Calculate Quantitative's stock selection return contribution.

Q: What is the dividend payout ratio and the dividend yield ratio?

A: Dividend payout ratio is the ratio between total dividends and the net income of a company. It helps…

Q: Does the component cost of preferred stock include or excludeflotation costs? Explain

A: Preferred Stock: The stock that has no right over the decision making of the company against which…

Q: Should the weights used to calculate the WACC be based on bookvalues, market values, or something…

A: The WACC might considers the weight of each element of a corporation's capital structure. The…

Q: a. Describe how the Black-Scholes Call option formula can be used to make an inference about the…

A: The Black-Scholes Call option formula is a mathematical equation used in finance to determine the…

Q: Write Example for preference dividend?

A: Formula: Preference dividend = Preference shares x Preferred dividend rate

Q: I buy an investment for GBP 2,345,678.91 and sell it one week later for GBP 2,350,000.00. What is my…

A: Yield is the rate of return an investment will provide in annual terms. It is based on the annual…

Q: what is portfolio load

A: Introduction : In simple words, when an individual or an entity purchase and collect different kinds…

Q: Example or scenario of market portfolio?

A: The question is based on the concept of market portfolio, which  is a bundle of  all the assets…

Q: What stock valuation models are available?

A: The stock valuation models as follows: Absolute valuation: This method mostly emphases on finding…

Q: The following methods are used to measure market risk in the industry, except   A Regression…

A: Market risk refers to the measurement of uncertainty in the future outcomes underlying the…

Q: The VIX measures Select one: a.Realized volatility B. Current volatility C. Historical volatility D.…

A: The VIX stands for volatility index. Volatility index was the first benchmark which was created by…

Q: Mathematically, what does the beta value represents the _____________ of the market line

A: Beta (β) represents the slope of the security market line (SML).The security market line is a…

Q: what is base stock methods?

A: The base stock method is a valuation technique for the inventory asset, where the minimum amount of…

Q: Describe the nature of preference dividend and equity dividend with your own suit

A: Answer: Preference dividend is the dividend that are given on preference shares and equity dividend…

Q: 4. How the Stock valuation is normally made? Cost or net realizable value whichever is more Cost and…

A: Stock valuation is the process of analyzing the intrinsic worth of the stock possessed by the entity…

Q: 1. What are some fixed-income portfolio benchmarks available and why are they used?

A: Market-capitalization-weighted indices like Citigroup World Government Bond Index and Barclays…

Q: It is the uncertainty of future returns

A: A return can be defined as the money made on money invested over some period of time. A return can…

Q: Describe two conditions which will determine whether or not a stock is in equilibrium. Can either of…

A: Equilibrium refers to a state of rest or a situation where demand is equal to supply. At point of…

Q: A "risk-premium" is the difference between ___________________________ . A) the variance of a…

A: Solution:- Capital Asset Pricing Model (CAPM) is the equity model to determine the expected rate of…

Q: “Value-weighted index could provide a better signal on the market condition to the investors as…

A: Value -weighted  index -Index return equals the weighted average  of the return of each component*…

Q: There are three explanations for the shape of the yield curve i.e. Unbiased expectations theory,…

A: The term structure of interest rates is a function of the terms of the bonds and the variation in…

Q: What is meant by par value, and what is its significance to stockholders?

A: Par Value Par value is also known as face value. Par value is the value which is mention on the…

Q: Who are the steps involved in estimating the earnings per share for an aggregated market service?

A: Earnings per share (EPS) refers to the amount a company makes on each of the common stock…

Q: The expected return of a portfolio is simply the weighted average of the expected returns for the…

A: When investors create a portfolio of assets, one of the key metrics of interest is the expected…

Q: Explain a flat yield curve using the segmented market theory.

A: Mаrket  segmentаtiоn  theоry  is  а  theоry  thаt  lоng  аnd  shоrt-term  interest  rаtes  аre  nоt…

Q: Define Restricted Stock Units.

A:

Q: Define Gordon dividend discount model?

A: The Gordon, dividend discount model, also recognized as a version of the dividend discount model, is…

Q: Calculate Portfolio Returns with example?

A: The determination of profit or loss on the investment in a portfolio is called portfolio return. The…

Q: Discribe the nature of preference dividend and equity dividend with your own suitable examples?

A: Preference dividend and equity dividends are paid to preference and equity shareholders as a return…

Q: The Capital Asset Pricing Model (CAPM) describes a relationship between the expected return of,,,…

A: Solution:- Capital Asset Pricing Model (CAPM) is an equity model which calculates the required rate…

Q: Critically discuss the application of EWMA, GARCH and asymmetric GARCH models to volatility…

A: Volatility should be forecastable using a volatility model. Almost all financial applications of…

Q: What is a market index? How is it used?

A: The economy is affected by the various stocks that are present in the market. Their movement and…

Q: d. Equity beta. e. Asset beta. f. Pure-play comparable.

A: The stock's sensitivity to changes in the market is measured by equity beta, also known as asset…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.