Risk and Return Analysis Essay - 1811 Words

Risk and Return Analysis Paper FIN 402 Risk and Return Analysis Paper Creating the right balance of securities in a diversified portfolio is crucial to maximizing return and minimize risk. This can be done through analysis of current and past activity of each product. Through a risk assessment, return analysis, researching the beta of each security, and reviewing the average risk and return, we can determine the weights of our securities and devise the strongest portfolio to limit risk and maximize return. As a team, we decided to remain with our original five investments; Ford, Microsoft, The Home Depot, Procter amp; Gamble, and UPS to create a strong diversified portfolio that will meet our expectations. Risk Assessment and†¦show more content†¦This is also an investment that would need to be watched very closely and counteracted with a company such as Ford to help minimize risk. Finally, Home Depot strongly follows the market with a beta of .82 with the Samp;P and Home Depot both beginning and ending the five year comparison with the same numbers; the slight fluctuations occurring intermittently throughout the years. With these observations we see that three of the five investments follow the market closely and two are independent of the market behavior. To minimize the risk it is important to balance these results with the returns of each company. Taking into consideration the lowest and highest points throughout the last 52 weeks. The change for Microsoft is .51% while the change for The Home Depot, Proctor amp; Gamble, Ford, and UPS are 7.18%, .95%, -16.87%, and -1.51% respectively (Yahoo Finance, 2011). While UPS and Ford both had a negative change over the last 52 months, one follows the market and one doesnt. The strongest increase was with Home Depot who has a market reflection followed by Proctor amp; Gamble and Microsoft. Taking all this information into consideration our portfolio will be diversified by giving the following weights to our investments; Proctor and Gamble 30%, Microsoft 30%, Home Depot 15%, UPS 15%, and Ford 10%. Risk Tolerance Levels and Macroeconomic Variables Security valuation begins with an economic analysis. An accurate forecast andShow MoreRelatedRisk And Return Analysis : Risk1008 Words   |  5 PagesRisk and Return Analysis Risk has a role in individual’s lives around the world and that role can be influenced by an individual’s character and their daily life. Risk and return is affected by time when investing occurs. Time relates to the amount of time in the market which offers the highest chance of returns. The investment time frame will determine the amount of impact that investors will see, investment choices includes stocks and bonds (Kinicki, Cornett, Adair, Nofsinger, 2016). 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SARAVANAN, MBA, M hil School Of Management NEHRU COLLEGE OF ENGINEERING AND RESEARCH CENTRERead MoreRisk and Return Analysis on Common Stock of Standard Chartered Bank Nepal Ltd and Nepal Investment Bank Ltd.6086 Words   |  25 Pagesâ€Å"Finance is the branch, which looks after the money matter of the entire organization. Every organization needs a sound financial system to carry out its activities efficiently because each and every managerial decision -making is based on financial analysis. It involves acquisition, utilization, control and administration of funds needed for the business. Managerial finance is an interesting, exciting and dynamic area of study. Finance is concerned with the institution, markets and instrument involvedRead MoreRisks And Risks Of A Investment Return1124 Words   |  5 Pagesinvest their money in the stock exchange. Investment return is the reason that the investors put their money in the stock market. 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