Summarize key facts from this week’s material. In your reflection, focus on the ideas of risk,...

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Finance

Summarize key facts from this week’s material. In yourreflection, focus on the ideas of risk, return and expectation.Explain why this is an important concept for the firm. TheReflection should be roughly one page in length (you can write yourexplanation in Excel, or you can import your information to Word)and follow the directions in the syllabus.

thats all the question

Inyour reflection, focus on the ideas of risk, return andexpectation. Explain why this is an important concept for thefirm.

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An investment is always evaluated on the basis of return andrisks it offers Risk and return are frequently used terms inthe field of corporate financeA return is what your investment atany point of time gives back to you at a later time The simplestway to calculate a return is what you receive till investmenthorizon over and above what you invested So if an investment ofvalue V0 grows to Vt at the end of investmenthorizon with intermediate payments in between thenA risk is a probability ofunfavorable outcome All investments are subjected to risks Andall such risks can be broadly classified into two typesSystematic risksUnsystematic risksTable below presents a comparisonbetween the two types of risks Diagram above is the pictorialdepiction of the presence of riskSl NoParameterSystematic RiskUnsystematicRisk1NatureRisks inherent inside a systemcommon to all the entities inside the system prevalent in everyinstrument traded in the marketRisks specific to an entity companyor instrument independent to external changes in economy orpolitics2Another way to look at itThese are risks associated with theeconomic political sociological and other macrolevel changesThey affect the entire market as a wholeFactors such as managementcapability consumer preferences labour etc contribute tounsystematic See Answer

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Summarize key facts from this week’s material. In yourreflection, focus on the ideas of risk, return and expectation.Explain why this is an important concept for the firm. TheReflection should be roughly one page in length (you can write yourexplanation in Excel, or you can import your information to Word)and follow the directions in the syllabus.thats all the questionInyour reflection, focus on the ideas of risk, return andexpectation. Explain why this is an important concept for thefirm.