Risk and Return
Student:
Institution:
For this assignment I shall use the financial records of Noni B Ltd
1. Calculate the monthly returns for your (assigned) company’s shares for the 12 months ending 30th June 2014. You should calculate the capital gain/loss yield only; that is, ignore dividends. Get the necessary share price data fromDatAnalysis.(2 marks)
The following extract from the balance sheet is used to explain the monthly capital gain
Equity 2013 2012
Issued capital 15 22,105 22,105
Reserves 579 551
Retained earnings/(Accumulated Losses) (1,351) 4,074
Total Equity 21,333 26,730
From the above extract, the company had a net annual capital loss of (26730-21333) thousand dollars …show more content…
Normally, the stock holders expect their investments in the company to gain so that they may have dividends and other returns to their investment. However, there are some trading decisions and situations that may lead to capital losses. A capital loss is experienced where the reported total equity is less than the total equity reported at a similar time last trading period (normally 12 months). In Noni B Ltd’s case, the company received negative gain (loss) since the figures reported in the preceding year were higher.
The ASX trading index is the average of the first 200 shares that are traded at ASX. this is referred to the industry bench mark for all the shares that are listed in the stock exchange market.
5. Identify and discuss two systematic and two unsystematic risk factors impacting on your company. Your discussion should be aimed at explaining systematic risk and unsystematic risk to your Aunty using example risk factors relevant to your company. One of the four risk factors should be drawn from news released about your …show more content…
This has always led to collapse of pre mature decisions since most of them pass through only one level.
Pricing policies Most of the products offered by the company have constant prices almost throughout the year. This makes it easy for competitors to predict the retail price of the new products and use lower prices to beat the company in competitiveness.
Unsystematic risk factors
Dividend policy Dividends are declared either quarterly semi-annually or annually. in the case of Noni B Ltd, share dividends were only declared at the end of the year. Considering that the competitors had declared quarterly and semiannual dividends, the company lacked investor support.
Share value market loss
Over the last twelve months, the market price of company’s stock has fallen drastically. This is a risk factor at a time that the company may be seeking more investors in order to reclaim their position in the market.
6. Source a current beta coefficient for your company from DatAnalysis. Explain to your Aunty what it means and give an example, assuming the expected market return is forecast to fall by 5% in the coming year. (2
Student:
Institution:
For this assignment I shall use the financial records of Noni B Ltd
1. Calculate the monthly returns for your (assigned) company’s shares for the 12 months ending 30th June 2014. You should calculate the capital gain/loss yield only; that is, ignore dividends. Get the necessary share price data fromDatAnalysis.(2 marks)
The following extract from the balance sheet is used to explain the monthly capital gain
Equity 2013 2012
Issued capital 15 22,105 22,105
Reserves 579 551
Retained earnings/(Accumulated Losses) (1,351) 4,074
Total Equity 21,333 26,730
From the above extract, the company had a net annual capital loss of (26730-21333) thousand dollars …show more content…
Normally, the stock holders expect their investments in the company to gain so that they may have dividends and other returns to their investment. However, there are some trading decisions and situations that may lead to capital losses. A capital loss is experienced where the reported total equity is less than the total equity reported at a similar time last trading period (normally 12 months). In Noni B Ltd’s case, the company received negative gain (loss) since the figures reported in the preceding year were higher.
The ASX trading index is the average of the first 200 shares that are traded at ASX. this is referred to the industry bench mark for all the shares that are listed in the stock exchange market.
5. Identify and discuss two systematic and two unsystematic risk factors impacting on your company. Your discussion should be aimed at explaining systematic risk and unsystematic risk to your Aunty using example risk factors relevant to your company. One of the four risk factors should be drawn from news released about your …show more content…
This has always led to collapse of pre mature decisions since most of them pass through only one level.
Pricing policies Most of the products offered by the company have constant prices almost throughout the year. This makes it easy for competitors to predict the retail price of the new products and use lower prices to beat the company in competitiveness.
Unsystematic risk factors
Dividend policy Dividends are declared either quarterly semi-annually or annually. in the case of Noni B Ltd, share dividends were only declared at the end of the year. Considering that the competitors had declared quarterly and semiannual dividends, the company lacked investor support.
Share value market loss
Over the last twelve months, the market price of company’s stock has fallen drastically. This is a risk factor at a time that the company may be seeking more investors in order to reclaim their position in the market.
6. Source a current beta coefficient for your company from DatAnalysis. Explain to your Aunty what it means and give an example, assuming the expected market return is forecast to fall by 5% in the coming year. (2