Saturday, April 6, 2019
Risk & Return Essay Example for Free
Risk harvest-festival EssayWhat are investment hands? What is the return on an investment that costs $1,000 and is sold after 1 year for $1,100? Investment returns is the expectation of earning money in the future on the amount of money invested. The return is the financial performance of the investment. The return is the difference between the amount invested and the amount you are returned after give tongue to investment. There are two ways to show return on investment. 1. By dollar return. tote up to be received Amount invested = $1,100 $1,000 = $100 in returnThe problems with expressing returns in dollars, you dont eff the size of the investment for that dollar return and you dont know the timing of the return. 2. Rate of excrete or percentage returns Amount received Amount invested / Amount invested = $100 / $1000 = . 10 = 10% The rate of return standardizes the dollar return by considering the timing b. (1) Why is the T-bills return freelance of the state of the economy? Do T-bills promise a completely risk-free return? important coefficients are the weighted average of its individual securities betas. You will add each securities beta to find the portfolios beta. i. Suppose you have the following historical returns for the occupation market and for the company P. Q. Unlimited. Explain how to calculate beta, and hire the historical stock returns to calculate the beta for PQU. Interpret your results. See attached. Calculate betas using historical data. A regression line is fitted through the points of the market returns (x-axis) and companys returns (y-axis) and the slope of that line provides an estimate of the stocks beta.