CORPORATE FINANCE NOTES, Exams of Corporate Finance

RISK & RETURN AND Basic of risk & return.

Typology: Exams

2017/2018

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TATA STEEL INFOSYS NIFTY
Date Adj Close Price Adj Close Price Afj Close
1/31/2013 302.90 558.42 5693.05
2/28/2013 277.49 555.03 5682.55
3/31/2013 268.53 429.42 5930.20
4/30/2013 258.77 463.28 5985.95
5/31/2013 242.81 503.12 5842.20
6/30/2013 191.32 597.91 5742.00
7/31/2013 250.66 625.33 5471.80
8/31/2013 248.42 606.63 5735.30
9/30/2013 306.38 666.41 6299.15
10/31/2013 366.48 691.90 6176.10
11/30/2013 388.07 718.94 6304.00
12/31/2013 325.73 763.38 6089.50
1/31/2014 314.52 788.90 6276.95
2/28/2014 360.40 677.10 6704.20
3/31/2014 366.53 656.06 6696.40
4/30/2014 434.64 606.27 7229.95
5/31/2014 483.40 709.96 7611.35
6/30/2014 506.27 734.41 7721.30
7/31/2014 478.99 784.82 7954.35
8/31/2014 428.49 817.30 7964.80
9/30/2014 457.38 883.49 8322.20
10/31/2014 441.84 980.82 8588.25
11/30/2014 372.81 887.52 8282.70
12/31/2014 364.46 963.72 8808.90
1/31/2015 327.31 1019.45 8844.60
2/28/2015 295.66 998.12 8491.00
3/31/2015 336.36 873.89 8181.50
4/30/2015 306.63 910.29 8433.65
5/31/2015 284.32 885.79 8368.50
6/30/2015 230.46 1013.85 8532.85
7/31/2015 216.57 1030.18 7948.95
8/31/2015 204.28 1093.76 7948.90
9/30/2015 236.94 1068.82 8065.80
10/31/2015 220.03 1033.48 7935.25
11/30/2015 249.63 1050.10 7946.35
12/31/2015 239.92 1106.62 7563.55
1/31/2016 239.35 1029.82 6987.05
2/29/2016 307.18 1157.35 7738.40
3/31/2016 337.35 1147.66 7849.80
4/30/2016 321.26 1186.18 8160.10
5/31/2016 309.34 1112.23 8287.75
6/30/2016 341.15 1032.01 8638.50
7/31/2016 363.62 995.49 8786.20
8/31/2016 367.70 995.68 8611.15
9/30/2016 398.35 958.63 8638.00
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TATA STEEL INFOSYS NIFTY

DATE TATA STEEL INFOSYS NIFTY RETURN RETURN

12/31/2016 454.94 901.99 8561.30 TATA STEEL INFOSYS

Avg. Return= expected return= 0.0417169738 0. Avg. Return= expected return(yr)= 0.5006036852 0.

Column 1 Column 2 Column 1 0. Column 2 0.00024 0.

TS

RETURN 4.17%

VAR 0.

SD 6.04%

COV 0.

CORRE 0.

WEIGHT 50%

RETRN(P) 2.75%

RETURN(P)YR. 32.99%

RISK(VAR) 0.

SD(P) 0.

CEV 1.

CEV GIVES PER UNIT RISK PER UNIT RETURN,UNIT WITH HIGHER CEV IS RISKIER

4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

EFFICIENCY FRONTIER

NIFTY TATA STEEL INFOSYS

-0.02 -0.01 0 0.01 0.02 0.03 0.04 0.05 0.06 0.

-0.

-0.

0

f(x) = 0.1562562487x + 0.

Chart Title

x Linear (x)

Sharp Ratio -54% -54% -55% -54% -52% -48% -42% 4.68% LOWEST RISK WEIGHTAGE SO WE MUST CHO MINIMUM VARIANCE PORT -35% -27% -20% -14% -8% -4% 0% 4% 6%

TATA STEEL INFOSYS NIFTY RETURNS

Avg. Return= expected return(X*)= 0.02094487 0. YEARLY= 25.13% 16.18%

RF= 5.50%

MRP= 7.77%

RF= 5.50%

MRP= 7.77%

BETA

0.0331265377 -0.0209448678 0.000438687 -0.00375341 1.409E-05 0.

-0.013037112 0.0017806244 3.170623E-06 -0.029931732 0.000896 -0.

VARIANCE= 0.012524786 0.

SD= 0.111914188 0.

Beta= TATA STEEL 1.045196718 INFOSYS 0. Slope= TATA STEEL 1.045196718 INFOSYS 0. WT WI Beta(p) 0% 100% 0. 10% 90% 0. 20% 80% 0. 30% 70% 0. 40% 60% 0. 50% 50% 0. 60% 40% 0. 70% 30% 0. 80% 20% 0. 90% 10% 0. 100% 0% 1.

SECURITY MARKET LINE= (SML) IS THE RELATION B/W STOCK b AND CAPM RET. CAPM RET 3.71% 5.50% 7.44% 7.91% 9.39% 13.27% 13.58% 15.21% 17.16% 19.10%

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Column G Linear (Column G)

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2

0.00%

0.000487 -0.0004623 -8.284E-

9.911E-06 -0.0002841 -0.

0.00058 -4.29E-05 0.

0.001484 0.00155118 0.0004654 covariance 0.038524 0.03938497 0.

b AND CAPM RET.

2

Column G Linear (Column G)

2