how can we help you on your risky capital assets pricing

1
It is in everybody’s wish to gain rewards from their investment funds. Given fluctuations in the market economy, this can affect your investment securities in a good or bad manner. There are two methods that the investor gets rewarded from funds they put in place for the securities. The first one is the time value of money where investors are compensated by placing investment funds or money over a period of time. This represented by the risk-free rate in the standard capital asset pricing model of investment portfolio theory. When you invest R500 in a mutual fund for 5 years and that the fund will grow by annual rate 10%. Then after a year the value of your fund will be R6 600 inflation-risk free. The second one is the systematic market risk which entails that the risk is correlated with the expected return on an investment. S T R A T E G Y & M A N A G E M E N T C O N S U L T I N G 718 Carlton View Building 36 Von Wielligh Street Marshall Town Johannesburg 2001 +27 84 088 6738 [email protected] C o n t a c t U s The market risk entails that higher gains from an investment are associated with taking more risk. In analysis of our 3 core securities which are shares, bonds and mutual funds, market risk remains the most important element. In most instances it is measured using the Standard & Poor 500 index of 500 listed performing stock companies in the world market economy. In the South African market, macroeconomic factors such as the real interest rate, CPI inflation and GDP economic growth affect these 3 securities. Now having this, how do we go on pricing these risky security assets? Our methodologies have been developed to let you know on which stock to invest and when to invest. For those who invest in mutual funds, the rewards VolT Analytics electric current for our African clients from stock performances especially on those which trade in shares will bring better rewards for mutual funds. To determine optimal close share price, we can consider market forces of demand and supply. The stock company’s opening price, earnings and dividends are important components to determine the close price in market fluctuations. Lower earnings hamper expected returns in shares. Also if the stock performs poorly, then this can also hamper it. Generally this represents aggressive stocks with a market risk rate above 1. When the market is favourable, aggressive stocks can lead to higher expected returns. Being the opposite, defensive stocks they come with low expected returns as the risk of investing is less. We deal with both complicated cases of defensive and aggressive stocks in bringing analysis for a wise investment decision-making. This is some consulting you have to… CONSIDER ALL OF YOUR CHALLENGES FINALLY OVER WITH THE AID OF WORLD CLASS CONSULTANTS HOW CAN WE HELP YOU ON YOUR RISKY CAPITAL ASSETS PRICING www.kmbusiness.co.za KM Analytics Kgano Mefolo PREFERED PARTNERS

Upload: km-business-analytics-pty-ltd

Post on 13-Apr-2017

46 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: How Can We Help You On Your Risky Capital Assets Pricing

It is in everybody’s wish to gain rewards from their

investment funds. Given fluctuations in the market

economy, this can affect your investment securities

in a good or bad manner. There are two methods

that the investor gets rewarded from funds they put

in place for the securities. The first one is the time

value of money where investors are compensated

by placing investment funds or money over a

period of time. This represented by the risk-free

rate in the standard capital asset pricing model of

investment portfolio theory. When you invest R500

in a mutual fund for 5 years and that the fund will

grow by annual rate 10%. Then after a year the

value of your fund will be R6 600 inflation-risk free.

The second one is the systematic market risk

which entails that the risk is correlated with the

expected return on an investment.

S T

R

A

T

E

G

Y &

MA

N

A

G

E

M

E

N

T

CO

N

S

U

L

T

I

N

G

718 Carlton View Building

36 Von Wielligh Street

Marshall Town

Johannesburg

2001

+27 84 088 6738

[email protected]

C o n t a c t U s

The market risk entails that higher gains from an

investment are associated with taking more risk. In

analysis of our 3 core securities which are shares,

bonds and mutual funds, market risk remains the

most important element. In most instances it is

measured using the Standard & Poor 500 index of

500 listed performing stock companies in the world

market economy.

In the South African market, macroeconomic

factors such as the real interest rate, CPI inflation

and GDP economic growth affect these 3

securities. Now having this, how do we go on

pricing these risky security assets? Our

methodologies have been developed to let you

know on which stock to invest and when to invest.

For those who invest in mutual funds, the rewards

VolTAnalytics electric current for our African clients

from stock performances especially on

those which trade in shares will bring

better rewards for mutual funds. To

determine optimal close share price,

we can consider market forces of

demand and supply. The stock

company’s opening price, earnings and

dividends are important components to

determine the close price in market

fluctuations.

Lower earnings hamper expected

returns in shares. Also if the stock

performs poorly, then this can also

hamper it. Generally this represents

aggressive stocks with a market risk

rate above 1. When the market is

favourable, aggressive stocks can lead

to higher expected returns. Being the

opposite, defensive stocks they come

with low expected returns as the risk of

investing is less. We deal with both

complicated cases of defensive and

aggressive stocks in bringing analysis

for a wise investment decision-making.

This is some consulting you have to…

CONSIDER ALL OF YOUR

CHALLENGES FINALLY OVER WITH

THE AID OF WORLD CLASS

CONSULTANTS

Within these industries, we do

consulting with most of the well-known

South African and International brands.

We offer them a range of services that

HOW CAN WE HELP YOU ON YOUR RISKY CAPITAL ASSETS PRICING

www.kmbusiness.co.za

KM Analytics

Kgano Mefolo

PR EF E RE D

PA RT N E RS