger information, 150
revenue principle, 137
types of accounts, 139­142
Accounting break period, 69
Accounting ledger, 149
Accounting period, 144, 146
Accounting records, 144­145
Accounting systems, 199
Accredited investors, 36, 128­129
Accrual accounting method, 138
Accruals, types of
bond interest, 142­144
financing interest, 144­145
management fees, 146
stock dividends, 144
Accrued interest, 179
Adjusted gross income, 160
Advertising, regulation of, 194
Advisers, functions of, 46
After-tax dividends, 66
After-tax returns, 37­39, 113
Aggregate tax allocation
characterized, 164
example of, 165­171
flow chart, 165