Study On Introductory Finance And Market Portfolio Finance Essay - Free Essay Example

Sample details Pages: 5 Words: 1629 Downloads: 3 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? Having selected two stocks, LLOY.L and BARC.L, from the FTSE100 Index and downloaded the daily prices, spanning the period January 2008 December 2010, it is now time to calculate the daily returns and the average returns. The daily returns are calculated by subtracting from the closing share price of the following day the closing share price of the prior day, all divided by the closing share price of the prior day. The daily return of stocks represents the changing of the value of the stock in a short term point of view, so the value in percentage that could be obtained by trading the stock in different days at the midquote(closing) price. This paper doesnt take into account dividend in the return equation for simplicity. The average returns are the sum between the daily returns of each stock divided by the number of days: LLOY.L -0,09% and BARC.L 0,05%. As it is an average of the sum of the daily returns, the average return of a stock is like a summary value in a long term point of view. In order to calculate the variance, which is the measure of the variability of measured data from the average value of the set of data , we use the excel prepared formula =VAR and the results are LLOY.L 0,00329681532 and BARC.L 0,00298971628. Variance is also the measure of dispersion of a set of data points around their mean value. The standard deviation of the two stocks is calculated by the prepared formula of excel =DEV.ST or just by calculating the radical square of the variance , LLOY.L 0,05741790071952 and BARC.L 0,054678298027727 and it represents the variability of a distribution. The value which represents the correlation between two variables is the covariance of the two stocks which is 0,00197867681213. Having constructed a portfolio which consists of 50% in each stock it is now time to calculate its return and standard deviation which respectively are -0,00018953911968 and 0,05060604020891: in order to calculate the standard dev iation we have to calculate the variance as the standard deviation is the radical square of the variance. The table below shows a set of portfolios of the two stocks with different weights. It is mainly important to notice two factors: the returns and the variance. As the average return of LLOY.L is negative, a rational investor would choose to invest only in BARC.L in order to get a positive return; accordingly to the data of the variance it is significant to notice that it has high values in the extremes of the composition of the weights of the portfolio. High values of variances mean high values of risk. Actually, if an investor does not reduce the exposure to risk by diversification of his portfolio with different assets the risk of losses is higher. The risk is higher because with diversification the investor is able to reduce the specific risk of the firm and will be subjected only to the general market risk. The graph below summarizes a portfolio with different weights of assets. The outcome is what is called the efficient frontier (the upper part) and so the graph shows the correlation between returns and risk (standard deviations). The previous explanation meant to mark the difference between what appears to be the best choice for an investor and so the highest return and what is really the best choice, which is maximizing the utility of the investor by minimizing his exposure to risk. The minimum exposure to risk is calculated by minimizing the variance and by calculating the exact weights of the assets in the portfolio. This paper has used the excel prepared function solver to get the minimum variance in the portfolio made with those two different stocks. The minimum variance is 0,25% with weights of 43% LLOY.L and 57% BARC.L as highlighted. In order to achieve a portfolio yielding a return of 25% the weight of each stock should be equal to: LLOY.L -17536% and BARC.L 17636%. This result has been obtained by using the excel function solve r and it mirrors the fact that an investor should sell LLOYD.L assets (-17536%) and buy BARC.L assets (17636%) in order to achieve a return of 25%. Question (b): It is now time to define what a Market Portfolio is. This paper intends to begin describing the market with risky assets and then deals with a portfolio with risk free assets in order to scrutinize the main differences, because it is just in the composition between these two different set of portfolios that there is the market portfolio. Before dealing particularly with the market portfolio it is important to analyze the officials acting in the financial environment, investors in particular. There are two kinds of investors: risk averse and risk takers. If we consider risk as a measure of uncertainty about both the development of the market and the success of our investment, risk averse investors are those officials who prefer to invest in low risk assets even though they will not achieve a high income. Risk takers in stead are those investors whose aim is to bet on the market development and invest in a more risky way in order to get better returns. The main objective of the description of these officials it is to describe the combination of assets of their portfolios. Risk takers invest on assets which have a high degree of dispersion (the variance and so the standard deviation) in the final income. There is a high chance that the final outcome will not be equal to the expected return. An efficient portfolio for risk takers is made by maximizing the expected returns for a given amount of risk or minimizing risk when the expected return is given. Risk averse investors will invest in assets with a low or almost nonexistent level of risk, even though the expected return is not high. Efficient portfolios are shown in the efficient frontier, which is a curve showing optimal portfolios made by assets of different degrees of risk. The efficient frontier offers the highest return for any level of risk and it is constructed by combining mean and standard deviation, so return and risk. In the graph below the efficient frontier is just AB because for every level of risk (variance) we can get higher expected return in AB instead of in AC: this represents efficiency in the selection of assets for a portfolio. Having analyzed the portfolio made of risky assets it is now time to describe the contrast to a portfolio of risk free assets. A portfolio of risk free assets reduces its risk to zero. The expected return turns into realized return (Expected(R) = Realized(R)). Government bonds are usually the closest example of risk free assets. The most visible change is that the efficient frontier becomes a straight line. This straight line is called capital market line and its equation is E(Rp)=Rf+[(E(Rm)-Rf)/ÃÆ' Ãƒâ€ Ã¢â‚¬â„¢m]xÃÆ' Ãƒâ€ Ã¢â‚¬â„¢p. The expected return on a portfolio depending on a risk free rate of return suffers less risk because the variance of the portfolio is smaller, as the variance of the risk free assets and the covariance are equal to zero. The main advantage given by risk free assets is that investors can borrow or lend any amount of money at the risk free rate of return depending on the weight they have, as the graph below shows. It is important to pay attention to both the risk component and the risk free one in order to find out the Market Portfolio (M, in the graph below) as it is just the tangent point between the efficient frontier and the capital market line. The CML is the line used in the capital asset pricing model to illustrate the rates of return for  efficient portfolios depending on the risk-free rate of return and the level of risk (standard  deviation)  for a particular portfolio. Markowitz introduced a new goal for investors, which is to maximize their utility. The utility is maximized in the market portfolio, which is the equalization between the efficient frontier and the capital market line. The utility is approximately calculated as the expected return minus the variance of return, which is multiplied to a risk averse variable. If an investor wants to achieve the best utility from the combination between assets of his portfolio, he will try to minimize the variance in order to maximize the expected return. The Market Portfolio is where every investors will want to invest. Actually this portfolio must include all risky assets and as the market is in equilibrium all assets are included in their market value. Since the Market Portfolio contains all risky assets, it is a completely diversified portfolio, which means that all the unique risk of individual assets (unsystematic risk) is diversified away. In the presence of capital markets, rational risk averse investors select efficient portfolios that lie in the CML with the highest expected Sharpe ratio (risk premium/standard deviation) which means with the highest expected return and the lowest degree of risk. Th e concept of Market Portfolio is strictly related to the concept of the Separation Theorem. James Tobin explained in the Separation Theorem that if an investor holds risky assets and he is able to borrow (buying stocks on margin) or lend (buying risk free assets) at the same rate, then the efficient frontier is a single portfolio of risky assets plus borrowing and lending. Tobins Separation Theorem says an investor can separate the problem into first finding that optimal combination of risky assets and so the tangency point (Market Portfolio) and then deciding whether to lend or borrow, depending on his attitude toward risk. If there is only one portfolio plus borrowing and lending, it is got to be the market. Don’t waste time! Our writers will create an original "Study On Introductory Finance And Market Portfolio Finance Essay" essay for you Create order

