1.Expected return. A stock’s returns have the following distribution:

Demand for the company’s product| Probability of this demand occurring| Rate of return if this demand occurs| Weak| 0.1| (50%)|
Below average| 0.2| (5%)|
Average| 0.4| 16|
Above average| 0.2| 25|
strong| 0.1| 60|
| 1.0| |

Calculate the stock’s expected return, standard deviation, and the coefficient of variation.

2.Required rate of return. Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average stock is 13%, and the risk free rate is 7%. By how much does the required return on the riskier stock exceed the required return on the less risky stock?

3.Required rate of return. Suppose rRF =9%, rM = 14% and bi = 1.3

a. What is ri, the required return on stock i?

b.Now suppose rRF (1) increases to 10% or (2) decreases to 8%. The slope of the SML remains constant. How would this affect rM and ri?

c.Now assume rRF remains at 9%, but rM (1) increases to 16% or (2) falls to 13%. The slope of the SML does not remain constant. How would this affect ri?

4.Evaluating risk and return.
Stock X has an expected return of 10%, a beta coefficient of 0.9, and a 35% standard deviation of expected return.
Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25% standard deviation.
The risk free rate is 6%, and the market risk premium is 5%.

a.Calculate each stock’s coefficient of variation.

b. Which stock is riskier for a diversified investor?

c.Calculate each stock’s required rate of return.

d.On the basis of the two stocks’ expected and required returns, which stock will be more attractive to a diversified investor?...

...Financial analysis Lynn University Analysis of financial position is the assessment of stability, viability, and profitability of a project or business. It is performed using ratios and used in making decisions by top management. The information from the analysis helps the management make decisions regarding investment, lending, and issuance of stocks, purchases, continuation, and discontinuation. The goals of performing financial analysis are to asses profitability, solvency, liquidity, and stability. Profitability is the ability to generate income and sustain growth in the short term and long term. A solvent organization can pay its obligations and others in the long term. A liquid company can maintain positive cash flow and also meet its immediate obligations. A stable company can maintain itself in business for a long time in future (Coyle, 2010). Financial ratios are used to perform financial analysis. A financial ratio is a qualified scale of two selected financial numerical taken from an organizations financial statement. The market share of an organization in the market can be used to calculate the ratios. If a company is traded in the stock exchange market, it could be easier to do so. They are expressed as decimals or percentages (Coyle, 2010). Profitability ratio It measures ability to generate adequate income to sustain growth. The use of assets...

...University of Phoenix Material
Role of Financial Accounting Versus Managerial Accounting Matrix
Compare and contrast financial accounting and managerial accounting by answering the following questions in the matrix provided. Cite any sources you use in accordance with APA guidelines.
Term or Concept
Financial Accounting
Managerial Accounting
What is the primary purpose of the accounting system?
The primary purpose is to produce forms portraying a company’s performance over a period of time to make sound judgement on economic decisions.
Managerial accounting is the collection, analyzing, and reporting of information concerning operations (Bragg, 2012).
What are the types of reports produced?
Financial accounting creates reports that reflect the business’ financial health for external users.These include balance sheets, income statements, and statement of cash flow.
These reports are aimed for internal use and provide data on past, as well as future, numbers in operations. Budget reports, Job cost reports, sales and revenue forecasts are examples.
Who are the primary users?
External users, such as shareholders, creditors, tax authority all utilize reports generated from financial accounting.
Managerial accounting is aimed at providing data for Internal users, such as management of that company, senior supervisors,...

...CORPORATE FINANCE
END TERM PROJECT
To study the Financials of ICICI bank, HDFC bank and Axis bank and to conduct Comparative Financial Analysis among them.
UNDER THE GUIDANCE:
Dr. ASHISH GARG
PROGRAM COORDINATOR PGDM (FINANCE)
Submitted by:
Janmey Patel (202)
Nikhil Arora (206)
Shashank Mohore (228)
Aniket Gupta (229)
Parandeep Singh Chawla (231)
TABLE OF CONTENTS
Overview of Indian Banking Industry 4
Types of Commercial Bank 4
Public Sector Bank 4
Private Sector Bank 4
Foreign Bank 4
Regional Rural Banks 4
Overview of ICICI Bank 5
Overview of Axis Bank...

...return is rs = 10.1%, and the constant growth rate is g = 4.0%. What is the current stock price?a. $23.11b. $23.70c. $24.31d. $24.93e. $25.57e 8- Ratio analysis involves analyzing financial statements in order to appraise a firm's financial position and strength. |
| |
a. | True |
b. | FalseA |
9- Profitability ratios show the combined effects of liquidity, asset management, and debt management on operating results. |
| |
a. | True |
b. | False |
A 10 - One problem with ratio analysis is that relationships can be manipulated. For example, if our current ratio is greater than 1.5, then borrowing on a short-term basis and using the funds to build up our cash account would cause the current ratio to increase. |
| |
a. | True |
b. | False |
B | |
11 - Arshadi Corp.'s sales last year were $52,000, and its total assets were $22,000. What was its total assets turnover ratio? |
| |
a. | 2.03 |
b. | 2.13 |
c. | 2.25 |
d. | 2.36 |
e. | 2.48 |
D 12 - Rappaport Corp.'s sales last year were $320,000, and its net income after taxes was $23,000. What was its profit margin on sales? c |
| |
a. | 6.49% |
b. | 6.83% |
c. | 7.19% |
d. | 7.55% |
e. | 7.92% |
13 - The first, and most critical, step in constructing a set of forecasted financial statements is the sales forecast. a. Trueb. Falsea |
14- According to the Capital Asset Pricing Model, investors are primarily...

