• services@thehomeworkhelp.co.uk
Call Us Now: 8185279935
Call Us Now: 8185279935
Homework Help
Homework Help
Homework Help
View Details
Homework Help
Assignment Help
Homework Help
Assignment Help
View Details
Assignment Help
Online Tutoring
Online Tutoring
Online Tutoring
View Details
Online Tutoring
Home » Finance Homework Help » Risk Return Estimation
Risk Return Estimation
Risk and return are most important concepts in finance. In fact, they are the foundation of modern finance theory. What is risk? How it is measured? Other related questions are: how are assets valued in capital markets? How do investors make their investment decisions? All these questions are answered in this particular section of finance.

In short we are discussing some types of risks which are generally arising in financial management.

Systematic risk arises on account of the economy-wide uncertainties and the tendency of individual securities to move together with changes in the market. This part of risk cannot be reduced through diversification. It is also knows as market risk investors are exposed to market risk even when they hold well- diversified portfolios of securities.

Unsystematic risk arises from the unique uncertainties of individual securities. It is also called unique risk. These uncertainties are diversifiable if a large number of securities are combined to form well-diversified portfolios. Uncertainties of individual securities in a portfolio cancel out each other. Thus unsystematic risk can be totally reduced through diversification.

Total risk of an individual security is the variance (or standard deviation) of its return. It consists of two parts.

Total risk of a security = systematic risk + Unsystematic risk                                      

Systematic risk is the covariance of the individual securities in the portfolio. An investor has to suffer the systematic risk, as it connote be diversified away. The difference between variance and covariance is the diversifiable or unsystematic risk. Thus equation can be written as:

Variance of security = covariance of portfolio + (variance of security covariance of portfolio)

Some of its main topics are:

1. Beta estimation and cost of equity
2. Capital asset and risk
3. Investment timing and duration
4. Return analysis and portfolio return
5. Return on a single asset
6. The arbitrage pricing theory (APT)

Risk return and beta estimation homework help, homework tutor and online tutors are available at thehomeworkhelp.co.uk. if you need help in Risk return and beta estimation homework, please register yourself at thehomeworkhelp.co.uk and upload your homework/assignment from your account by clicking on upload homework. We will check your homework with our expert tutors and get back as soon as possible with suitable price quote.

Submit Your Query ???

 

To book a free session write to:- tutoring@thehomeworkhelp.co.uk or call 8185279935