Rate of return

portfolio theory basically helps in making optimum portfolio by interpreting, and evaluating risk and return of different risky assets. Basically, the portfolio theory is all about analyzing the balance in between the minimizing risk and maximizing return. However, the objective of this theory is to select one’s investment in that which could diversify the risk without reducing the expected return.…

billion, they are more than twice as large as the next biggest competitor, General Growth Properties. Hence, the following report analyzes SPG monthly performance from January 2005 until October 2015. In order to study SPG performance through risk and return relationship, two models are used: CAPM and Fama-French models. Before estimating the models, we can see through Table 1 (Pair-Wise Correlations among Variables), that there is a positive relationship among all the variables used in our…

problem, due to the concept of time value of money, the decrease in value further it is expected to be received demonstrates that Sue was awarded fairly by the jury. However, one can argue if the interest rate changes then the question cannot be really answered, as we do not know the annual rate of return. I answered the question on the basis of time value of money, as the concept sheds light on such issues brought by the question. That being said, the question doesn’t exactly take into account…

The issue emerged on the grounds that the amplification of the company 's profits could genuinely debilitate its liquidity, and the quest for liquidity tended to weaken returns. This article assessed the relationship in the middle of conventional and option working capital measures and degree of profitability (return for money invested), particularly in mechanical firms recorded on the Johannesburg Stock Trade (JSE). The issue under scrutiny was to make whether the all the more as of late…

Cost-plus pricing also ensures a positive rate of return because the full production amount plus markup means full recovery of production costs. Due to the costs remaining constant it is easy for a company using the cost-plus strategy to estimate revenue for a particular period time. With these benefits of using cost-plus pricing also comes with some disadvantages. According to Vivian Guo, “the guarantee of a target rate of return creates little incentive for cutting cost or for…

volatility. Since these leverage effects are related or identical to asymmetric volatility, the presence of time-varying risk-return relationship could be reflected by asymmetric volatility. Second, the expected risk-return relationship can also help explain the leverage effect. The stock prices decline with the anticipation of higher risk/volatility which tends to increase expected returns. Since investors are rational and risk-averse, they demand less stock with an increase in volatility,…

interests’ costs. When short term requirements are not financed with long term requirements, a company saves on the interest rate differentiation between the short term interest rates and the long term interest rates. Long term interest rates are moderately higher as a result of the risk premium. The final advantage is that there are no risks of refinancing and interest rate instability during refinancing. One of the basic principles of finance is pursued here. This means that long term assets…

from $800 to $950, the yield to maturity rate drops by 19.7% (from 25% to 5.3%). Similarly, when the bond price increases and becomes equal to face value ($1000) giving the yield rate to be 0%, it normally happens…

PORTER’S 5 FORCES ANALYSIS – INDIAN AVIATION INDUSTRY Threat of New Entrants 1. Setup Cost As on today, venture capital of $15 Million is enough to launch an airline service. Airlines can also utilize an ACMI lease agreement for extra aircrafts. If you have more aircrafts then you can also offer few aircrafts on lease to other airlines, especially in the peak season to cope-up with traffic and loads. 2. Fuel Price ATF has been increased many folds from the beginning. In India, companies do…

Systematic risk which is known as market risk that refers to the variation in the returns on securities, which arises due to macroeconomic factors of business such as social, economic and political factors. Changes to the government policies cause an effect or influences systematic risk. There are different types of systematic risk such as interest risk which refers to a risk that is cause by the fluctuation in the rate or the interest from time to time and affects interest bearing securities…