FINANCIAL MANAGEMENT

PROJECT WORK

(PGDM 2020-22)

GROUP-9, SECTION- B

1. AASHISH KUMAR (001)

2. SHUBHAJEET SARKAR(104)
3. SAGNIK CHAUDHURI (095)
4. ARPIT GHOSH (007)
5. RAVI MALHOTRA (081)
 ACKNOWLEDGEMENT
We would like to express our sincere gratitude to all the people
without whom the success of this project would have been highly
impossible.
We would like to devote our vote of thanks to our project guide Prof.
Sangram Keshari Jana for his constant support and encouragement.
He has great hand in firm foundation of this project.
We are indebted of his valuable suggestions and scholar guidance and
constructive criticism and constant support at every step for making
this project successful.
Last but not the least we would like to thank those who assisted us
directly or indirectly for their time and help.

1. AASHISH KUMAR (001)

2. SHUBHAJEET SARKAR(104)
3. SAGNIK CHAUDHURI (095)
4. ARPIT GHOSH (007)
5. RAVI MALHOTRA (081)

Introduction
RISK AND RETURN
The risk–return spectrum is the relationship between the amount of return gained on
an investment and the amount of risk undertaken in that investment. The more return sought,
the more risk that must be undertaken.

HOLDING PERIOD RETURN

The holding period return refer to the return which an investor earned by holding the stock
for long term period. It generally talks about the return which can be earned by just not
selling the stock of the company. The formula of HPR is (End Price – Beginning Price)/
Beginning Price.

MEASUREMENT OF RISK
There is no universally agreed-upon definition of risk. One way to think about the risk of
returns on common stock is in terms of how spread out the frequency distribution in is. The
spread, or dispersion, of a distribution is a measure of how much a particular return can
deviate from the mean return. If the distribution is very spread out, the returns that will occur
are very uncertain. By contrast, a distribution whose returns are all within a few percentage
points of each other is tight, and the returns are less uncertain. The measures of risk we will
discuss are variance and standard deviation.

RISK FREE RATE

The Risk-free rate is the theoretical rate of return of an investment with zero risk. The risk-
free rate represents the interest an investor would expect from an absolutely risk-free
investment over a specified period of time.

MARKET RISK
Market risk is the possibility of an investor experiencing losses due to factors that affect the
overall performance of the financial market in which he or she is involved. Market risk, also
called "systematic risk," cannot  be eliminated through diversification, though it can be
hedged against in other ways. Sources of market risk include recessions, political turmoil,
changes in interest rates, natural disasters and terrorist attacks. Systematic, or market risk
tends to influence the entire market at the same time.

RELATION BETWEEN MARKET AND STOCK

Stocks and shares both are volatile in nature. To measure the relation between share and
market we use beta as measurement tool.
The beta is a measure of how an individual asset moves (on average) when the overall
stock market increases or decreases. Thus, beta is a useful measure of the contribution of an
individual asset to the risk of the market portfolio when it is added in small quantity. Thus,
beta is referred to as an asset's non-diversifiable risk.
Formula we used for computation of beta is as follows:

EXPECTED RATE OF RETURN

The expected return is the profit or loss that an investor anticipates on an investment that has
known historical rate of return (RoR). It is calculated by multiplying potential outcomes by
the chances of them occurring and then totaling these results. Expected return calculations are
a key piece of both business operations and financial theory.
In our analysis we use Capital Asset Pricing Model to determine the expected return on the
investment. We used the following formula for analysis:

Expected Return
Risk Free Rate
Value of Beta
Expected Market Return
SECURITY MARKET LINE
The security market line (SML) is a line drawn on a chart that serves as a graphical
representation of the capital asset pricing model (CAPM)—which shows different levels of
systematic, or market risk, of various marketable securities, plotted against the expected
return of the entire market at any given time.
Beta
Expected Return

SECURITY MARKET LINE

140.00%

120.00%

100.00%
EXPECTED RETURN

80.00%

60.00%

40.00%

20.00%

0.00%
1 2
BETA

OUR RECOMMENDATION
Thank you