...Equity Ratio=> Debt/Equity
=>68000/18263.26 =>0.37
2011:
Debt=> 7161cr
Shareholder’s Equity=> 121.77 + 21334.05 => 21455.82cr
Therefore the ratio for debt and equity would be:
Total Debt Equity Ratio=> Debt/Equity
7161/21455.82 => 0.33
The Debt Equity ratio has fallen, which increases the borrowing capacity of the company.
Capital Asset Pricing Model
The capital asset pricing model (CAPM) determines a detailed required rate of return of an asset, if that asset is to be added to an already well-diversified portfolio, given that Asset's non-diversifiable risk. The model takes into account the asset's sensitivity to non-diversifiable risk i.e., the systematic risk or market risk, symbolized by the quantity beta (β) in the financial market, as well as the expected return of the market and the expected return of a theoretical risk-free asset. In other words, it is a model which explains the relationship between risk and expected return so as to use in the pricing of the risky securities.
From the above figure we get to know the relationship between Beta and the asset.
*Beta is the measure of Systematic risk and the volatility.
Formula for CAPM,
Re => Rf+β (Rm-Rf)
Rf => 4% (assumed)
β => calculated as Covariance (Sensex, Stock)/ Variance(Sensex)
Online value: 1.18 from BSE’s official website
Rm => (Last day’s closing price – first day’s closing price)/ first day’s closing price * 100
For the month of March 2011 Sensex,
Rm =>...

...reasoning makes no sense, for at least two reasons. First, a key element in understanding a business’s attractiveness involves knowing the set of financial expectations the price represents. The market as a whole has historically traded at a price-to-earnings multiple in the mid-to-high teens. Simple math shows today’s stock prices reflect expectations for value-creating earnings and cash flows many years in the future.
The mismatch between a short forecast horizon and asset prices that reflect long-term cash flows leads to the second problem: investors have to compensate for the undersized horizon by adding value elsewhere in the model. The prime candidate for the value dump is the continuing, or terminal, value. The result is often a completely non-economic continuing value. This value misallocation leaves both parts of the model—the forecast period and continuing value estimate—next to useless.
Some investors swear off the DCF model because of its myriad assumptions. Yet they readily embrace an approach that packs all of those same assumptions, without any transparency, into a single number: the multiple.
Many companies require over ten years of value-creating cash flows to justify their stock prices. Ideally, the explicit forecast period should capture at least one-third of corporate value with clear assumptions about projected financial performance.
While the range of possible outcomes certainly widens with time, we have better...

...Topic 7 – self attempt tute questions
Chapter 12
6. The DEAR for a bank is $8500. What is the VAR for a 10-day period? A 20-day period? Why is the VAR for a 20-day period not twice as much as that for a 10-day period?
For the 10-day period: VAR = 8500 x [10]½ = 8500 x 3.1623 = $26 879.36
For the 20-day period: VAR = 8500 x [20]½ = 8500 x 4.4721 = $38 013.16
The reason that VAR20 (2 x VAR10) is because [20]½ (2 x [10]½). The interpretation is that the daily effects of an adverse event become less as time moves farther away from the event.
8. In what sense is duration a measure of market risk?
The market risk calculations are typically based on the trading portion of an FI’s fixed-rate asset portfolio because these assets must reflect changes in value as market interest rates change. As such, duration or modified duration provides an easily measured and usable link between changes in the market interest rates and the market value of fixed-income assets.
12. Bank of Ayers Rock’s stock portfolio has a market value of $10 000 000. The beta of the portfolio approximates the market portfolio, whose standard deviation (m) has been estimated at 1.5 per cent. What is the 5-day VAR of this portfolio, using adverse rate changes in the 99th percentile?
DEAR = ($ value of portfolio) x (2.33 x m ) = $10m x (2.33 x .015)
= $10m x .03495 = $0.3495m or $349 500
VAR = $349 500 x 5 = $349 500 x 2.2361 = $781 505.76
14. Calculate the...

...Alexandra-Gabriela Sirbu
Business and Management, year 2, University of Salford
12/17/2010
BRITVIC PLC
Table of contents:
1 .Aim pg. 2
2. Company overview pg. 2
3. Short-term assets management pg. 3
4. Liquidity pg. 4
5. Profitability pg. 5
6. Financial structure and cost of capital pg.7
7. Share price behaviour pg. 8
8. Portfolio effect pg. 10
9. Concluding remarks pg 12
10. Bibliography pg 13
Britvic PLC –financial analysis-
1. Aim
The aim of the following report is to assess the financial activity of Britvic PLC over a sixty months period, from January 2005 until December 2009, in order to make recommendations for a future investment in the company.
2. Company overview
Britvic PLC was founded in 1938, in Chemsford, under the name of British Vitamin Company Products, from which it takes its name and has been the first company to launch fruit juice in baby bottles. Barely in 1971, the company became known as we know it today, changing its name to Britvic PLC.
Nowadays, Britvic PLC is, according to their website, one of Europe’s leading companies in the soft drinks industry, trading in over fifty countries across Europe, amongst which we may enumerate Great Britain, Ireland and France and possessing a brand portfolio which comprises names, such as Robinsons, Drench, and, from 2010, Fruite. Moreover, Britvic PLC owns bottling agreements with PepsiCo in the United Kingdom, for the brands Pepsi and...