Finance Assessment - Essay Example

Only on StudentShare

Extract of sample
Finance Assessment

In this concept one stocks performance is benchmarked by the performance of another stock. The returns which will be generated are compared relatively to other stocks of similar nature operating in the markets (Gitman, 2003). The major difference between both the absolute and relative return is that absolute return is concerned about the returns which are generated from one particular asset or stock, whereas in relative return the stock is compared or benchmarked with the measures of other stocks. The most debated concept of Security Analysis and Portfolio Management is about the understanding whether a portfolio has been properly analyzed for the returns which the investors will get or understanding the relative performance of that particular stock in the markets (Deloitte, 2010). The investors need to redefine the definition of risk, how it is measured and how to deal with it and for this reason; investors create a portfolio of different stocks and securities. Alpha and Beta are the tools used by the investors to assess their portfolios and measure whether or not their investments are generating the expected returns considering the risk they are taking. Assessing a portfolio in terms of both Alpha and Beta, the investor will have more control over the portfolio and he will maximize the returns by minimizing risk (Koba, 2012). The measurement of an investment on risk adjusted basis is called Alpha. ...
Download paper


Finance Assessment Name of the of the instructor Date SECTION A QUESTION # 1 PART # 1 SIGNIFICANCE OF ABSOLUTE RETURNS TO RELATIVE PERFORMANCE The term absolute return is linked to the utilization of assets by the company over a specific period of time…
Author : steuberimelda

Related Essays

Finance Principles
3 pages (753 words) Essay
9 pages (2259 words) Essay
Football & Finance
12 pages (3012 words) Essay
48 pages (12048 words) Dissertation
5 pages (1255 words) Essay
corporate finance
6 pages (1506 words) Assignment
MID-YEAR ASSESSMENT Management Finance
9 pages (2259 words) Assignment
Got a tricky question? Receive an answer from students like you! Try us!