Differentiate between systematic and unsystematic risk, Financial Management

Assignment Help:

QUESTION

a) Discuss the importance of diversification in the context of stock markets using appropriate numerical illustrations.

b) Mimine and Minush are two companies with the following dividend and market price per share (MP) for the period 2000-2005

Mimine

Minush

Year

DIV (Rs)

MP

DIV(Rs)

MP

2000

1.4

22

1.53

31

2001

1.4

25

1.53

20

2002

1.8

35

1.53

31

2003

1

27

2

67

2004

2

36

2

100

2005

2

39

3

154

i. Calculate the average return and risk for the above shares. Show clearly your calculation. Interprete your results.

ii. Calculate the portfolio return if an investor decides to make a portfolio with equal weight.

iii. If the correlation coefficient is -0.5 calculate the portfolio risk. Comment on your answer.

(c) Differentiate between systematic and unsystematic risk.


Related Discussions:- Differentiate between systematic and unsystematic risk

State the term- dividend cover, Dividend cover Dividend cover = Profit ...

Dividend cover Dividend cover = Profit available to ordinary shareholders (PAT) / Annual dividend(no. of times) Or =    EPS/Dividend per share Dividend cover shows safety

PROFIT MAXIMIZATION, what are the arguments in favour of profit maximizat...

what are the arguments in favour of profit maximization?

#WALTOR''S MODEL., CAPITALISATION RATE=0.01 EARNINGS PER SHARE(E)=10 ASSUME...

CAPITALISATION RATE=0.01 EARNINGS PER SHARE(E)=10 ASSUME RATE OF RETURNS ON INVESTMENTS (R):15

What is the meaning of statement- earn out arrangements, What is the meanin...

What is the meaning of statement- Earn out arrangements These arrangements take place during acquisition of another company. Parent company agrees to pay additional money if

Determine about the systems based audit, Determine about the Systems based ...

Determine about the Systems based audit Systems based audit is useful as it would help identify risks within the processes in an organisation and review how adequate the contr

A-credit, A-Credit is the highest credit grade existing as allotted to a bo...

A-Credit is the highest credit grade existing as allotted to a borrower by a lender. Lenders use a credit grading system to make the borrowers eligible. The more the borrower's cre

Blade inc case study, what are the advantages blades could gain from import...

what are the advantages blades could gain from importing or exporting to a foreign country such azs thailand?

Acquisition planning and strategy, A c quisition Planning and Strategy ...

A c quisition Planning and Strategy In the previous section, we discussed about the constraints to successful merger integration. In this section, we will learn how to plan a

Describe about permanent working capital, Q. Describe about Permanent Worki...

Q. Describe about Permanent Working Capital? Permanent Working Capital: - The requirement for working capital fluctuates from time to time. Nevertheless to carry on day-to-day

Start-up financing, Start-Up Financing Capital provided to companies wh...

Start-Up Financing Capital provided to companies which have been in operation for less than one year to facilitate all phases of bringing their product to market.

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