Given its debt-to-asset ratio, it could load up the company with debt, says Wright.
As of the end of September, the ministry had a debt-to-asset ratio of 61.81%, up from 60.63% at the end of 2011.
As discussed in our new book, The Age of Deleveraging, back in mid-2008, many FDIC-insured institutions were heavily leveraged but still had an average capital-to-asset ratio of 7.9%.
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Fortunately, farmers are in better financial shape these days: the debt-to-asset ratio, over 25% in the crisis years of the 1980s, is now closer to 15%, notes Bob Stutzman, of Prudential Agricultural Investments.
That drop in value caused Plaza Group to trigger the loans' net asset value ratio covenant and default, according to filings made by Plaza Group in bankruptcy court.
In most cases, an asset-to-salary ratio is used to determine if a person is saving enough for retirement.
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Another closed-end fund, it trades at a 13% discount to net asset value and has an expense ratio of 1.7%.
It trades at a 5% discount to net asset value and has a 1% expense ratio.
Rising rates usually go hand in hand with falling farm revenues and higher capitalisation rates (the ratio of income produced by an asset to the asset's value).
Overall, an ETF that has a difference between its net asset value and benchmark compared to its expense ratio of 25 to 30 basis points is worthy of caution.
Sunil Garg, a banking analyst at JPMorgan in Hong Kong, said in a note that HSBC would probably be able to fund the acquisition internally, with the purchase representing 3.5% of its asset base, or an 80-basis-point impact on its Tier 1 capital ratio.
To do this, take your ETF's net asset value, compare it to its benchmark, and if it's significantly above the expense ratio, look into why that is.
But he said it is a different situation when one approaches asset class as a fundamental investment and add commodities to achieve a certain rate of return or Sharpe ratio.
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