Table of contents • Outline the contents of the report in numbered sections. • Give titles of

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Table of contents • Outline the contents of the report in numbered sections. • Give titles of Appendices. Introduction IAG comprises three of the leading airlines in the UK and Spain. The combination of these three airlines, each of which operates’ significant networks; enables IAG to offer passenger and cargo customers unique benefits from its larger combined network. IAG continues to believe that retaining the core assets of brands and products in each of its operating airlines is important to maintaining valuable customer loyalty. IAG has maintained its disciplined approach to evaluating future inorganic growth opportunities and will only act if it is in the interest of its shareholders. This disciplined approach is reflected in IAG’s…show more content…
The Group operating profit target was increased as a result of the solid 2013 revenue performance of British Airways, together with Vueling joining the Group. During the year Iberia commenced its Transformation Plan to return it to a viable profitable business, which was a key element of our business plan. The Group business plan is based on a number of assumptions relevant for the industry, such as economic growth of their key markets, fuel price and exchange rates. QUESTION 1 Beta is a measure of the market risk of a security or a portfolio in comparison to the market as a whole. It is used in the Capital assets pricing model (CAPM), which calculates the expected return, and assets based on its beta and expected market returns. The market beta is set at 1.00 and every stock is calculated by value line based on past stock price volatility. A beta of less than 1 indicates that the security will be less volatile than the market whereas a beta greater than 1 indicates that the security price will be more volatile than the market. According to IAG the current beta is 0.85 which is less than 1.00 which indicates the security will be less volatile than the market .As the market return of IAG Company is 10% and beta being 0.85 there is result likely to gain 8.5% market return for low beta issue. Whereas for company named AA having a beta more than 1.00 there is result likely to have loss of 10% for high beta issue. QUESTION- 2 RM= 10% RF= 1% RE = Risk free + Beta
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