Status of Women in Things Fall Apart - 1421 Words

The Role and Status of Women When reading Segu and Things Fall Apart, the role of women is a major part of each novel. Their roles are alike in some ways but at the same time they have some slight differences. In Achebe’s text, women do not seem to be of much importance in their day to day life, but they are crucial to the spiritual wellness of their culture. In Conde’s text though, the women are much more respected by the people in their tribe. The level of reverence for women differs greatly in each novel. In Things Fall Apart, women were often abused for anything they may have done wrong. For example, Okonkwo beat his second wife twice, once because she was late returning home and had not yet prepared his meal. He was then†¦show more content†¦One last example of how the women of the Bambara were seen as property was when Dousika passed away in part two and his first wife Nya was handed down to his younger brother, Diemogo. â€Å"If Nya now refused to marry Diemogo as tradition prescribed, she would have to go back to her own family† (Conde 144). Women had no say in the matter, even in her case, the two of them never got along but she still had no choice unless she wanted to be without her children. It also seemed as though the men held a double standard in the Ibo village when it came to the respect of women. They constantly abused their women of the tribe, but yet highly regarded the priests of their religion whom were also female. Everyone from near and far came to consult Chielo, the priestess of Agbala and the oracle of the hills and caves (Achebe 42). Another female character whom they valued greatly was Ani. She was the earth goddess and the source of all fertility (Achebe 31). Every year they even held a special occasion, the Feast of the New Yam, in order to give thanks to her. The men would never question these females and would always listen to them and praise them, but they did the opposite and did not c are what their own women had to say about anything. The women of Things fall apart and Segu really had no identity of their own. They were more so known by the second wife, the thirdShow MoreRelatedChinua Achebe s Things Fall Apart1069 Words   |  5 PagesThings Fall Apart was written by a Nigerian man named Chinua Achebe in 1958, with the intentions of fully exploiting the truth and creating a new perspective about African culture. Seeing as though Achebe lived through the colonization of the Igbo people, he was able to write without stereotyping Africans and European people. 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Martial Arts Persuasive Essay Example For Students

