Endicott M-FINC300-5.docx - 1 Week 5 Assignment Mary...

1
Week 5 Assignment
Mary Endicott
American Public University
FINC300: Foundations in Financial Management
Dr. Edward Balli
October 10, 2021

2
Week 5 Assignment
Exercise 1 Chapter 18
In Chapter 18, we learned about the many types of risk that investors face in hopes to
receive a profitable return for that initial investment. How much and what type of risk is right for
your portfolio. There is always risk associated with an investment even with the so called risk
free rates can sometimes hurt over confident investors. In exercise one of Chapter 18 the
company ENI provides data over the course of a year to show the expected rate of return based
off of the absolute risk. The Returns on the ENI share come out to 2.2% based off of the formula
17.30/16.93-1=2.2% as shown in the text. The returns on the Italian index show that ENI risk at
4.59%. The total index risk is 7.35%, This basically shows that ENI is a high risk for an
investment regardless of the return of investment and this would be a good time to take a look at
the market as a whole in hopes of making a big return and not just based off of one induvial
stock.