Formula to calculate the Present value of cash flows
(Brigham & Michael, 2013)
Solution to Question 4:
Formula of Holding Period Return (HPR):
(Monthly Data for NAB, BHP and Market has been exacted from Yahoo Finance and references for same can be found in reference section)
(References: Yahoo finance: NAB, 2018, Yahoo finance: BHP, 2018 and Yahoo finance: ASX100, 2018)
Graph for holding period returns
Answer ii to iv:
Formula of Annual Holding Period Return (HPR):
Formula of Standard Deviation:
Graph plot where risk is on X axis and return on Y axis for each of NAB, BHP and Market
Answer to vi:
Formula of CAPM:
(Moles & Kidwekk, 2011)
Answer to vii:
Portfolio of NAB (30%) and BHP (70%)
Construction of Portfolio
Formula to calculate the estimated return of portfolio:
(Bromwich & Bhimani, 2005)
According to results gathered above I would like invest in Portfolio as it provides average return with lower risk.
Yahoo finance: ASX100. (2018). Historical Data. Retrieved on 8 April 2018, from https://au.finance.yahoo.com/quote/%5EATOI/history?p=%5EATOI
Brigham, F., & Michael C. (2013). Financial management: Theory & practice. Cengage Learning.
Bromwich, M. & Bhimani, A., (2005). Management accounting: Pathways to progress. Cima publishing.
Moles, P. & Kidwekk, D. (2011). Corporate finance. John Wiley &sons.
Yahoo finance: NAB. (2018). Historical Data. Retrieved on 8 April 2018, from https://au.finance.yahoo.com/quote/NAB.AX/history?p=NAB.AX
Yahoo finance: BHP. (2018). Historical Data. Retrieved on 8 April 2018, from https://finance.yahoo.com/quote/BHP/history?p=BHP