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# VI Financial Management assistance

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1. Holding Period Return
Based on the following information calculate the holding period return:

P0 = \$11.00
P1 = \$11.40
D1 = \$1.02

2. 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.

3. Holding Period Return
Based on the following information calculate the holding period return:

P0 = \$10.00
P1 = \$12.00
D1 = \$1.22

4. Measures of Risk. Address each source of risk that is measured and relate it to two models addressed in this unit.
Your response should be at least 250 words in length.

5. Sources of Risk & Diversification - convertible bond.
Address each source of risk from the portfolio perspective and how diversification impacts them.

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The solution discusses assistance with financial management.

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1. Capital gain yield = (P1 - P0)/P0 = (11.40 - 11.00)/11.00 = 0.0363 = 3.63%
Dividend yield = 1.02/11.00 = 0.0927 = 9.27%
Total holding period return = 3.63 + 9.27 = 12.9%
2. Missing information
3. Capital gain yield = (12-10)/10 = 0.2 = 20%
Dividend yield = 1.22/10 = 0.122 = 12.2%
Total holding period return = 20% + 12.2% = 32.2%
4. Understanding sources of risk is important for investors to understand their expectations on asset returns. There are three major sources of risk which affect a financial asset's return. These are interest rate risk, market risk and inflation risk.
 Interest rate risk: Interest rate risk is the risk of losses due to changes in interest rate levels. This risk affects security return inversely, i.e. if interest rates go up, prices of securities go down and if interest rates go down prices of securities go up.
 Market Risk: The variability resulting from fluctuations in the overall market is called market risk. The market gets affected by multiple factors which could be ...

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