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Corporate Finance Assignment Solved (Doc)

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Added on  2020-03-16

Corporate Finance Assignment Solved (Doc)

   Added on 2020-03-16

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Corporate finance
Corporate Finance Assignment Solved (Doc)_1
Question 1 Risk Calculation using Standard DeviationPopulation Standard Deviation: SampleStandard Deviation: Example:Values: 4, 6, 8, 12, 20, 30, 24, 28, 40, 48Mean = Sum of Values/Total No. of Values= (4+6+8+12+20+30+24+28+40+44) / 10 = 22(Value-Mean)2 = [(4-22)2=324, (6-22)2=256, (8-22)2=196, (12-22)2=100, (20-22)2=4, (30-22)2=64, (24-22)2=4, (28-22)2=36, (40-22)2=324, (48-22)2=676]Mean of Squared Values = (324+256+196+100+4+64+4+36+324+676) / 10 = 198.4Standard deviation = [{Sum of (Value-Mean)2} / Total No. of Values]1/2= (198.4)1/2 = 14.08545Risk measurement is the core concern for a smart investor, for which standard deviation ismost commonly used measurement metrics. Standard deviation is best measure for calculatingdispersion, widely used in studyingvariabilityof returns of an investment from a particularstrategy (Damodaran, 2016). It is often interpreted as a measure of the degree of uncertainty,and thus risk, associated with a particular security or investment portfolio.The base assumption while using standard deviation to measure risk in thestock is a normaldistribution. Here 68% times value fall within a single standard deviation of the mean; 95%time’s values are within two standard deviations of mean and 99.7% times within 3 standard
Corporate Finance Assignment Solved (Doc)_2

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