Beta value, Financial Management

Assignment Help:

Beta Value

Risk is an important consideration while investing in any security. It is the possibility that realised returns will be less than the returns expected. The degree, to which different portfolios are affected by 'risk' as compared to the effect on the market as a whole, varies and is measured and calculated by 'Beta'. The Beta factor explains the movement in a stock's or a portfolio's returns in relation to that of the market returns.

 

Beta is given by:   

 

Beta        =      {Covariance (X, Y) / Variance (X)}

 

Where,           

'Y' is the returns on the security,

'X' is the market returns or index,

'Covariance' is a measure of how the two variables 'co-vary', and

'Variance' is the square of standard deviation.


Related Discussions:- Beta value

Difference between transaction and translation risk, Question: You have...

Question: You have been appointed as the head of the treasury of Platza International, an automobile firm with many subsidiaries abroad. The management of Platza International

Increased common stock cash dividend signal to stock holder, Do you believe...

Do you believe an increased common stock cash dividend can send a signal to the common stockholders?  If so, what signal might it send? An enhance in cash dividends is often se

Financial information, A)  What are the statements of financial information...

A)  What are the statements of financial information? Talk about two items from each. B)   Describe statement of changes in financial positions, with an example.

Explain how management goals are incorporated into pro forma, Explain how m...

Explain how management goals are incorporated into pro forma financial statements. Management locates a target goal, and forecasters produce pro forma financial statements within

Working capital management, WORKING CAPITAL MANAGEMENT Working capital ...

WORKING CAPITAL MANAGEMENT Working capital relates to the capital required for daily operations of a business enterprise.  The requirement for Working Capital is omnipresent fo

Commodities exchange, Explain the organization and function of commodities...

Explain the organization and function of commodities exchange

Explain money have time value, Why does money have time value? Positive i...

Why does money have time value? Positive interest rates point out that money has time value.  While one person lets another borrow money, the first person needs compensation in e

Cash flow, how do you find total cash outflow through maturity

how do you find total cash outflow through maturity

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd