So the asset value is all in equity.

What does it imply about the value of that asset?

Which implicitly means that the market value of this asset is 210,000.

And all an asset is, is something that has some future economic value.

Correlation

let me give you that piece of terminology, it just means net asset value.

So the higher the value in 1 diagonal and the lower the value in the other diagonal, the stronger the correlation.

But when you actually back out the implicit value of the asset, all of a sudden you realize that you're really overpaying for this asset.

Okay, so. A correlation, this simply defining correlation.

you have to buy this back from me at the NAV (net asset value) per share.

And if they accept it, it'll raise their asset value and we can win the game.

So he owns it outright so all of the 100,000 of asset value is actually his equity.

Now, each of these shares, well the 1,000 is called the NAV, or the net asset value,

TNEF Correlation Key

That's called correlation.

So the 1 million asset would really become an 800,000 asset.

Historically, real rates have jumped around a lot, showing little correlation with asset prices. Whatever their other benefits, the low rates we see around the world now hardly amount to insurance against future drops in asset prices.

Essentially when the market price of my asset dropped, all of that value came out of my equity.

It's the same asset.

So that's the asset.

So it's an asset.

That's an asset, right?

Specifically the correlation analysis.

Slight high correlation, or puh, puh, sorry, positive correlation for high SES.

Remember from the lecture on correlation, then, that represents the covariance or correlation.

That's its asset it has.

So it's an illiquid asset.

This is a real asset.

Why is cash an asset?

I still have 1 10 of 10 million of total asset value, because now he threw in his 5 million.

So the correlation is low.

It's an extraordinarily close correlation.

We could observe a correlation.

Just to give you a sense of the correlation, the correlation is about .5.

So the bank says, you know what, we're willing to lend you up to 75 of the value of your asset.

Our plan now is we compute the Phi correlation for each line, and then we rank the lines from high correlation to low correlation.

But we'll look at the correlation analysis and you'll see that that's the correlation coefficient.

The entire asset was his equity.

It's derived from the original asset.

That improves my return on asset.

So I would revalue the asset.

So cash could be an asset.

So that's what an asset is.

He would be a great asset.

Correlation in itself doesn't prove causality.