the information below Y relating to the monthly rates of return for two companies X and Y over a period of 4 months: 1 xRate of return yRate of Return Date Month 1 -4.76 -4.75 Month 2 5.34 7.65 Month 3 12.09 6.98 Month 4 -2.98 9.65 Calculate the covariance per month between the two companies. Show all your working. a) If a firm increases its financial risk by selling a large bond issue that increases its financial leverage explain this assumption? Also what is the relationship between risk and return. Explain with examples.
the information below Y relating to the monthly rates of return for two companies X and Y over a period of 4 months: 1 xRate of return yRate of Return Date Month 1 -4.76 -4.75 Month 2 5.34 7.65 Month 3 12.09 6.98 Month 4 -2.98 9.65 Calculate the covariance per month between the two companies. Show all your working. a) If a firm increases its financial risk by selling a large bond issue that increases its financial leverage explain this assumption? Also what is the relationship between risk and return. Explain with examples.
Chapter2: Developing The Business Idea
Section: Chapter Questions
Problem 9SEP
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Question
the information below Y relating to the monthly
1
xRate of return yRate of Return Date
|
Month 1 |
-4.76 |
-4.75 |
|
Month 2 |
5.34 |
7.65 |
|
Month 3 |
12.09 |
6.98 |
|
Month 4 |
-2.98 |
9.65 |
Calculate the covariance per month between the two companies. Show all your working.
- a) If a firm increases its financial risk by selling a large bond issue that increases its financial leverage explain this assumption? Also what is the relationship between risk and return. Explain with examples.
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