Risk & Return Essay Example for Free

Risk Return EssayWhat are investment exceeds? What is the return on an investment that costs $1,000 and is sold aft(prenominal) 1 year for $1,100? Investment returns is the expectation of earning money in the future on the amount of money invested. The return is the financial performance of the investment. The return is the contravention between the amount invested and the amount you are returned after said investment. There are two ways to show return on investment. 1. By long horse return. Amount to be received Amount invested = $1,100 $1,000 = $100 in returnThe problems with expressing returns in dollars, you dont know the size of the investment for that dollar return and you dont know the timing of the return. 2. Rate of Return or percentage returns Amount received Amount invested / Amount invested = $100 / $1000 = . 10 = 10% The rate of return standardizes the dollar return by considering the timing b. (1) Why is the T-bills return independent of the state of the ec onomy? Do T-bills promise a completely risk-free return?Beta coefficients are the weighted average of its individual securities of imports. You will add each securities beta to materialise the portfolios beta. i. Suppose you have the following historical returns for the stock market and for the company P. Q. Unlimited. Explain how to calculate beta, and use the historical stock returns to calculate the beta for PQU. Interpret your results. See attached. Calculate betas using historical data. A regression line is fitted through the points of the market returns (x-axis) and companys returns (y-axis) and the slope of that line provides an melodic theme of the stocks beta.