Beta Essay Example | Topics and Well Written Essays - 500 words

Beta - Essay Example Company's (like Wal-Mart, Kmart, etc.,) security returns will also be affected. If oil price are increased in the market there will be considerable impact on other goods. Indirectly the price of other goods will rise. There is an overall risk of raising capital for firms. Whenever any entrepreneur wants to run a company/firm with low budget and high profit, entrepreneur would consider different terms of interest rate, production, long-run growth, and company debentures. A mix portfolio of 40% is invested in A + 40% of investment in B, which may earn only 7% in a good market but booms to 14% in a recession, and the other 20% in government investment G earning 4%. Portfolio Expected Return for Portfolio P: Suppose if the beta value of a company is = 1.2 the risks involved is 20% higher than the normal risk. If = 0.8 then the investment has 20% below market risk. Risks are involved in the investment market; if the potential returns are higher then potential risks involved in it are also higher. A clever investor wants his money to be doubled or at least the amount invested should return. The company that is having = 1.0 is mostly favored by the investors. More or less Wal-Mart value is just above normal market risk.