Capital markets investment and finance assignment research Weekend Effect The weekend effect (also known as the Monday effect, the day-of-the-week effect or the Monday seasonal) refers to the tendency of stocks to exhibit relatively large returns on Fridays compared to those on Mondays. This is a particularly puzzling anomaly because, as Monday returns span three days, if anything, one would expect returns on a Monday to be higher than returns for other days of the week due to the longer period
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Financial Theories Overview Edward E. Edgar University of Phoenix Financial Theories Overview The following is an overview of 10 different financial theories prevalent today. The overview will include a brief description of the theory, an example of the theory, and other attributes of the theory. There will also be a conclusion to sum up a general understanding of the theories and their applications. Efficiency theory Efficiency theory has been around since the 60s and, is an extension of
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Chapter 10 Arbitrage Pricing Theory and Multifactor Models of Risk and Return Multiple Choice Questions 1. ___________ a relationship between expected return and risk. A. APT stipulates B. CAPM stipulates C. Both CAPM and APT stipulate D. Neither CAPM nor APT stipulate E. No pricing model has found Both models attempt to explain asset pricing based on risk/return relationships. Difficulty: Easy 2. ___________ a relationship between expected return and risk. A. APT stipulates
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that they are error-free. 1 Central concepts for this week • Risk-return trade-off • Covariance (between individual assets) • Efficient Frontier • Market portfolio (choice of the rational investor) ↓ • Capital Market Line • Security Market Line • Cost of capital - Firm: the returns that are necessary to attract capital - Investor: returns that the capital markets offers for comparable investments Readings this week: Brealey, Myers & Allen (BMA), Corporate Finance 8th edition
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of South Florida FIN 4414 Abstract Taking the role as Jessie Jones, we will analyze whether to recommend the Coca Cola stock to potential clients or current clients that do not have it in their portfolio. By using the Capital Asset Price Model (CAPM), Dividends Discount Model (DDM) and the Price/Earnings (P/E) ratio we will come to a conclusion. Background The Coca Cola Company, which is based out of Atlanta, Georgia, is a leader in the global soft drink market. It owns subsidiaries
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Inventory Capital Cost, Inventory Service Cost, Inventory Storage Cost, and Inventory Risk Cost. inv carrying cost 1. Inventory Capital Cost Inventory Capital Cost is the expected financial return that capital could be expected to earn in an alternative investment of equivalent risk. In other words, it is the minimum financial return necessary to make a project worthwhile. The Weighted-average cost of capital (WACC) equation (Eq. 3) is commonly used to calculate the capital cost once
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methods described include the analysis of capital valuations modeling with respect to the cost of various debt and equity measurements available. Long-term finance alternatives are presented, as are the different sources of capital available to organizations. The paper concludes with a look at various cash management techniques needed by the Casino / Resort for operating as well as the various methods of short-term financing. Capital Valuation Models Capital modeling provides common metrics for risk
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For this project you will assume the role of a portfolio manager. As part of your new assignment, you have seven stocks under management. Your task is to determine how your seven stocks are performing in your portfolio. Your first set of analysis will focus on the assumption that there are no short sale constraints on your holdings and one smaller set of analysis that will focus on the effect of a short sale constraint on your performance. Portfolio Theory Analysis 1. Perform a portfolio
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Idiosyncratic risk is a firm-specific risk that affects the price change of a security. It is also known as unsystematic risk. This risk is unique to the specific security and affects a single asset or small group of assets. In contrast to systematic risk, which is the market risk that affects the larger number of assets. Unsystematic risk of a portfolio can be brought down to zero through diversification whereas systematic risk cannot be diversified. This can be further elaborated with the help of an example
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Investments team project KUBS Investment Fund Manager Group 14 (Step 1) For the convenience of problem solving, we solved the problems in following orders: a–c–e–b-d. a) The yearly expected return: First, find the weekly return for each stock by using the formula of: rᵢ=p₁-p₀p₀ Second, for each of the stock, add all of the weekly return and then divide by the number of sample (from Oct 27, 2005 until Oct 19, 2015) to get the average of weekly return. rw=1mnί=1mnrᵢ (where mn is 521) Third
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