Risk & Return Analysis
Ethan Cromartie
Risk & Return Analysis
BUS 505 Corporate Finance
Certificate of Authorship:
I certify that I am the author of this paper and that nay assistance received in its preparation is fully acknowledged and disclosed in the paper. I have also cited any source from which data, words, or ideas either quoted directly or paraphrased has been used. I also certify that this paper was prepared by me specifically for this course
Ethan Cromartie
11/30/11
Investments held individually.
Nike Inc., has a standard deviation of 8.2, almost double that of the markets. While Nike has been a consistently strong company its average rate of return for the past 10 years was .77%. …show more content…
Investments in a portfolio context:
If these stocks were to be placed in a portfolio context it would probably unwise, by adding the Tnote and S&P’s beta to the portfolio it actually lowers Nike and Merck’s beta’s to .52. While these are strong stable companies, they do not have an indirect correlation to one another so they would be of no help if the market were to move up or down quickly. The Annual Rate of return would be .103% which is respectable but not as strong if there was a more diversified portfolio. By diversifying the portfolio it should give us the ability to deal with the market risk, that we face with the fluctuation of everyday stock prices. Also because Nike and Merck operate in a global market, we may be able to combat some of the foreignexchange risk that they may face in a weaker world market versus a stronger one.
"MRK Historical Prices  Merck & Company, Inc. Common St Stock  Yahoo! Finance." Yahoo! Finance  Business Finance, Stock Market, Quotes, News. N.p., n.d. Web. 30 Nov. 2011. .
"NKE Historical Prices  Nike, Inc. Common Stock Stock  Yahoo! Finance."

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