Assignment: Understanding the Concepts FIN 100 – Principles of Finance Assignment: Understanding the Concepts Ever dream of owning your own business? The life of a business owner can be a glorious one with many exciting benefits such as a big house, a nice car, and oodles of money. According to (Henderson, 2012), “The average income of small business owners varies widely depending upon their level of experience. For example, small business owners with less than one year of experience in running
Words: 2989 - Pages: 12
Required Rate of Return on stocks Name: Course: Instructor: Date: REQUIRED RATE OF RETURN ON STOCKS Introduction The full amount of risks that any investment faces is composed of the summation of the diversifiable and the non-diversifiable risks. As shown in the formula below. Total Risk = Systematic (non-diversifiable) Risk + Diversifiable Risks The Systematic risk is defined as the effect of risk that every type of investment will come across owing
Words: 371 - Pages: 2
team concludes that risk and return are strongly correlated. A higher risk usually yields a higher return. Our team observed that within Alex Sharpe’s portfolio, the Reynolds’ fund holds the highest risk (highest standard deviation of 32.45%), as well as the highest return (16.27% in comparison to Hasbro’s return of 11.31%). Although a lower standard deviation (lower risk) is ideal for an investment portfolio, the Reynolds’ fund yields a higher return for the higher associated risk. Furthermore, our
Words: 334 - Pages: 2
Introduction Financial risk takes place when an individual or company is exposed through numerous financial transactions. These transactions may include sales, purchasing, different types of investments, loans, volatile markets due to political situations and more. Financial prices may change as a result of changes in interest rates, inflation, the exchange rate, and many more economic reasons such influences of the European markets as well as the United States. These occurrences can result in
Words: 1797 - Pages: 8
latest five years’ worth of monthly returns for Vanguard S&P 500 Index Fund, R.J. Reynolds and Hasbro. Among those return data, the Vanguard has a maximum return of 34.46% and a minimum return of -10.14. The Reynolds has a maximum return of 112.49 and a minimum return of -31.48. The Hasbro has a maximum return of 71.03 and a minimum return of -15.36. The result turns out that the Reynolds has the highest average return as 1.87% with a highest stand-alone risk measured by the standard deviation
Words: 929 - Pages: 4
International Research Journal of Finance and Economics ISSN 1450-2887 Issue 85 (2012) © EuroJournals Publishing, Inc. 2012 http://www.internationalresearchjournaloffinanceandeconomics.com Sensitivity of Sector Risk-Return Relationships in the Saudi Arabian Stock Market Bruce Q. Budd College of Business, Alfaisal University, Riyadh, Kingdom of Saudi Arabia E-mail: bbudd@alfaisal.edu Declan McCrohan College of Business, Alfaisal University, Riyadh, Kingdom of Saudi Arabia E-mail: dmccrohan@alfaisal
Words: 5671 - Pages: 23
ANGELA FORNEY ASSIGNMENT 2 11/22/2012 KONWUFINE, ELIAS FINANCE 100 Lenders love to analyze ratios. It allows them to see how your business is doing and compare your business to other businesses they’ve loaned money to. But ratio analysis is a useful tool for the business owner too. How healthy is your business? Some basic ratio analysis will tell the story. Calculating these three financial ratios will let
Words: 2232 - Pages: 9
| Concepts Covered Cost of Equity: Cost of Equity is the minimum rate of return a firm must offer to the shareholders. This is necessary as the shareholders who have taken a risk in investing would be waiting for returns. The formula for Cost of Equity is given by: Cost of Equity = (Dividend per share/ Current Market Value of Stock) * Growth rate of Dividends Cost of debt: - Cost of
Words: 2487 - Pages: 10
concepts that occur at the time (Emery, Finnerty, & Stowe, 2007, pp. 32-33). The concepts a business uses are as follows: “The Risk/Return Tradeoff,” “Diversification,” “Dollar Cost Averaging,” “Asset Allocation,” “Random Walk Theory,” “Efficient Market Hypothesis,” “The Optimal Portfolio,” and “Capital Asset Pricing Model” (Investopedia, 2010, p. 1-8). The Risk/Return Tradeoff concept is also known by another name. This name is “the ability-to-sleep-at-night-test.” Although some individuals
Words: 952 - Pages: 4
main objective for this portfolio is to invest in companies that have a medium risk. I am part of the middle class society so I don’t want to invest in high risk companies since losing money isn’t an option. I will chose companies that can increase my monetary value in a long period of time, possibly for retirement. The main companies that I am looking to invest in are long term investments with a medium to high risk. I have 3 young children right now that are going to need cars in the future
Words: 2971 - Pages: 12
