Finance Report: Adairs (ADH) Portfolio Return, Risk, and CAPM Analysis
VerifiedAI Summary
This report assesses the expected return and risk associated with a portfolio consisting of Adairs (ADH) company and a reference company. It computes the historical average monthly rate of return and standard deviation for each, along with the market index. The analysis includes a portfolio with a 60% investment in Adairs and 40% in the reference company. The Capital Asset Pricing Model (CAPM) is employed to evaluate the expected return and beta for both companies. The report concludes by calculating the portfolio's expected return and beta, highlighting that while Adairs has a higher expected return due to its higher beta, the overall portfolio is riskier, suggesting that investing directly in Adairs is safer than the diversified portfolio. Desklib provides a platform for students to access similar solved assignments and past papers for academic assistance.
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