Minimising investment risk in sainsbury and halfords - Free Essay Example

Sample details Pages: 7 Words: 1964 Downloads: 3 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? In the modern world, companies and share holders aim is to gain maximum profit at minimum risk. Risk can be controlled, if thorough understanding of market is done. Risk also plays an important role in corporate finance both for company and investors. Don’t waste time! Our writers will create an original "Minimising investment risk in sainsbury and halfords" essay for you Create order Companies face inconsistency in project cash flow, on the other hand investors faces unpredictability in capital gains and dividends (Watson and Head 2010). A Portfolio can be defined as a combination of securities. Portfolio analysis is a method for selecting the finest range that gives maximum return at minimal risk at various uncertain environments (Huang 2010). For the purpose of the assignment the author had selected one of the well performing retailer M/s Sainsbury and leading Automobile accessories retailer M/s Halfords. In this part of assignment share prices of Sainsbury and Halfords are taken on monthly basis for five years (December 2005-November 2010) and analysis is made [Refer Table-1 in Appendixes]. Mean,Variance and Covariance Based on the above table, the mean of Halfords equity is 0.002400 and that of Sainsbury is 0.002046. Variance measures the volatility from an average. Volatility is a measure of risk, it helps determine the risk an investor might take on when purchasing a specific security (Investopedia.com No Date). The variance of Sainsbury (0.004600) is higher compared to that of Halford (0.004293). Covariance is basically a number that reflects the degree to which two variables vary together (Howell 2008, p.180) Positive covariance indicates that asset returns move together. A negative covariance means returns  move inversely (Investopedia.com No Date). Covariance between Sainsbury and Halford gives a positive value of 0.001572. Descriptive Statistics Risk on investment is measured by standard deviation (ÃÆ' Ãƒâ€ Ã¢â‚¬â„¢) of the return on share (Watson and Head 2010). The standard deviation for Sainsbury is 0.0678218, which is higher compared to that of Halford 0.0655209, clearly stating that higher level of risk on Sainsbury equity. A measure of the degree to which a distribution is asymmetrical (Howell 2008, p.49). Measure of symmetry is defined as skewness. Positive skewness indicates that there is a greater probability of getting higher return. Negative skewness indicates that there is a substantial probability of a big negative return. (advfn.com No Date). The Skewness of Halford is 0.065 and that of Sainsbury is -0.840. Kurtosis refers to the scale to which the curve is peak or flat (Rubin 2010). Halford and Sainsbury have positive Kurtosis of 0.713 and 2.339 respectively. Positive kurtosis indicates a peaked distribution (itl.nist.gov No Date). The correlation between Halfords and Sainsbury is 0.01(Refer Correlation Table in Appendixes). Risk Free Rate Risk free rate of return can be defined as the return that investors acquire without any risk of losing money (Scott[online] 2010). For the purpose of finding out the monthly risk free rate, we had taken the yearly interest rate for 3  ¼ % Treasury Gilt Maturing on 07/12/2011 (United Kingdom Debt Management Office [Online] 2010) Efficient Frontier Efficient frontier can be defined as situation of maximum return from minimum risk (businessdictionary.com No Date). Different combination of securities creates different level of return. The efficient frontier details the best of these security combinations (investinganswers.com No Date). The risk free rate for investing on the UK guilt is 0.00051573 which gives maximum return with minimum risk. Minimum risk is observed at the ratio 55:45 that of Halford and Sainsbury. Curve above this point can be termed as efficient frontier. Investment Suggestion Risk and return plays an important role for investment in a company. Diversification of risk can be done by investing in different portfolio. As explained earlier efficient frontier details the efficient combinations of risk and return. Based on the analysis of above data the best combination of investment is 65 % on Halfords and 35 % on Sainsbury. As per Markowitz theory the best method of investment is to diversify the portfolio. PART -B Company Overview Sainsbury PLC is one of the biggest retailers operating a total of 890 stores comprising 547 supermarkets and 343 convenience store. It equally owns Sainsbury Bank with Lloyds banking group. Sainsbury are also into property business having joint venture with Land Securities Group PLC and The British Land Company PLC (j-sainsbury.co.uk 2010). Halfords is the UKs leading retailer in Automobile maintenance and accessories. Halford portfolio comprised of 469 stores in UK and Republic of Ireland. Halfords differentiate itself