FUNDAMENTALS OF FINANCE ASSIGNMENT Essay Example | Topics and Well Written Essays - 2250 words

FUNDAMENTALS OF FINANCE ASSIGNMENT - Essay Example If we analyze the trend of rate of return of bonds in table 1 we get to know that fluctuation is higher than cash but on the other hand much better return is being generated as compared to cash. Average rate of return is more than double of that of cash but again standard deviation is high representing high rate of risk. Many people know about the property investments. Property investment is usually in shape of build home or any other type of building; that appreciate or devalue in value and provides a normal profits known as â€Å"rent†.Normally property investment generates a satisfactory returns as compared to cash and bonds but has more risk .According to data in Table1 the rate of reurns from year 1992 to 2006 is getting appreciated and overall average expected rate of return better than cash or bonds but inevitably results in greater risk or standard deviation. A share is companied issued legal document, which has some value in the market. Company’s Ownership can be in the shape of trade investment. Subsidiary or associate. It specifies the right of share holding pr voting power and also determines the amount of dividend to be received. Usually return from share is in the shape of dividends given by the companies. The possibility that Investor will lose money when they invest in a company that has debt, if the companys cash flow proves inadequate to meet its financial obligations.In other words risk of getting loss instead of profit is financial risk. The rate of return depends upon the risk associated with that investment. The greater the risk, the larger the return that is they are directly proportional to each other. This is one of the most fundamental relations in finance. The rate of return is what you earn on an investment, stated in percentage terms.If we analyze portfolio Kappa and Omega we can see that average expected rate of return are 7% and 8% approximately where as there risk or standard deviation is 4%