Risk and Return Analysis
Risk and Return Analysis Paper
FIN 402
Risk and Return Analysis Paper Creating the right balance of securities in a diversified portfolio is crucial to maximizing return and minimize risk. This can be done through analysis of current and past activity of each product. Through a risk assessment, return analysis, researching the beta of each security, and reviewing the average risk and return, we can determine the weights of our securities and devise the strongest portfolio to limit risk and maximize return. As a team, we decided to remain with our original five investments; Ford, Microsoft, The Home Depot, Procter & Gamble, and UPS to create a strong diversified portfolio that will meet our expectations.
Risk Assessment and Return Analysis The risk assessment and return analysis should be performed for each of the companies in the investment portfolio. Since the companies in the portfolio belong to different industries there should be a good balance in the risk taken and returns. When one company’s stock goes down the others should not suffer. The returns of the other companies would help to cover the loss of the suffering company. UPS is a part of the Air delivery and freight service industry. Proctor & Gamble is a part of the Household products industry. Ford is a part of the automotive manufacturing industry. Microsoft is a part of the Application software industry. Home Depot is a part of the Home Improvement retail industry. The diversification in the choices of investments should help the portfolio. Each company has critical, essential, and non-essential business functions and processes. Some examples of business functions for UPS would be shipping and receiving, communication, information technology, and service. Proctor & Gamble has shipping and receiving, communication, sales, and inventory. Ford’s functions and processes are shipping and receiving, inventory, sales, and production. Microsoft’s functions and
FIN 402
Risk and Return Analysis Paper Creating the right balance of securities in a diversified portfolio is crucial to maximizing return and minimize risk. This can be done through analysis of current and past activity of each product. Through a risk assessment, return analysis, researching the beta of each security, and reviewing the average risk and return, we can determine the weights of our securities and devise the strongest portfolio to limit risk and maximize return. As a team, we decided to remain with our original five investments; Ford, Microsoft, The Home Depot, Procter & Gamble, and UPS to create a strong diversified portfolio that will meet our expectations.
Risk Assessment and Return Analysis The risk assessment and return analysis should be performed for each of the companies in the investment portfolio. Since the companies in the portfolio belong to different industries there should be a good balance in the risk taken and returns. When one company’s stock goes down the others should not suffer. The returns of the other companies would help to cover the loss of the suffering company. UPS is a part of the Air delivery and freight service industry. Proctor & Gamble is a part of the Household products industry. Ford is a part of the automotive manufacturing industry. Microsoft is a part of the Application software industry. Home Depot is a part of the Home Improvement retail industry. The diversification in the choices of investments should help the portfolio. Each company has critical, essential, and non-essential business functions and processes. Some examples of business functions for UPS would be shipping and receiving, communication, information technology, and service. Proctor & Gamble has shipping and receiving, communication, sales, and inventory. Ford’s functions and processes are shipping and receiving, inventory, sales, and production. Microsoft’s functions and
References: Bodie, Z., Kane, A., & Marcus, A. J. (2007). Essentials of Investments (7th ed.). Boston: McGraw-Hill/Irwin. Retrieved from https://ecampus.phoenix.edu/content/eBookLibrary2/content/eReader.aspx#gloss01_334 Hirt, G. A., & Block, S. B. (2006). Fundamentals of Investment Management (8th ed.). New York, NY: McGraw-Hill/Irwin. Retrieved from https://ecampus.phoenix.edu/content/eBookLibrary2/content/DownloadList.aspx?assetM etaId=8e418a6c-01e1-4b71-acca-99fa37753d7d&assetDataId=eb158329-6dc8-48b0- b920-39434d3c400c Yahoo Finance. (2011). Ford Motor Co. Key Statistics. Retrieved from http://finance.yahoo.com/q/ks?s=F+Key+Statistics Yahoo Finance. (2011). Microsoft Corporation Key Statistics. Retrieved from http://finance.yahoo.com/q/ks?s=F+Key+Statistics