from other competitors by having broad product range, strong brand recommendation, competitive pricing (achieved through scale of purchasing power) and better customer relation (halfordscompany.com 2010). Diversification of Risk Modern portfolio theory explains the ability of investors to diversify the risk. It also suggest that investment on any of the portfolios that lies in the efficient frontier gives maximum return at minimum level of risk. Risk can be classified into systematic risk and unsystematic risk. Systematic risk details how the returns on the share are affected by factors such as business cycles, government policies and change in interest rates. Systematic risk is unavoidable or can be specified as market risk. Unsystematic risk is a specific risk for a particular share or risk of the individual company. Unsystematic risk occurs when the company is performing badly or going into liquidation (Watson and Head 2010). Criticism and Risks of Companies Wecker [online] (2009) states that economist criticises modern portfolio theory for several problems. Firstly they argue that the forecast are inaccurate as it refers to historical data. Based on the historical data the future returns cannot be predicted. Error in estimation of future returns has enormous effects on the Mean-Variance optimization and asset allocation. Secondly the returns are not normally distributed in reality. Thirdly lot of efforts are required to evaluate the historical data. For example, for 10 securities one to need to find out 500 values and analyse about 10 equations. Additionally Watson and Head (2010) explain that practical application of portfolio theory is associated with problems. Practically it is difficult to assume that investors can borrow at risk free rate, since individuals and company are not risk free. Problem exists in identifying market portfolios as it require knowledge of the risk and return on risky investment and their corresponding co rrelation and coefficients. Due to higher transaction cost it will be expensive for smaller investors. Composition of market portfolio changes eventually, these changes shift the risk free return on the efficient frontier. The systematic and unsystematic risk of Sainsbury and Halfords are detailed below. Major incident or act of terrorism, impact of the economic and market risk, environment, sustainability, financial strategy and treasury risks, interest rate risk, foreign currency risk can be considered as systematic risk for both Sainsbury and Halfords. On the other hand new business strategy adopted by the board, reputation risk, potential fraud or dishonesty by employees, health and safety risk , IT and operational infrastructure risk, product safety risk and regulatory requirements particularly in relation to planning, competition, employment, pensions and tax laws   can be considered as unsystematic risks. Reliance on foreign manufacturer, responsiveness to changi ng customer preference, liquidity risk and capital management risk are also considered by Halfords as unsystematic risk (j-sainsbury.co.uk, halfords.annualreport2010.com 2010). Despite of better sales figure the share prices of Sainsbury fell by 2.5 p from 387.1 p, on October 2010 (Lowery [online] 2010). New non executive chairman had been appointed by Sainsbury on October 2010. This change in management strategy can make the sales and share prices rise or fall (advfn.com No Date).Based on the above facts the investors cannot rely on Markowitz theory. Portfolio theory does not comment about systematic risk. The systematic risk such as major events or act of terrorism can make the share prices falls across the world. E.g.: 9/11 terrorist attack made the share prices falls around the world (Kitzer [online] No Date). Portfolio theory relies on historical data and efficient frontier is drawn based on that. Smaller investors cannot rely on this type of analysis for decision making. PART -C Briec et. al (2007) on his management science article recommends nonparametric measurement approach for selecting portfolios having problem in mean, variance and skewness space. Markowitz gave a theory of portfolio management in 1952. Modern portfolio theory balances the risk and return of the shares in a static context. This theory maintains strong dependency on probability distribution and utility function. Diagonal and CAPM models were developed by various economists in order to calculate the risk and returns. Despite of all these tools, Markowitz model is given more preference. Problem with the parametric approach is that, it depends on the mean and variance, of the random variable distribution. It is valid only when asset processes are normally distributed and investors have quadratic utility functions. Many ancient studies prove that generally portfolio returns are distributed normally. Preference is given to positive skewness by many investors. Third derivative of unit y function is related to preference of the positive