Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
¶ … measure risk?
Risk is a "yin" to the yang of investment, which would be performance. In a nutshell, risk is a deviation from the standard and expected outcome. In other words, let us say there is the expectation that a certain stock will keep soaring. Risk is the perceived or actual probability that this will not happen. The usual tool and metric used to measure risk is standard deviation. Standard deviation is the measure of how far from the norm or average that a stock or other investment performs.
What are the different types of risk affecting the securities and portfolios held by individuals and corporations? Discuss
In general, there are two types of risk, those being active and passive. The common measurement that comes forth when it comes to measuring risk is the "beta," which is basically another way of saying how volatile the security or how likely it is that the security's performance will deviate from the "norm" for the market as a whole. Other names for the beta include market risk, systematic risk or non-diversifiable risk. Risk can also come in the form of completely ad hoc or one-off events such as terrorism or an unexpected political shift (Investopedia, 2016). A recent example of the proverbial...
While the vote was expected to be close, the odds of them choosing to leave was deemed to be very low. However, "leave" was triumphant and the British pound, just to name one thing, has dropped like a rock in terms of value since the vote's results were revealed. There may very well be a correction back up coming soon but it has not happened yet (Kantchev, 2016).
3) What are the different types of risk affecting the operations of corporations? Explain.
There are many, but there are some that are more prominent than others. For example, an unexpected shift in interest rates or currency valuation (e.g. the Brexit fervor) can hurt a business that is knee-deep in investments that rely on interest. Indeed, this would be many investments such as bonds, preferred stocks or anything with a fixed rate of return. Beyond that, bonds bought or issued by a company can always go belly up and the risk of those bonds, regardless of who issues them, will have an effect on interest rates. Just as a consumer with shoddy credit will pay a higher interest rate, the same is true of bonds for companies with stability/cash-flow issues. Businesses have to…
References
Investopedia. (2016). Investopedia - Sharper Insight. Smarter Investing. -- Investopedia.
Investopedia. Retrieved 29 June 2016, from http://www.investopedia.com
Kantchev, M. (2016). Pound Plunges on U.K. Vote to Leave the European Union. WSJ.
Retrieved 29 June 2016, from http://www.wsj.com/articles/u-k-pound-jumps-after-brexit-polls-close-1466718460
Risk, Return and Their Evaluation Risk & Performance Indicators Since this is a small business, therefore raising equity capital through public stock issue is less likely than debt or whatever form of paper issued to angel or venture investors. Therefore while a larger, publicly traded firm would consider the return on equity version of the short form DuPont equation, a small, more closely-held concern would focus on return on assets (ROA). If
Investment Portfolio The beta coefficient for Google, Inc. is 1.03 using the Excel Slope function (Christensen). Using the S&P 500 as a benchmark, this beta coefficient has a higher risk than the market (Christensen, How to Interpret a Beta Coefficient). With this stock included in a portfolio, it would need to be diversified with less riskier investments in order to balance the overall portfolio risk and return on investment aspects of
A common thread through these fifteen stocks is that they not only represent diversification as a group, but most of the companies chosen also have a range diversification within the company's operations. The companies are spread around the world, and include a number of sectors. For example, within technology the portfolio has access to the health care sector through Cerner; within ADRs there is exposure to the Internet, chemicals and
Risk Management in Hedge Funds A research of how dissimilar hedge fund managers identify and achieve risk The most vital lesson in expressions of Hedge Fund Management comes from the inadequate name of this kind of alternative investment that is an alternative: The notion that all methodical risks are differentiated away is not really applicable here, with the Hedge Fund returns, in realism, representing a mixture of superior administration of market
Investment Analysis Identify the Components of Realized Return of Common Stock The real return on the sale of stock is often referred to as the realized return as this is the true rate of return of the risk of investment. Many often mistake the realized return as the gain from the sale of the stock in the secondary market, or at most, the inclusion of dividends that have accrued over the period
However, it will depend upon the impact that rising prices will have on consumer spending and corporate balance sheets. Geopolitical tensions could have an impact upon the price of commodities most notably: oil and gold. As various uncertainties around the globe, could have an impact upon the availability of oil supplies, which will cause prices to increase. A good example of this can be seen with the different protests that