country
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Corporate Finance : West And Clip Industries Stocks

tag 0 Download3 Pages 709 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT

Question:

Describe about the Corporate Finance for West and Clip Industries Stocks.

 

Answer:

Risk and return analysis report for the Stock Market Index and the two companies, the Bank West and the Clip Industries

The mean (expected) returns of the market index and the two companies, Bank West and Clip Industries stocks’ are computed as 3.84%, 7.65% and 0.88% respectively. An expected return is the average measure or the amount of loss or profit an investor expects on an investment on the basis of several expected or known rates of return over a certain period (Murphy, 1994; Investopedia.com, 2012). In other words, it can be interpreted as the average monthly return value (+ve for profits, -ve for losses) a stock or an index has obtained overall during the given time period. As observed, the expected return is highest for Bank West, and lowest for Clip Industries.

The standard deviation (SD) is the measure of risk or the volatility in the monthly returns of a stock to its expected value (Graham and Zweig, 2013). The SDs of the market index and the two companies, Bank West and Clip Industries stocks’ are computed as 3.403%, 8.097%, and 8.667%. A higher value of SD for a stock’s monthly return implies a higher amount of risk involved with the investment in that stock, i.e. the returns are inconclusive and can be unusually higher or lower. Therefore, it can be said that a risk-averse investor may prefer to invest in the market index portfolio, rather than making investments solely in either of the two aforesaid companies due a lower risk involved, while a risk-seeking investor will invest in the Clip Industries or the Bank West (in preference) which sure has higher risk involved but, may provide the investor higher expected returns.

The coefficient of variation (COV) is a measure of spread that describes the amount of variability relative to the mean (Damodaran, 2007). The COV of the market index and the two companies, Bank West and Clip Industries stocks’ are computed as 0.886, 1.058 and 9.821 respectively. It can be observed from the above values that the Clip Industries’ monthly returns are varied over a large range and demonstrate a very high variability.

The correlation coefficient between the Bank West and the Clip Industries is –0.0983, which implies a poor negative relationship between the monthly returns of these two industries, i.e. an increase in the monthly return of one stock will result in a decrease in the monthly return of another stock and vice-versa; however, the dependence is very poor.

For the portfolio obtained for the two equally weighted industries, the expected return was computed as 4.27% and the standard deviation as 5.6318%. For the purpose of risk minimization, a portfolio with the lowest investment risk involved was formulated with average weightings of Bank West and Clip Industries as 0.5309 and 0.4691 (or 53.09% and 46.91%) respectively. This resulted in the lowest standard deviation of 5.6187% possible for a portfolio of these two companies.

Beta is a function of the volatility of the asset and the market and reflects suggests how risky an asset is compared to overall market risk. In other words, it is a correlation coefficient between the market and the specified stock and represents the tendency of the stock’s returns to respond to swings in the market (Graham and Zweig, 2013). For the Bank West and the Clip Industries, betas were computed as 1.3147 and –0.5570 respectively, suggesting that the Bank West stock's monthly returns are theoretically more volatile than the market and provides the chance of a higher expected return, but at the same time, posing higher risk. However, for the Clip Industries, a negative beta demonstrates that the expected returns may outperform the benchmark by 55.7% during down markets and underperform by 55.7% in up markets.

 

References

Murphy, J.E. (1994) Stock market probability: Using statistics to predict and optimize investment outcomes. Chicago, IL: Irwin Professional Publishing.

Damodaran, A. (2007) Strategic risk taking: A framework for risk management. 2nd edn. United States: Pearson Prentice Hall.

Investopedia.com (2012) ‘Expected return, variance and standard deviation of A portfolio’, in Available at: https://www.investopedia.com/walkthrough/corporate-finance/4/return-risk/expected-return.aspx (Accessed: 12 September 2016).

Graham, B. and Zweig, J. (2013) The intelligent investor: A book of practical counsel. New York: HarperBusiness Essentials.

OR

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2018). Corporate Finance : West And Clip Industries Stocks. Retrieved from https://myassignmenthelp.com/free-samples/corporate-finance-west-and-clip-industries-stocks.

"Corporate Finance : West And Clip Industries Stocks." My Assignment Help, 2018, https://myassignmenthelp.com/free-samples/corporate-finance-west-and-clip-industries-stocks.

My Assignment Help (2018) Corporate Finance : West And Clip Industries Stocks [Online]. Available from: https://myassignmenthelp.com/free-samples/corporate-finance-west-and-clip-industries-stocks
[Accessed 01 April 2020].

My Assignment Help. 'Corporate Finance : West And Clip Industries Stocks' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/corporate-finance-west-and-clip-industries-stocks> accessed 01 April 2020.

