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I don't think it can truly be said that TARP turned profit. Because TARP was actually structured as the purchase/hedging of banks' securities. And it is impossi
by marcusgarvey 10y ago
I don't think it can truly be said that TARP turned profit. Because TARP was actually structured as the purchase/hedging of banks' securities. And it is impossible to know profitability of securities without knowing their Sharpe ratio, which no one knew at the time because all their valuation models were garbage as all the defaults happening in real-time soon made apparent.
- caminante 10y agoI don't think it can truly be said that TARP turned profit[...] And it is impossible to know profitability of securities without knowing their Sharpe ratio, I think you're mis-interpreting the Sharpe Ratio and saying something different. Profit -- ex-ante or post-ante (edit: ex-post, brain fart!) -- is always a profit.[0] Whereas, you're arguing that the profit (on a risk-adjusted basis) wasn't that good. [0] http://www.investopedia.com/terms/s/sharperatio.asp http://www.investopedia.com/terms/s/sharperatio.asp