Who is Avon‚Äôs target market? How can it be segmented?
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Measuring Systematic Risk
For the first chart, we can measure the systematic risk. Systematic risk is defined as the risk that cannot be diversified away. The systematic risk of an individual asset is really just a measure of the relation between the returns on the individual asset and the returns on the market.
Now, we draw a 45o line across the origin as the picture. The the line shows the company’s performance when the measure stay at the same systematic risk as market. From this chart, we can see the points above the line are less than the points under the line and most of the points under the line are close to the line. Therefore, we can get that at the same systematic risk as…show more content… Secondly, the error may be greater than 0 or may be less than 0. The last but not the least important, except variable being -1, Forecast error is around 0, in other words, the forecast in these two chart is acceptable.
Therefore, the error in these two chart can be used. We can use them as a reference. However, we must consider when the variable equals -1 and if possible, we should find the reason and correct it. Also, the low error means this business has a low risk, it basically can develop as the plan. But variable being -1 is an instability. We should pay more attention to it when we think about this chart.
Return on investment (ROI)
Return on investment (ROI) is the concept of an investment of some resource yielding a benefit to the investor. A high ROI means the investment gains compare favorably to investment cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. In purely economic terms, it is one way of considering profits in relation to capital invested.
From this chart, we can get that the investment return from 1955 to 1984 is stable, the return is not far from 0. However, after 1984, the return is more and more unstable, the amplitude of chart is bigger and bigger, which means investor will have a higher risk in this investment. They can earn a lot but they also can lose a lot. And until 2008, this trend