Calculate the expected return and risk, Financial Management

Assignment Help:

QUESTION

The Stock of Max Ltd performs relatively well compared to other stocks during recessionary periods. The stock of Bax Ltd, on the other hand, does well during growth periods. Both the stocks are currently selling for Rs 100 per share. You assess the rupee wealth (dividend plus price) of owning these stocks for the next year as follows:

Economic Condition

High Growth

Low Growth

Stagnation

Recession

Probability

0.3

0.4

0.2

0.1

Return on Max's Stock

100

110

120

140

Return on Bax's Stock

150

130

90

60

Required: -

Calculate the Expected Return and Risk from the industry when investing:

I. Rs 1,000 in the equity stock of Max Ltd

II. Rs 1,000 in the equity stock of Bax Ltd

III. Rs 500 each in the equity stock of Max and Bax Ltd.

IV. Explain the importance of the risk-return relationship

 


Related Discussions:- Calculate the expected return and risk

Difference between mortgage bond and a debenture, Difference between mortga...

Difference between mortgage bond and a debenture? A mortgage bond is a secured bond whereas a debenture is an unsecured bond.

Financial plan , As starting a new business, is it better to leas or buy th...

As starting a new business, is it better to leas or buy the business venture?. what factors should be considered. (Knowing that the equity finance is $150,000 and $250,000 could be

Define discounting the equity cash flow, Which of these two methods is bett...

Which of these two methods is better: discounting the Equity Cash Flow or discounting the Free Cash Flow? The results we get by discounting the Equity Cash Flow and the Free Ca

Put option, Put Option This is a right which is granted in exchange for...

Put Option This is a right which is granted in exchange for an agreed-upon sum to sell property. Options are mostly used frequently in securities transactions it also used stoc

Operational rules for financial management, Operational Rules for Financial...

Operational Rules for Financial Management Besides features, certain operational rules are established as to the subsequent: 1) While revenue and expenses are reported;

Product pricing through simulation, Product Pricing Through Simulation ...

Product Pricing Through Simulation Having studied a simpler problem, let us revert to our earlier illustration regarding fixing a price. Let us suppose that we want to simul

Cost of capital, what is the cost of capital and advantages of it?

what is the cost of capital and advantages of it?

Determine the key points in the turnbull report, Key points in the Turnbull...

Key points in the Turnbull Report: Have a defined process for review of effectiveness of internal control. Review regular reports on internal control. Consider key

Trend analysis, Do you guys provide Trend Analysis assignment help? I need ...

Do you guys provide Trend Analysis assignment help? I need writing a report on Trend Analysis and it is about 2000 words. Let me know. I need to buy your solution.

Evaluate cost of irredeemable debt subsequent to tax, Q. Evaluate Cost of I...

Q. Evaluate Cost of Irredeemable Debt subsequent to tax? Cost of Irredeemable Debt subsequent to tax: - When a company utilizes debt as a source of finance then it saves a cons

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