Corporate Finance BAO2001 Solved

Referencing Styles : Harvard | Pages : 7

Tasks Each team is required to make the following calculations using the statistical functions on Excel:1. Convert the price data into returns on a month to month basis. You should have 23 returns for the market and the two shares after you complete this process.2. Mean (expected) return and standard deviation for the stock market and the two companies.3. The coefficient of variation for the market and the two companies.4. The correlation coefficient between Inception and Retract Ltd.5. The standard deviation of returns for a portfolio consisting of Inception Ltd and Retract Ltd (assume equal weightings).6. Beta coefficient calculation for both Inception and Retract LtdREPORTYour team is also required to produce an approximately 500 word report that comments of the results calculated above. The report will need to refer to each statistic calculated and interpret the result and make comparisons amongst the market index and the two companies. Your team is required to specifically address what each statistic is actually measuring and its implications from a risk and return viewpoint. You will also need to focus on the impact of creating a portfolio of two shares and the implications for risk reduction (You will need to provide some quantitative evidence of risk reduction). Furthermore, the Beta of each company needs to assessed and interpreted in the context of asset pricing.

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