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  • Sapm Risk Return

    Transféré par

    Dinesh Sathasivam
    17 vues11 pages
    Total return =current yield equity shares Nonconvertible debentures equity shares Debt Low High Capital appreciatio n High Negligible risk Marketabilit Tax y / Liquidity shelter High Low Fairly high Average High Nil High High Low Moderate High Low High Low Very High No tax on Very High dividend Low 80 C 80 C High Nil Very High Very High Very High No tax on Very High dividend.

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    Total return =current yield equity shares Nonconvertible debentures equity shares Debt Low High Capital appreciatio n High Negligible risk Marketabilit Tax y / Liquidity shelter High Low Fairly high Average High Nil High High Low Moderate High Low High Low Very High No tax on Very High dividend Low 80 C 80 C High Nil Very High Very High Very High No tax on Very High dividend.

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    17 vues11 pages

    Sapm Risk Return

    Transféré par

    Dinesh Sathasivam
    Total return =current yield equity shares Nonconvertible debentures equity shares Debt Low High Capital appreciatio n High Negligible risk Marketabilit Tax y / Liquidity shelter High Low Fairly high Average High Nil High High Low Moderate High Low High Low Very High No tax on Very High dividend Low 80 C 80 C High Nil Very High Very High Very High No tax on Very High dividend.

    Droits d'auteur :

    Attribution Non-Commercial (BY-NC)
    Téléchargez comme PPTX, PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    sur 11

    Evaluation of various investment avenues

    Return Current yield Equity shares Nonconvertible debentures Equity shares Debt Low High Capital appreciatio n High Negligible

    Risk

    Marketabilit Tax y/ Liquidity shelter

    convenienc e

    High Low

    Fairly high Average

    High Nil

    High High

    Low Moderate

    High Low

    High Low

    High High

    High

    Very High

    No tax on Very High dividend Low 80 C 80 C High Nil Very High Very High Very High Fair Avg

    Bank deposits PPF LI Residential house Gold & silver

    Moderate Nil Nil Moderate Nil

    Nil Moderate Moderate Moderate Moderate

    Negligi High ble Nil Nil Avg Avg

    Negligi Low ble Avg High

    Approaches to the investment decision making

    Fundamental approach
    Intrinsic value of security depends upon the underlying economic factors. Factors related to company , industry and economy. Buy- undervalued (IV > MP), Sell overvalued (IV<MP)

    Psychological approach
    Stock prices are guided by emotions rather than reasons. Castles-in- air theory used technical analysis. Study internal market data. Chart, moving avg.

    Academic approach
    Stock market reaction based on information. Past price behavior cannot use for future. Positive relationship with risk and return.

    Eclectic approach FA establish std & benchmarks. TA relative strength of supply &demand. AA react reasonably efficient with flow of info

    Risk & Return concepts

    Variation of return of income Risk can be quantified and measured Risk is the difference between expected return and actual return.

    Risk

    External risk are uncontrollable and broadly affect the investment- Systematic risk(undiversified) market risk. Internal environment of the firm or particular industry and is controllable to certain extend. Unsystematic risk(diversified)unique risk. Total risk = unique risk + Market risk

    Types of risk

    market risk
    Earing power of corporate sector. price of securities tend to fluctuate. Major cause appear to change in consumer sentiment.

    Interest rate risk


    Interest rate goes up, market price of fixed income securities will fall & vice versa.

    Business risk
    Emerging new technologies, changes in consumer preference, changes in government policiesetc. poor business performance affects the interest of equity holders.

    Inflation risk Currency risk

    Sources of risks

    Variance and standard deviation Beta

    Measuring historical risk

    Reward for undertaking investment. Total return =current return + capital return R=C+(Pc-PB)/PB

    Return

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