Financial reporting and Investment horizon: Difference between pages

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1.  
''Investment.''


Financial reporting is traditionally external.
The investment horizon is the length of time for which an investor plans to hold an investment.


It is concerned with collating and providing information to external stakeholders, the financial markets and the public.
Depending on their different investment horizons, different investors may regard the same investment asset as having different levels of risk in the context of their differing investment strategies.




2.
:<span style="color:#4B0082">'''''Term premia: models and some stylised facts'''''</span>


The term 'financial reporting' is also used by some organisations in a broader sense, to include internal reporting (as well as external).
:"... long-term interest rates can be broken out into a part that reflects the expected path of short-term interest rates and a term premium.


:... the latter part represents the compensation, or risk premium, that risk-averse investors demand for holding long-term bonds.


Financial reporting is also known as ''financial accounting''.
:This compensation arises because the return earned over the short term from holding a long-term bond is risky, whereas it is certain in the short term for a bond that matures over the same short investment horizon.  


:While some types of investor, such as pension funds, may consider long-term bonds less risky given their long-term liabilities, most other investors would tend to view them as more risky."


===The objective of financial reporting (IFRS)===
:''Bank for International Settlements, Quarterly Review, September 2018.''
 
The users of financial information need to assess:
 
*Prospects for future net cash inflows to the reporting entity; and
*Management's stewardship of the entity's economic resources.
 
 
Accordingly, financial reporting seeks to provide information about:
 
*The entity's economic resources (assets), claims against the entity (liabilities) and changes in those resources and claims; and
*How efficiently and effectively management has discharged its responsibilities to use the entity's economic resouces.




== See also ==
== See also ==
* [[Closing exchange rate]]
* [[Bank for International Settlements]]
* [[Conceptual framework]]
* [[Bond]]
* [[Credit]]
* [[Day trading]]
* [[Entity]]
* [[High frequency trading]]
* [[Financial accounting]]
* [[Holding period return]]
* [[FP&A]]
* [[Holding period yield]]
* [[International Financial Reporting Standards]] (IFRS)
* [[Horizon scanning]]
* [[Management accounting]]
* [[Liquidity Fund]]
* [[Management efficiency ratio]]
* [[Investment]]
* [[Stakeholder]]
* [[Pension fund]]
* [[Stewardship]]
* [[Premium]]
* [[Useful financial information]]
* [[Return]]
* [[Rising yield curve]]
* [[Term premium]]
* [[Ultra short duration bond fund]]
* [[Yield]]
* [[Yield curve]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]

Revision as of 15:58, 9 July 2022

Investment.

The investment horizon is the length of time for which an investor plans to hold an investment.

Depending on their different investment horizons, different investors may regard the same investment asset as having different levels of risk in the context of their differing investment strategies.


Term premia: models and some stylised facts
"... long-term interest rates can be broken out into a part that reflects the expected path of short-term interest rates and a term premium.
... the latter part represents the compensation, or risk premium, that risk-averse investors demand for holding long-term bonds.
This compensation arises because the return earned over the short term from holding a long-term bond is risky, whereas it is certain in the short term for a bond that matures over the same short investment horizon.
While some types of investor, such as pension funds, may consider long-term bonds less risky given their long-term liabilities, most other investors would tend to view them as more risky."
Bank for International Settlements, Quarterly Review, September 2018.


See also

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