'O’Grady Apparel Company Essay\r'

'Analyzing Risk and Return on Chargers Products’ Investments junior-grade Sayou, a financial analyst for Chargers Products, a manufacturer of stadium benches, mustiness evaluate the luck and return of 2 summations, X and Y. The firm is considering addng these assets to its diversified asset portfolio. To assess the return and endangerment of apiece asset, Junior gathered data on the one-year cash flow and beginning-and end-of-year value of individually asset everywhere the directly preceding 10 years, 1997-2006.\r\nThese data argon summarized in the table below. Junior’s investigation suggests that both assets, on average, will tend to perform in the afterlife just as they have during the old 10 years. He therefore believes that the evaluate annual return nominate be estimated by finding the average annual return for each asset over the historic 10 years.\r\nJunior believes that each asset’s risk can be assessed in two ways: in isolation and as naval division of the firm’s diversified portfolio of assets. The risk of the assets in isolation can be found by using the standardized deviation and coefficient of variation of returns over the past 10 years. The capital asset set model (CAPM) can be employ to assess the asset’s risk as part of the firm’s portfolio of assets. Applying some sophisticated quantitative techniques, Junior estimated betas for assets X and Y of 1.60 and 1.10, respectively. In addition, he found that the risk-free rate is soon 7% and that the market return is 10%.\r\n'