Assignment : Intro to FM

Submitted To : Sir Adil Pasha

Submitted By : Aqsa Shaheen
Department : Commerce
Section : A
Class : M.Com 2
Submission Date : 26-03-2020
 Topic : Risk and Return
 Calculate expected risk of return of all investments and rank.
 T. Bill :

P R PR R−Ṝ (R−Ṝ)² P(R−Ṝ)²

0.1 8% 0.8% 0% 0% 0%
0.2 8% 1.6% 0% 0% 0%
0.4 8% 3.2% 0% 0% 0%
0.2 8% 1.6% 0% 0% 0%
0.1 8% 0.8% 0% 0% 0%
∑PR=8.0% Ϭ²=0.0%

Expected Return :
Ṝ=∑PR
Ṝ=8.0%
Expected Risk :
Ϭ=√∑P (R−Ṝ)²
Ϭ²=0.0%
√Ϭ²=√0.0%
Ϭ=0.0%
Co-efficient of Variation :
CV=Std/Mean = Ϭ/Ṝ
CV= 0.0/8.0
CV=7.678
 HT :
P R PR R−Ṝ (R−Ṝ)² P(R−Ṝ)²
0.1 -22.0% -2.2% -39.4% 1552.36% 155.236%
0.2 -2.0% -0.4% -19.4% 376.36% 75.272%
0.4 20.0% 8.0% 2.6% 6.76% 2.704%
0.2 35.0% 7.0% 17.6% 309.76% 61.952%
0.1 50.0% 5.0% 32.6% 1062.76% 106.276%
∑PR=17.4% Ϭ²=401.44%

Expected Return :
Ṝ=∑PR
Ṝ=17.4%
Expected Risk :
Ϭ=√∑P(R−Ṝ)²
Ϭ²=401.44%
√Ϭ²=√401.44%
Ϭ=20.0%
Co-efficient of Variation :
CV=Std/Mean = Ϭ/Ṝ
CV= 20.0 / 17.4
CV= 1.149
 Coll. :

P R PR R−Ṝ (R−Ṝ)² P(R−Ṝ)²

0.1 28.0% 2.8% 26.26% 689.5876% 68.95876%
0.2 14.7% 2.94% 12.96% 167.96% 33.592%
0.4 0.0% 0.0% -1.74% 3.0276% 1.21104%
0.2 -10.0% -2.0% -11.74% 137.8276% 27.56552%
0.1 -20.0% -2.0% -21.74% 472.6276% 47.26276%
∑PR=1.74% Ϭ²=178.59008%

Expected Return :
Ṝ=∑PR
Ṝ=1.74%
Expected Risk :
Ϭ=√∑P (R−Ṝ)²
√Ϭ²=√178.59008%
Ϭ= 13.36%
Co-efficient of Variation :
CV=Std/Mean = Ϭ/Ṝ
CV= 13.36 / 1.74
CV= 7.678
 USR :

P R PR R-Ṝ (R-Ṝ)² P(R-Ṝ)²

0.1 10.0% 1.0% -3.8% 14.44% 1.444%
0.2 -10.05% -2.0% -23.8% 566.44% 113.288%
0.4 7.0% 2.8% -6.8% 46.24% 18.496%
0.2 45.0% 9.0% 31.2% 973.44% 194.688%
0.1 30.0% 3.0% 16.2% 262.44% 26.244%
∑PR=13.8 Ϭ²=354.16%
%

Expected Return :
Ṝ=∑PR
Ṝ= 13.8%
Expected Risk :
Ϭ=√∑P (R−Ṝ)²
√Ϭ²=√354.16%
Ϭ= 18.8%
Co-efficient of Variation :
CV=Std/Mean = Ϭ/Ṝ
CV= 18.8 / 13.8
CV=1.362
 MP :

P R PR R-Ṝ (R-Ṝ)² P(R-Ṝ)²

0.1 -13.0% -1.3% -28.0% 784.0% 78.40%
0.2 1.0% 0.2% 14.0% 196.0% 39.20%
0.4 15.0% 6.0% 0.0% 0.0% 0.0%
0.2 29.0% 5.8% 14.0% 196.0% 39.20%
0.1 43.0% 4.3% 28.0% 784.0% 78.40%
∑PR=15.0 Ϭ²=235.20%
%

Expected Return :
Ṝ=∑PR
Ṝ= 15.0%
Expected Risk :
Ϭ=√∑P (R−Ṝ)²
√Ϭ²=√235.20%
Ϭ= 15.30%
Co-efficient of Variation :
CV=Std/Mean = Ϭ/Ṝ
CV= 15.30 / 15.0
CV= 1.020
 Comparing Expected Risk and Expected Return :

Security Expected Return Expected Risk

T. Bill 8.0% 0.0%
HT 17.4% 20.0%
Coll. 1.74% 13.36%
USR 13.8% 18.8%
MP 15.0% 15.3%

 Risk Ranking by Co-efficient of Variation :

Security CV
T. Bill 0.000
HT 1.149
Coll. 7.678
USR 1.362
MP 1.020

Coll. Have the highest coefficient of variation.