Beauty Ltd And Ugly Ltd Overall Performance

1200 Words May 29th, 2016 5 Pages
From the two given companies, Beauty ltd and Ugly ltd overall performance, we can see that the both companies are performing well. But by evaluating the performance of company, the company Ugly is in better position as per the investor’s point of view.
As the standard deviation of Beauty company is 0.02 and Ugly ltd has 0.07 which is much higher than market rate, 0.01. The company Ugly has higher standard deviation than market rate. Along with this, the calculation of Beta for Beauty Company is 0.051 and Ugly is 0.05 the beta portfolio is 0.11.the capital assets pricing model for beauty co and Ugly company is 48% and 55% respectively. The weighted average cost of capital for Beauty ltd is 60% and 63%.
The company with high standard deviation is more risky and the company with high Standard deviation than market is more risky than the market. It is mainly because the market is structured in a way that could generate less risk in the economy as a whole .
The Calculation of Beta gives information about the how fluctuate the share price is. The Ugly Company’s the Beta is less volatile than Beauty Company because of the less risky project it takes in the business. As a result of that, Ugly Company is in better position as per the investment point of view. Ugly company’s price does not rapidly fluctuate in the market. It attracts the investors to invest their money in the Ugly Company because they know about the stability of business in the market. The investors will…
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