RISK AND RETURN ANALYSIS OF SELECTED EQUITY STOCKS

STOCK MARKET

A stock market (also known as an equity market or share market), is a collection of buyers and
sellers of stocks. These stocks represent ownership interests in companies. These may include
publicly or privately traded securities. The New York Stock Exchange (NYSE) is an example of
a share market.

Usually, large companies will list their stock on a stock exchange because it makes their shares
more liquid (i.e., easy to buy and sell), which investors love. This liquidity also attracts
international investors.

As of 2017, the Global Stock Market is now worth a record .The NYSE has a market
capitalization of roughly $21 trillion and is the largest stock market in the world.

The BSE and NSE

Most of the trading in the Indian stock market takes place on its two stock exchanges. The BSE
has been in existence since 1875. The NSE, on the other hand, was founded in 1992 and started
trading in 1994. However, both exchanges follow the same trading mechanism, trading hours,
settlement process, etc. At the last count, the BSE had more than 5,000 listed firms, whereas the
rival NSE had about 1,600. Out of all the listed firms on the BSE, only about 500 firms
constitute more than 90% of its market shares.A stock, and a potential seller asks a specific price for
the same stock. Buying or selling at the market means you will accept any ask price or bid price for the
stock. When the bid and ask prices match, a sale takes place, on a first-come, first-served basis if there
are multiple bidders at a given price

Growing a Business With Equity

When learning how to value a company, it helps to understand the nature of a business and the
stock market. Almost every large corporation started as a small, mom-and-pop operation and,
through growth, became a financial giant.

Consider Walmart, , and McDonald's. Walmart was originally a single-store business in

Arkansas. Amazon.com began as an online bookseller in a garage. McDonald's was once a small
restaurant that no one outside of San Bernardino, California, had ever heard of. How did these
small companies grow from tiny, hometown enterprises to three of the largest businesses in the
American economy? They raised capital by selling stocks.
As a company grows, it continues to face the hurdle of raising enough money to fund ongoing
expansion. Owners generally have two options to overcome this: They can either borrow the
money from a bank or venture capitalist or they can sell part of the business to investors and use
the money to fund growth. Companies often take out a bank loan because it's typically easy to
acquire and very useful, up to a point.

Banks won't always lend money to companies, and over-eager managers may try to borrow too
much, which adds a lot of debt to the company balance sheet and hurts its performance metrics.
Factors such as these often provoke smaller, growing businesses to issue stock. In exchange for
giving up a tiny fraction of ownership control, they receive cash to expand the business.

Going public provides a company with money that doesn’t have to be paid back. It also gives the
business managers and owners a new tool. Instead of paying cash for certain transactions, such
as the acquisition of another company or business line, they can use their own stock.

RISK

Systematic risk, also known as “undiversifiable risk,” “volatility” or “market risk,” affects the overall
market, not just a particular stock or industry. This type of risk is both unpredictable and impossible to
completely avoid

Unsystematic risk is unique to a specific company or industry. Also known as “nonsystematic risk,”
"specific risk," "diversifiable risk" or "residual risk," in the context of an investment portfolio,
unsystematic risk can be reduced through diversification.

RETURN

A return can also be expressed as a percentage derived from the ratio of profit to investment.

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 REVIEW OF LITERATURE

A STUDY ON RISK AND RETURN ANALYSIS OF SELECTED STOCKS IN INDIA

DR .S .K rishnaprabha
To make comparative study of risk and return of selected stocks

To find Standard Deviation and Variance of the stocks

Methodology

Monthly market prices of leading sectors listed in BSE have been collected

Bnaking, IT, Automobile, Pharma, FMGC

FINDINGS

Long term investors were able to take advantange

As there is less fluctuations in shares when comapred to market as well as its prices the investors able to
predict about when the shares prices raise
A study on relationship between risk and return analysis of selected stocks on
NSE using capital asset pricing model
Dr. S Poornima and Swathiga P

Objectives of the study

To study on relationship between risk and return analysis of selected stocks on NSE

To compare average return with standard expected return using CAPM

To rank the companies on the basis of risk and return

Sampling Design

secondary sources like Internet, Money control, NSE and from books. The various
information about analysis Historical data was collected from website.

Tools

Average Return

Return

Expected return ( beta)

Findings

The study of this kind provides information about the performance of various stocks in the
market in terms of risk and return with the help of CAPM.

Researcher has selected only two sectors such as automobile and IT Sectors, where the
automobile companies has performed better and has increased growth in the market when
compared to IT Sector has negative average return
Risk and Return Analysis of Equity Shares in Banking Sector
P. Naveen
OBJECTIVES ·

To look and study the cost of share values amongst public and private banks in regard
of their risk and return.

To compute risk and return of equities, to assess this company is solid for investment to
investor.

To compare the firms risk and return and to state the best firm among the selected
firms.

RESEARCH METHODOLOGY

SAMPLE DESIGN DATA: For the investigation of risk and return banks equity costs are
selected.

METHOD OF SAMPLING: Deliberate sampling technique because it means to select the

banking area and particular unit.

SAMPLE SIZE: To analyse the risk and return analysis five banks are chosen.
METHODOLOGY RESEARCH

NEED OF THE STUDY

To know the financial position of the 9 Banking Companies and evaluate the risk and
return of that institutions.Rank the companies according to the risk and return analysis so
investors will invest his money in best company.

SCOPE

The historical data is purely helpful.

Limited time period.

In this only 9 banks are used

OBJECTIVES

• T o study the risk in securities

• To examine the return using few statistical tools

HYPOTHESIS

RESEARCH DESIGN

DATA COLLECTION

Through secondary data

Books , newspapers

SAMPLE SIZE

9 banks

RESEARCH TOOLS

Beta

Average Returns

Variance

Correleation