Purchase Solution

# Financial Management: Risk and Return

Not what you're looking for?

1) Based on the following information calculate the holding period return:
P0 = \$10.00
P1 = \$12.00
D1 = \$1.22

2) Risk & Return and the CAPM.
Based on the following information, calculate the required return based on the CAPM:
Risk Free Rate = 3.5%
Market Return =10%
Beta = 1.08

3) Risk and Return, Coefficient of Variation
Based on the following information, calculate the coefficient of variation and select the best investment based on the risk/reward relationship.
Std Dev. Exp. Return
Company A 10.4 15.2
Company B 14.6 22.9

##### Solution Summary

There are 3 short answer type problems. Solution to first problem describes the steps to calculate the Holding Period Return in the given case. Solution to second problem depicts the methodology to calculate the required rate of return bu using CAPM Method. Solution to third problem calculates the coefficient of variation measure for the given companies.

##### Solution Preview

1)
Holding period return=(P1-Po+D1)/Po=(12-10+1.22)/10=32.20%

2)
Risk Free Rate =rf= 3.5%
Market Return=rm=10%
Beta = ...

Solution provided by:
###### Education
• BEng (Hons) , Birla Institute of Technology and Science, India
• MSc (Hons) , Birla Institute of Technology and Science, India
###### Recent Feedback
• "Thank you"
• "Really great step by step solution"
• "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
• "Thanks Again! This is totally a great service!"
• "Thank you so much for your help!"

##### Free BrainMass Quizzes

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

##### 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.

##### 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.

##### IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

##### Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.