Business Finance Assignment (Doc)

Added on - 21 Jul 2020

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BUSINESS FINANCE
EXECUTIVE SUMMARYInvestment is made by all sort of people in terms of income level but making prudent decisionsis very difficult task. In order to take perfect decision some tools and techniques need to be used.In the present research study index return and firms returns are analyzed by using tools likemean , standard deviation and beta. It is observed that security markert line is the one of theimportant approach that help one in making correct decisions. By comparing requred rate ofreturn with market return it is identified whether investment must be made in specific security ornot. Beta is another tool that must be widely used in order to meausre risk and to makedecisions. Thus, investors must not rely on single approach as they must use multiple methods totake investment decisions.
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1REQUIRED.....................................................................................................................................1(1)Monthly return series of stocks and index..............................................................................1(2)Portolio construction...............................................................................................................1(3) Mean return and standard deviation of stock, index and portfolio........................................2(4) Regression analysis................................................................................................................3(3) Beta estimates of portfolio...................................................................................................125 Combination line chart...........................................................................................................24ANALYSIS....................................................................................................................................24(1)Performance of market and six stocks..................................................................................24(2) Comparison of portfolios.....................................................................................................25(3) Relationship between sharpe ratio portfolio 3,2 and chart ploted in 5thpoint.....................25(4) SML and CML.....................................................................................................................255 Discussion on calculations......................................................................................................26CONCLUSION..............................................................................................................................26REFERENCES..............................................................................................................................27Figure 1Mean and standard deviation chart...................................................................................13Figure 2Mean and beta chart.........................................................................................................13Figure 3Mean and standard deviation chart...................................................................................14Figure 4Mean and beta chart.........................................................................................................14Figure 5Mean and standard deviation chart...................................................................................15Figure 6Mean and beta chart.........................................................................................................15Figure 7Mean and standard deviation chart...................................................................................16Figure 8Mean and beta chart.........................................................................................................16Figure 9Mean and standard deviation chart...................................................................................17
Figure 10Mean and beta chart.......................................................................................................17Figure 11Mean and standard deviation chart.................................................................................18Figure 12Mean and beta chart.......................................................................................................18Figure 13Mean and standard deviation chart.................................................................................19Figure 14Mean and beta chart.......................................................................................................19Figure 15Mean and standard deviation chart.................................................................................20Figure 16Mean and beta chart.......................................................................................................20Figure 17Mean and standard deviation chart.................................................................................21Figure 18Mean and beta chart.......................................................................................................21Figure 19Mean and standard deviation chart.................................................................................22Figure 20Mean and beta chart.......................................................................................................22Figure 21Mean and standard deviation chart.................................................................................23Figure 22Mean and beta chart.......................................................................................................23Figure 23Combination chart..........................................................................................................24Figure 24SML chart.......................................................................................................................25Figure 25CML chart......................................................................................................................26YTable 1Return profile of index and shares.......................................................................................1Table 2Portfolio 1............................................................................................................................1Table 3Portfolio 2............................................................................................................................2Table 4Portfolio 3............................................................................................................................2Table 5Portfolio 1mean and standard deviation..............................................................................3Table 6Portfolio 2 mean and standard deviation.............................................................................3Table 7Portfolio 3 mean and standard deviation.............................................................................3Table 8Calculation of beta.............................................................................................................12
INTRODUCTIONInvestment is one of the important area that is related to every human being whether itcomes in upper or middle classs. There are number of tools and techniques that need to be usedin order to make prudent decisions. In current report, portfolios are created and varied tools areused like beta and standard deviation, CML and SML for evaluating stocks and identifyingvaried facts. In second part of report all results are discussed and in this way entire research workis done.REQUIREDIntroduction to firmsANZ:ANZ is also known by name Australia and New Zealand Banking group as it is oneof the largest bank of Australia in terms of market capitalization. Currently, firm isoffering number of products to its customers whether they are retail or HNI. Firm have itsown future plans and have good growth prospects.BHP:BHP is one of well known firm that is operating in mines, metals and petroleumproducts. It is Australia largest mining company in terms of turnover. Presently, firm isoperating its business in number of nations of world and have good growth rate inbusiness.CSL:It is a company operating in biotechnology field. There are number of areas in thisfield and CSL is operating streams from where good amount of cash flow can bereceived. Firm product portfolio is wide and also provide good quality of services tocustomers.FMG:It is largest iron ore company and is considered as one of the largest iron mineralmarker in the world. FMG is considered as greater in size in comparison to rivals RioTinto and BHP. FMG have USP which make it different from rivals.WOW:It is a retail firm that is operating in both Australia and New Zelanad. Firm isconsistently opening new branches in foreign nations and is earning good amount ofrevenue in the business. Thus, it can be said that with improvement in global economygood profit will be earned by the firm.(1)Monthly return series of stocks and indexTable Return profile of index and sharesCompanReturn|P a g e
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