My Assignment Help. Corporate Finance : West And Clip Industries Stocks [Internet]. My Assignment Help. 2018 [cited 01 April 2020]. Available from: https://myassignmenthelp.com/free-samples/corporate-finance-west-and-clip-industries-stocks.


Getting nightmare regarding pending chemistry assignment? Then it is high time you consider hiring chemistry assignment help service of MyAssigemnthelp.com. We at MyAssignmenthelp.com deliver quality subject specific assistance on more than 100+ subjects. For us, students' need is foremost, and we work round the clock to offer science, humanities and commerce assignment help. Among Commerce wing, our one of the most popular services is capital budgeting assignment help. In science segment, we have gained popularity with biology assignment help.

Latest Statistics Samples

STA101 Statistics For Business

Download : 0 | Pages : 4

Answer: Question 1 a.   Table 1: Covariance According to the above table, it has been identified that the covariance of X and Y has been calculated to be -12.125. The negative value of the covariance means that X and Y have a strong relationship with each other. b. Based on table 1, covariance has been calculated as -12.125, which is a negative figure. Therefore, the relation between X and Y is strong but is inversely related. In a...

Read More arrow

MA108 Business Statistics And Professional Accounting

Download : 0 | Pages : 4

Answer: Introduction The analyses to be conducted are to compare the standard and variance between job satisfaction before training and after training. To determine covariance between the job satisfaction score before training’ and life happiness score and to show whether they change in the same direction. To conduct an independent sample T-test by determining whether there is a statistically significant difference in ‘life happin...

Read More arrow

BUS708 Statistics And Data Analysis 3

Download : 0 | Pages : 9

Answer: 1. a) The field of statistics has many applications in business setting. Owing to technological innovations, large quantities of data are produced by business nowadays. These data are nowadays being applied by companies to make strategic decisions. The collection and analysis of quantitative data shoves some of the most critical decisions and conclusions that are drawn in the contemporary business world, for example the quality of prod...

Read More arrow

HSN719 Assessment Methods For Nutrition And Physical Activity Research

Download : 0 | Pages : 15

Answer: Introduction Women's nutrition exams often report inappropriate or inadequate diets compared to men courses or nutritional intake (10). It was uniform in different races and countries. Many studies have often compared food intake with recommendations for energy, gender, and nutritional consumption for the general population (3, 13). The study included an indicative average food frequency questionnaire (FFQ) and average 3DD consumption...

Read More arrow

ITECH1103 Big Data And Analytics 3

Download : 0 | Pages : 8
  • Course Code: ITECH1103
  • University: Federation University
  • Country: Australia

Answer: Introduction  In the present digital era, big data analytics became a necessity for the business organizations. Use of the big data analytics can help the organizations to find out different hidden patterns in the collected data from the different business process as well as from the clients of the organizations.  The companies can exploit available market opportunities in order realize competitive advantage over competitor ...

Read More arrow
Next
watch

Save Time & improve Grades

Just share your requirements and get customized solutions on time.

question
We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

1,238,899

Orders

4.9/5

Overall Rating

5,067

Experts

Our Amazing Features

delivery

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

work

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

time

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.

subject

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

price

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

184 Order Completed

96% Response Time

Arapera Billing

Masters in Management, MMgt

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

285 Order Completed

99% Response Time

Eugene Baranowski

MBA in Supply Chain

London, United Kingdom

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

234 Order Completed

100% Response Time

Samantha Ji

PhD in Chemistry with Specialization in Organic

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 4/5

3076 Order Completed

99% Response Time

Emily Wei

Doctor of Philosophy (Ph.D) in Civil Engineering

Singapore, Singapore

Hire Me

FREE Tools

plagiarism

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

essay

Essay Typer

Get different kinds of essays typed in minutes with clicks.

edit

GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.

referencing

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

calculator

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability

1

1

1

Your Approx Earning

Live Review

Our Mission Client Satisfaction

I was very satisfy with that work and I think you for it because if wasn\'t for your help it would be very hard considering my writing

flag

User Id: 264099 - 31 Mar 2020

Australia

student rating student rating student rating student rating student rating

assignment was done within the promised time frame. The professor has not yet graded the assignment.

flag

User Id: 374442 - 31 Mar 2020

Australia

student rating student rating student rating student rating student rating

I was very pleased and happy with the turn over and presentation of the assignment. i will be recommending it to my family and friends

flag

User Id: 227000 - 31 Mar 2020

Australia

student rating student rating student rating student rating student rating

The assignment was good. I was pleased, it answered all questions asked although I had to complain a number of times.

flag

User Id: 382258 - 31 Mar 2020

Australia

student rating student rating student rating student rating student rating
callback request mobile
Have any Query?