Topic
Embedded value
About: Embedded value is a research topic. Over the lifetime, 343 publications have been published within this topic receiving 8853 citations.
Papers published on a yearly basis
Papers
TL;DR: In this article, a computer program has been written which allows the user to select values for a number of relevant variables, including years of analysis, age, return expected on outside investment, and tax bracket.
Abstract: Using the basic assumption that a cash value life insurance policy can be equated with a program combining term insurance and a separate investment fund, a methodology is provided for analyzing the investment performance of cash value contracts. The suggested model involves the comparisons of savings "accumulations" in the two programs. A computer program has been written which allows the user to select values for a number of relevant variables, including years of analysis, age, return expected on outside investment, and tax bracket. It is suggested that the model and program would be useful in classroom settings as well as for advising consumers. In any course on life insurance, one must come to grips with the question of the relative merits of cash value and term policies. There are a number of routes which can be taken in this area. Some teachers may choose to recommend one or the other of these products on a blanket basis. Others may state that it depends upon the individual situation and that no general guidelines can be given. A position taken by many is that one should buy cash value insurance unless a strong case can be made for the purchase of term insurance in a particular instance. It is this writer's observation that this is the philosophy followed by the majority of people working in the insurance industry. The material in this article is based upon the contrary position that one should buy term insurance unless a good case can be made for the purchase of cash value insurance. The purpose of this article is not to delineate the reasons for that position. Suffice to say at this point that this opinion is based upon the conclusion that the basic purpose of life insurance is to provide protection against premature death and that term insurance provides this protection during the period when it is needed. Having accepted the above premise, it remains for the instructor to deal with the question "When should cash value insurance be purchased?" One of a number of instances where it should be used is when the buyer wishes to combine a savings program with his life insurance program. In deciding whether he wishes to do so (given that he wishes a savings program of some type) the buyer ought certainly to be interested in the Michael L. Murray, Ph.D., is an Associate Professor in the University of Iowa. This paper was submitted in April, 1974.
9 citations
1 Jan 2007
TL;DR: In this article, the authors present Value Focused Management (VFM), which is a methodology for enhancing the organization value by identifying its value drivers, quantifying their estimated contribution, and prioritizing them according to their relative value creation potential and difficulty of implementation.
Abstract: The goal of the firm is to maximize shareholder value. While most firms devote their main efforts to exploit financial value drivers such as mergers and acquisitions, not enough attention is being paid to managerial value drivers like reducing time to market, increasing throughput, or improving logistics, operations and supply chain management, although these managerial drivers have a much greater potential for value creation. This paper focuses on managerial value drivers and presents Value Focused Management (VFM), which is a methodology for enhancing the organization value by identifying its value drivers, quantifying their estimated contribution, and prioritizing them according to their relative value creation potential and difficulty of implementation. VFM combines Value Based Management (VBM) with the Theory of Constraints (TOC) along with practices such as the focusing matrix, and provides managers with a structured process that includes a focused diagnosis of the organization, followed by a comprehensive implementation plan which helps them direct their efforts towards the most promising value drivers. VFM has been successfully implemented in dozens of organizations worldwide. This paper analyzes a case study of a supermarket chain which demonstrates VFM’s potential as an effective practical methodology to guide companies in their ongoing quest to increase shareholder value.
9 citations
TL;DR: In this article, the authors investigate the absolute and relative determinants of the actuarial costs of crop-specific and whole-farm revenue insurance contracts for an arbitrary acre allocation vector, and identify conditions such that the expected cost of revenue insurance via crop specific contracts is increasing under a more dispersed vector of location-and-scale adjusted revenue guarantee parameters.
Abstract: The U.S. market in subsidized commodity revenue insurance contracts has expanded rapidly since 1996. By far the most prevalent contract forms are crop-specific, rather than the whole-farm design which has a better claim to being optimal. For an arbitrary acre allocation vector, this paper inquires into absolute and relative determinants of the actuarial costs of these forms. The actuarial value of whole-farm insurance increases under a particular characterization of >more systematic= risk, whereas the actuarial value of insurance through crop-specific contracts need not change. Upon fixing stochastic revenue interactions, we identify conditions such that the expected cost of revenue insurance via crop-specific contracts is increasing under a more dispersed vector of location-and-scale adjusted revenue guarantee parameters. Then we identify two precise requirements such that the actuarial values of the two contract forms converge. To give insights on the difference, fair premiums for whole-farm and crop-specific contracts are compared for typical farms in two states.
9 citations
Patent•
14 Dec 1999
TL;DR: In this paper, a method for reducing risk including the steps of holding by a seller a liability having a future value S1 and determining the present value P1 of the liability in accordance with the future value s1.
Abstract: A method for reducing risk including the steps of holding by a seller a liability having a future value S1 and determining the present value P1 of the liability in accordance with the future value S1. The method also calls for buying the liability by a buyer entity for a value P2 greater than the present value P1, thereby providing a first net gain holding the liability by the buyer entity for a period of time and discharging the liability at the end of the period of time for a value S1 that is less than the future value S2 thereby providing a second net gain. The present value P2 is determined according to the present value P1 and according to a time t years prior to the time at which the value of the liability reaches S1. The present value P2 is determined according to the value S2 and the future value S1 is known at the time of the determining of the present value P1. The first net gain is a net gain for the seller and the second net gain is a net gain for the buyer entity. The liability is recorded as a long term debt by the seller and may be at present value by the buyer entity. The buyer entity can be an insurance company.
9 citations
Related Topics (5)
Performance Metrics
| Year | Papers |
|---|---|
| 2021 | 3 |
| 2020 | 2 |
| 2019 | 2 |
| 2018 | 3 |
| 2017 | 14 |
| 2016 | 20 |