Martial Arts Persuasive Essay Submission-style attacks such as chokes and locks are also prevalent in this martial art, which is valuable for defending ones self. No. Kiddo Created in Japan in the early 1 sass, kiddos followers learn how to use an assailants strength and energy against them. Students are taught to care for the well-being of their potential attacker and are trained to disarm, but not seriously wound them. Weapons training is common in kiddo, and followers are taught to defend themselves against staffs, swords and knives. Its founder, Moorhen Lesbian, said that in order to be successful followers Of kiddo must be, willing to receive 99% of an opponents attack and stare death in the face. No. 8 Kara Magma Israel Else by Israeli security forces, including the special police, this martial art is a rule-less, violent skill. Not practiced for sport, it emphasizes devastating attacks to the opponents vital areas, such as the groin and eyes, and encourages headhunts and the use of any available objects as weapons. Keep your mind optimistic, tell yourself you can do it because the second you are pessimistic you have defeated yourself. Stamina will help endure through the difficult situation. A major part of protecting yourself is perseverance, while the confrontation and preparing for it, Of course to be good at anything, especially defending yourself, you must practice. There are some days practicing seems tiring and insignificant, but you never know when you Will use what you practice 50 it is important that you continuously train. When you actually use the self-defense that you have recited, it is an overwhelming feeling of accomplishment Consequently, it all comes down to a persons self-control. A situation may arise that seems hard to escape, but if a person has good self-control they will know exactly what to do. A person can do anything that they put his or her mind to. When practicing, a person should motivate themselves, by telling themselves to do something and accomplishing it. In the end, there is still something missing, knowledge gained through experience by practicing, without it both stamina and perseverance is ineffective. Not only is flailing your hands about in an attempt to punch useless, but also strenuous. With experience anyone can learn how and the most best places to strike. It is important that people have experience because more than 80% of people have a tendency to freeze up when being attacked, Of course, if you know how to retaliate whether by blocking, punching, or kicking will reduce the amount trauma to your body. With less trauma to your body, it will be easier to fight back. When you have gotten your opponent too position you feel comfortable, it will be easy to escape. During the confrontation, knowledge is an necessity, After taking self-defense classes, many people are effected. Attending the classes is worth it because not only do I get exercise hut also learn many things, I enjoy attending self-defense classes and feel as though many people could benefit from the experience. Self- defense classes help many people to become more disciplined. While practicing have noticed a greater increase of confidence of not only me but also people around me. In reality, if there was a real confrontation believe the classes have prepared me for it.

The Masculine Mandate free essay sample

Women populate our military, entertainment industry, blue-collar factory floors, boutiques, salons, and just about every other professional role in American culture. There are powerful female politicians, rock stars, and athletes. Look just about anywhere and one can easily find women filling nearly every position that modern society has to offer. Examine the same landscape from a masculine perspective, however, and the story quickly becomes much different. Very few men are able to take on social roles stereotypically categorized as feminine without running the risk of being labeled as â€Å"gay† or â€Å"sissy.† If a woman aspires to become a law enforcement officer, society applauds her (as they should), but if a male endeavors to crochet or provide services as a flight attendant for a living, society looks upon his unorthodox election with a suspicious eye, as if to inquire â€Å"Isn’t that a lady’s job?† It is apparent that this socio-cultural stigma has been an unintended effect of the women’s rights movement and the subsequent widespread embracing of feminist values as a nation. We will write a custom essay sample on The Masculine Mandate or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Of course, both of these things were good, much-needed paradigm shifts; they allowed women to fill roles previously restricted to males only, in voting booths and barracks and cockpits across the nation. Needless to say, there has never been a men’s rights movement the very thought is laughably absurd. After all, men have successfully dominated nearly every aspect of power in nearly every culture since the dawn of civilization. Because of this, masculinity has become much to hyperbolic and overvalued, being expected of every male. The same level of exaggerated femininity has not been expected of women since their social liberation in the 20th century, hence the hypocrisy of the present sociological climate. Women do not risk alienation from their peers if they pursue a career as a surgeon or astronaut, but men who seek to fill traditionally feminine roles, such as hair-dresser or fashion consultant, face ridicule and homophobic epithets, despite the fact that most of these men aren’t even gay! The stigma goes far beyond the workplace. Just take a stroll down the halls of any American high school and one will instantly notice the reprehensible treatment of the male population who possesses feminine mannerisms. Sitting with one leg crossed over the other, gesticulating just a bit too flamboyantly, or wearing pastels is enough to warrant despicable verbal abuse and physical harassment by other, more â€Å"manly†, students, most of who are so ignorant that they cannot recognize the fact that just because someone fails to look like a NFL player, doesn’t mean that he is a homosexual. In stark contrast, the female students who play sports, wear cut-up jeans, and smoke while hanging out with their usual entourage of male companions, are revered. Incredibly enough, no one seems to notice this flagrant hypocrisy. All in all, this a truly a silly issue to begin with. Who cares if a man wants to paint nails for a living, shave his legs, or blog about fashion? No possible harm can come from it. This has been proven in that women have been filling traditionally masculine roles in society for the past 50 years, and there has yet to be any negative fallout. More or less: lighten up. The roles men choose to fill should not be determined by societal pressure or prejudicially developed norms, but rather solely by the individual alone.