FINANCIAL MODELING

Financial Modeling

Financial Modeling

Requirement 1 and 2:

Descriptive Statistics

FTSE

Mean

3.714346848

Standard Error

0.00655003

Median

3.727205043

Mode

#N/A

Standard Deviation

0.068069905

Sample Variance

0.004633512

Kurtosis

-0.769484796

Skewness

-0.439612093

Range

0.275120856

Minimum

3.552351808

Maximum

3.827472664

Sum

401.1494595

Count

108

The aloft table of anecdotic statistics is assuming that beggarly amount of FTSE basis is 3.71 with the accepted aberration of 0.068. Moreover, the about-face of the amount is 0.004 which shows that there is little aberration in the banal amount of FTSE index.

Descriptive Statistics

Tesco

Mean

2.52557468

Standard Error

0.0111836

Median

2.563626954

Mode

2.62838893

Standard Deviation

0.116223382

Sample Variance

0.013507874

Kurtosis

0.787574519

Skewness

-1.140517619

Range

0.522552554

Minimum

2.165867268

Maximum

2.688419822

Sum

272.7620654

Count

108

The anecdotic statistics of Tesco is assuming that beggarly banal amount of Tesco is 2.52 with the accepted aberration of 0.116. Furthermore, the about-face of the banal amount is 0.013 which shows that there is top aberration in the banal amount of Tesco.

Descriptive Statistics

British Sky Broad casting Group

Mean

2.769752847

Standard Error

0.006945877

Median

2.755111596

Mode

2.737192643

Standard Deviation

0.07218367

Sample Variance

0.005210482

Kurtosis

-0.3522154

Skewness

0.043091767

Range

0.349561079

Minimum

2.578065884

Maximum

2.927626962

Sum

299.1333074

Count

108

The aloft table of British Sky Broad casting Group is absorption that beggarly banal amount of the aggregation is 2.76 which is top than the Tesco with the accepted aberration of 0.072. Furthermore, the about-face of the banal amount is 0.005 which reflects that there is not too abundant aberration in the banal amount of British Sky Broad casting Group.

Requirement 3:

Return of Tesco = 1.025930193 + -4.414487679 (Rf) + e

The aloft blueprint is assuming the corruption blueprint of the Tesco; furthermore, it can be empiric that there is a abrogating accord of beta amount of the accident chargeless acknowledgment of one ages treasury bill with the acknowledgment of Tesco.

Return of British Sky Broad casting Group = 0.996296358 + 3.650151964 (Rf) + e

The aloft corruption archetypal for British Sky Broad casting Group is assuming that there is a absolute accord of accident chargeless acknowledgment of one ages Treasury bill with the acknowledgment of British Sky Broad casting Group. This shows that CAPM for the British Sky Broad casting Group will be benign for the banal holders as the beta amount of British Sky Broad casting Group is absolute in adverse to Tesco whose beta amount is negative.

Effectiveness of the Capital Asset Pricing Model

The Capital Asset Appraisement Archetypal (CAPM) has been acclimated for over 40 years. It is generally adopted over added appraisement models. Why is this? Do the rewards of application CAPM outweigh the flaws or risks? In researching the CAPM, abounding flaws to the archetypal were acicular out. One being to point out flaws of the admission is one of its own developers, William Sharpe; who is revamping the aboriginal model. The flaws of CAPM accept to be centred on the assumptions or expectations of all theories. In adjustment to be an able appraisement theory, the archetypal accept to be constant with bread-and-butter theory. The CAPM does not do this. Because the archetypal follows a mean-variance approach, CAPM does not yield into application the acute bread-and-butter affairs such as abasement or agitator attacks.

Investors are not all the same. They alter in the bulk of accident they are accommodating to yield to what will be captivated in their portfolio (varying admixture of assets held). CAPM makes the assumptions that all investors are accommodating to accept the aforementioned bulk of risk, accept admission to the aforementioned advice apropos the bazaar and assets ...