Business Finance Assignment 2022

Running head: BUSINESS FINANCE 1
BUSINESS FINANCE

Running head: BUSINESS FINANCE
Contents
Introduction.................................................................................................................... 3
Part 1: Average returns................................................................................................... 3
Findings and Results...................................................................................................... 4
Part 2: Volatility........................................................................................................... 5
Part 3: Beta................................................................................................................. 5
Part 4: Forecast and investment strategy.............................................................................. 6
References................................................................................................................. 8

Running head: BUSINESS FINANCE
Introduction
In the general basis the returns can be generated using four options or the types of the
investments which are known as the asset classes. There are classified as equities, fixed income,
and cash property. The performance of the assets can vary over the period of time and the basic
notion that has been associated with the shares is that the investments of the short term nature
carries the lower risk in comparison to the investments of the long term nature. In this report a
detailed understanding of average returns along with the volatility of the stock, the value of the
beta has been calculated using the returns of the company. Further, the forecast and the
investment strategy has also been analyzed in order to get an understanding of which share has
been overvalued or undervalued in terms of the market share price and performance.
Part 1: Average returns
The average returns are the returns which have been calculated according to the adjusted closing
volume of the shares of the company. According to Tri-Star Management Private Limited the
information has been analyzed for the five share prices namely AGL Energy Limited, Australia
and New Zealand Banking group, National Australia Bank Limited, Qantas Airways and
Westpac Corporation. The formula for calculating the average returns is derived in the following
manner (Liu, Stambaugh and Yuan, 2018).
Returnt = Pt −Pt−1
Pt−1
×100 ,
Once the formula has been applied it can be seen that the average return of all the five companies
have been calculated against the ASX 200 indexes.