StudentShare solutions

# Investment Analysis and Strategy - Term Paper Example

## Extract of sample Investment Analysis and Strategy

Modern Portfolio theory elaborately discusses the relationship between the risk and the return. (Lintner, 1965; Brealey and Myers, 2003)
Goldman Sachs, one of the largest banks, is the firm, which will be studied in this paper. Before calculating the rate of return that is expected on the investment in the shares of this company employing CAPM, it is required to briefly discuss this model for the betterment of the understanding.
Whether an individual will be interested in investing his money in the shares of a particular firm depends on the exposure of the firm to the market risks as well as those risks, which are mainly specific to this firm. Now portfolio theory suggests that instead of making investment in one particular share, it would be wiser for an individual to invest in a diversified portfolio. An appropriate diversification reduces total level of risks. (Brealey and Myers, 2003; Markowitz, 1991; Bernstein, 2001)
To estimate expected return on an investment in a particular stock, Capital Asset Pricing Model is used. This model specifies a formula, which is generally applied by the firms to determine market return on the shares of that firm. CAPM takes into account only those risks, which are non-diversifiable. These risks are commonly known as systematic or market risk and they are often expressed by the term beta (β). (Markowitz, 1991; Bernstein, 2001; Tobin, 1958 )
E(Ri) = Rf + β (E(RM) - Rf); where E(Ri) is expected return on the ith capital asset, Rf is the return on the risk free asset, β represents sensitivity of the return on the stock to the market return, and E(RM) stands for the expected return on the market portfolio. (Markowitz, 1991; Bernstein, 2001)
Before moving into further analysis it is necessary to understand what risk free and risky assets stand for. The classification of assets, particularly of financial ...Show more

## Summary

Investment in a particular project by an individual or by a firm is done through the analysis of risk-return trade-off associated with the investment project. Before investing in any asset, investors need to be very aware of the relationship between the risk and the return…
Author : ziemannafton
Save Your Time for More Important Things
Let us write or edit the term paper on your topic
"Investment Analysis and Strategy"
with a personal 20% discount.
Grab the best paper

### Check these samples - they also fit your topic

Firms are currently operating in an ever-evolving and dynamic market, challenging and complex industry, and competitor environments. This has prompted firms to carefully analyse both the external and internal environments for opportunities and threats with a view to developing key business strategies that can enable them remain competitive and expand their market share.
12 pages (3000 words) Term Paper
Marketing Strategy
The company is however the leader in innovation and production of items, whereby it produces one after another with great success. Recently, the company produced the iMac which is yet to hit or penetrate the market, hence the importance and necessity of developing a market entry strategy.
17 pages (4250 words) Term Paper
Creating a strategy that can be used online is one which is important first in the capacities for customers to remain loyal to the bank. This is furthered with the concept of using e-business to gather new customers’ interest and to market and advertise the business.
18 pages (4500 words) Term Paper
Investment Analysis and Stock Valuation on REDBOX company
Redbox is an American company that has its scope of business in the rental of DVDs, Blu-Ray Discs, and also video games using fully automated retail kiosks. Redbox possessed over 33,000 kiosks in over 27,800 locations. Redbox, as a subsidiary of Coinstar Inc., constituted 34.5% market share of discs rented, as of the second quarter 2011.
5 pages (1250 words) Term Paper
Portfolio Theory and Investment Analysis
The benefit of the strategy adopted from 2007 onwards. The return on the three asset portfolio: rp = wara + wbrb + wc rc Whereby rp is the return. ra is the return and wa is the weight on asset a. rb is the return and wb is the weight on asset b. rc is the return and wc is the weight on asset c.
8 pages (2000 words) Term Paper
ENGINEERING ECONOMY & GEO-RESOURCE EVALUATION AND INVESTMENT ANALYSIS
Methodology 6.1. How you constructed Table 7. Source of Data 7.1. Data manipulation 7.2 Graphs 7.3. Description of the graphs 7.4. Time Table 8. Event Description 8.1. Ten Key Events in the company 8.2. Five key events related to the related commodity 8.3.
16 pages (4000 words) Term Paper
Acquisition Strategy Paper
However, acquisitions pose great challenges in terms of marketing, logistics, and management of human resources. This includes integration of the firm’s personnel, routine, and
3 pages (750 words) Term Paper
This is furthered with the concept of using e-business to gather new customers’ interest and to market and advertise the business. The development of
18 pages (4500 words) Term Paper
Investment Analysis and Stock Valuation on company: REDBOX
As per Coinstar Inc.’s Annual Report for the year 2010, the company increased its ownership proportion of Redbox from 51% to 100%. a. General Economic Influence: At a time when a sluggish and struggling economy
3 pages (750 words) Term Paper
Valuation and Investment Analysis
On the service side, Best Buy offers installation, maintenance, technical support of their products as well as mobile phone and internet service sales. For Best Buy the U.S.
3 pages (750 words) Term Paper
Hire a pro to write