Purchase Solution

Determining risk and return for a stand alone investment asset

Not what you're looking for?

Ask Custom Question

Compare and contrast the following methods of determining risk and return for a stand alone investment asset e.g. a corporate equity or a corporate bond

Measures of historical rates of return
Expected rates of return
Measuring the risk of expected rates of return

Purchase this Solution
Solution Summary

The methods of determining risk and return for a stand alone investment asset are determined. The corporate equity or a corporate bond are examined.

Solution Preview

Get the answer with attachment.

Answer:
Measures of historical rates of return
Measures of historical rate of return are generally used by investors in order to estimate the expected rate of return for an asset class. First of all the historical rate of return is measure on a stand alone investment over the time period it has been held as investment. After this the average historical rate of return is measured for an individual or stand alone investment over a number of time periods. Based on this data a traditional measure of risk for a traditional time series of return is done. And based on this presentation of measures of ...

Solution provided by:
Jayant Kumar, MBA
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
Recent Feedback
  • "I've posted a similar question for another course. It's post 657940, and it's a practice problem that I'd like to use for the final exam. Your help will be greatly appreciated. "
  • "thank you!"
  • "Thank you again Jayant. You are super fast. "
  • "Thank you Jayant. You are appreciated. "
  • "Again, thank you Jayant. You are wonderful. "
Purchase this Solution
Free BrainMass Quizzes
Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

View More Free Quizzes
Related BrainMass Solutions

  • Evaluate Risk Characteristics of a stock portfolio

    As investment in a single asset carries stand alone risk this investor is more exposed to the risk and hence to minimize this risk it tries to add some more assets in the portfolio to minimize it at a required level.

  • Beta Using Regression Equation

    Download the data provided and calculate the measure of risk for this company (defined as Beta in the Capital Asset Pricing Model - CAPM) and explain why this calculation is a measure of risk.

  • Determining Risk of Stocks

    If a stock has a beta coefficient of 1.2, the return in the market is expected to be 14%, and the risk-free rate is 5%, then the Capital Asset Pricing Model says that the rate of return for the stock should be?

  • Discount Rate Explanation

    Weaknesses of the Capital Asset Pricing Model (CAPM): If a firm's stockholders are not well diversified, they may be concerned with stand-alone risk rather than just market risk.

  • Security and Capital Market Line

    M) What is the difference between stand-alone risk and market risk? How are they measured?

  • Identify three risk measurement techniques by its use and its application.

    The Stand-Alone Risk Measurement Approach: The stand-alone risk measurement approach is a beneficial approach for present business organizations in the direction of measuring risks.

  • Capital Budgeting

    The chnages in the firms future cash flows that are a direct consequence of accepting a project are called: Incremental cash flows Stand-alone cash flows Aftertax cash flows Net present value cash flows

  • Budgeting and Financing Problems

    The three risk types are stand alone risk, corporate risk and market risk. The stand alone risk is a risk that the company will pursue a single asset, which is treated as separate from the company's other assets.

  • Techniques for measuring corporate risk

    Some of the techniques are Standard Deviation - This measures the risk of cash flows on a stand alone basis Beta - This is a measure of systematic risk of an asset Sensitivity Analysis - This is used for projects and measures the change in NPV for

View More Related Solutions