Analysis Essay on Investment Risk/Return

2021-06-17 05:49:59
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Carnegie Mellon University
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Apple Risk-Return Relationship

In the analysis of risk/return, there are various issues to consider to ensure that companies are making profits and that they can become beneficial to investors. In the analysis of risk/return in Apple, Inc., it is evident that returns from investments made in the company are very high and this is apparent in that the investments from the company is 53,394 and Shareholders Equity is 119,355 thereby making the Rate of Return to be 45 percent (Markowitz & Blay, 2014).

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Return and Risk: Caterpillar INC

An analysis into of risk/return for CAT, one issue that helps in explaining the situation is the US bond issues, and the same implies that spread for 10 percent expected loss for the company needs to be 15.5 percent. It is in this manner that makes the rate of income be 2,102 and the Shareholders Equity to be 14,885 leading to the Rate of Return of 14 percent (Bodie, 2013). Such a Rate of Return is very high for an organization that is well established and can help in the delivery of both organizational and societal goals through the improvement of living conditions of the population.

Rate of Return: Consolidated Edison

The third company of interest is Consolidated Edison, data from financial documents reveal that although the rate of returns is not very high, the company is very promising as it is well-performing in the industry. From the financial data of the company, the net income of the company is 1,193 and the Shareholders Equity is 13,061 thereby making the Rate of Return to be 9 percent (Levy, 2014). Such data shows that the company is bound to have positive growth and that there should be encouraged investment into the company.

Risk Return Relationship: Northern Trust

Fourth is the examination of Northern Trust, and the same proves to be of great importance in that there is one advantage in the company because there are various investment opportunities thereby making it possible for investors to choose the right investment mix. In this manner, the right investment mix leads to higher returns while poor investment risk leads to loss of money. It is because the company has a Rate of Return of 11 percent as the Net Income is 974 and Shareholders Equity is 8,706 thereby making it worthwhile and promising to invest in the company (Bodie, 2013).

Rate of Return: Macy’s, Inc

Finally, an analysis of portfolio returns for Macy’s reveals that such portfolios are calculated net of all expenses suggesting that the company takes an analysis of expected costs and expenses. In the company, there is a Net Income of 1,072 where Shareholders Equity is 4,253 leading to a Rate of Return as high as 25 percent (Saunders, 2014).

References

Bodie, Z. (2013). Investments. McGraw-Hill.

Levy, H. (2014). Risk-Return Analysis: The Theory and Practice of Rational Investing.

Markowitz, H., & Blay, K. (2014). Risk-Return Analysis: The Theory and Practice of Rational Investing, vol. I.

Saunders, A., & Cornett, M. M. (2014). Financial institutions management. McGraw-Hill Education.

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