What is the meaning of ex-ante and ex post?
Ex-post is another word for actual returns and is Latin for “after the fact.” The use of historical returns has customarily been the most well-known approach to forecast the probability of incurring a loss on investment on any given day. Ex-post is the opposite of ex-ante, which means “before the event.”
How is ex-ante risk calculated?
Ex ante variance calculation: The expected return is subtracted from the return within each state of nature; this difference is then squared. Each squared difference is multiplied by the probability of the state of nature. These weighted squared terms are then summed together.
What is the difference between ex-ante and ex post investment?
Ex-ante investment is the amount of investment which firms plan to invest at different levels of income in the economy. Ex-post investment, on the other hand, is the amount realised or actual investment in an economy during a year.
How do you use ex ante?
Examples of ex ante
- Let us call this the ex ante solution to the rationality of deter rent threats.
- Unfortunately, we have little information from which to construct ex ante predictions of yield variability.
- Deploying these mechanisms is ex ante mutually advantageous, even if we are unhappy with the results.
What does ex-ante mean in law?
The term ex ante is a Latin word which means based on assumption and prediction. It also means beforehand or before the event. The term is used generally in the commercial world, where results of a particular action, or series of actions, are forecast in advance.
What is ex-ante?
What is Ex-Ante? Ex-ante refers to future events, such as the potential returns of a particular security, or the returns of a company. Transcribed from Latin, it means “before the event.”. Much of the analysis conducted in the markets is ex-ante, focusing on the impacts of long-term cash flows, earnings and revenue.
What are the implications of this addition to ex-ante risk management?
There are several implications of this addition to ex-ante risk management. First, the risk of a portfolio is not limited to the market exposures, but includes important effects resulting from the manager’s response to market conditions.
What is ex-ante analysis and ex-post analysis?
This is in contrast to ex-post analysis, which is based on the correlation of actual performance to factor returns. As a very simple example of ex-ante analysis, if we wanted to determine how much of a portfolio’s P&L could be attributed to a market factor, we would start by determining the portfolio’s market exposure.
How does portfolio composition affect ex-ante risk distribution?
This is important, as a key assumption in ex-ante risk analysis is that the portfolio’s composition remains unchanged over the risk horizon. However, with active management of market factors, the portfolio composition, and thus the beta exposures, change over the risk horizon, and change the expected ex-ante risk distribution as well.