skewness. When decisions are made frequently and the distributions are compact, only then mean variance approach can be used. Due to the lack of accuracy in the quadratic approximation, limited portfolio decisions with finite time interval should use higher moments. In order to overcome the computational problem associated with the above approach the primal and dual approaches were developed. The primal approach determine MVS portfolio via a multi objective programming approach. The dual approach starts with the measurement of indirect MVS utility functions and determines the ideal portfolio using parameters of risk and skewness. Geometric interpretation of portfolio frontier is difficult to develop, as dimensionality of portfolio selection increases. This leads to difficulties in the selection of preferred portfolio in the boundary points. As there is less importance to represent MV portfolio and there is no way by which MVS po rtfolio frontier can be represented in three dimensions. Distance function can be employed in consumer theory for positioning of bundle of goods with respect to that of target utility level. Using production theory Luenberger (1995) introduced shortage function with respect to distance function. Distance function looks on reducing the input and expanding the output. Thus a distance function represents multidimensional choice set and also positions point closer to the boundary. Generally points beneath the frontier are inefficient. To project any portfolio on the three dimensional MVS frontier, a shortage function can be used. As suggested by management studies, shortage function can be used to project portfolios which show improvement with respect to risk, skewness and return. The following targets are achieved by economist, using shortage function in theory as well as in practice. Its rate portfolio performance by measuring distance between a portfolio and optimal bench mark projection onto the primal MVS efficient frontier. it provides a non parametric estimation of an inner bound of the true but unknown portfolio frontier, it judges simultaneously return and skewness expansion and risk contractions and it provides a new, dual interpretation of this portfolio efficiency distance. Primal approaches are capable of selecting a portfolio among many from Pareto efficient MVS frontier. It can be said that there will be some points on the MVS frontier which will not be favourable from the investors point of view. Recently dual approaches are affected by lack of knowledge, preference for risk and skewness. Global optimization algorithm can be used to solve MVS decision problem. Shortage function looks for investors preferences and can identify best portfolio. By opting a micro-economic tool, such as shortage function will give big advantage in integrating primal and dual approaches. As said by Prakash et.al (2003) and Lai (1991), the MVS p ortfolio and MV portfolio are not the same. They differ from each other in the sense of return, risk and skewness. MVS portfolio will have higher risk with the extend of higher skewness compared to MV portfolio. Also as compared to MV portfolio, MVS portfolio has low returns at the extend of high skewness. The three dimensional MVS spaces shows us a way of portfolio selection approach with the help of tailor expansion. It can be concluded that non-linear programming approach act as a general frame work for any portfolio including traditional portfolio.

Drinking Water Lead Contaminated Water - 1239 Words

In Flint Michigan, nearly 100,000 residents are drinking lead contaminated water. (QuickFacts). We are not discussing a third world country on the other side of the globe, but rather a city in the United States. It would seem as though the land of opportunity, and the land many flee too should be able to provide clean drinking water. However, in the United States 310,000 children aged 1-5 are found with an unsafe level of lead running through their blood stream. (Lead 8). In Flint alone, 8,000 children under the age of six have been exposed to harmful levels of lead. The agencies and government that was put into place to protect the public from these issues is often turning a blind eye, and often allowing the public to continue to drink this contaminated water. A major part of the problem is that lead water pipes run throughout cities across the United States. 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Myers Briggs Type Indicator and Promotion

Question: Discuss about the Myers Briggs Type Indicator and Promotion. Answer: Introduction: The following report is going to succinctly elucidate the career planning option for the marketing aspect. I aspire to see myself as a marketing executive and strategic marketing planner in a multinational company. in this aspect I have planned certain strategies. My career option has always been in a same way in bringing the innovative process in selection of future path. Since I have pursued my study in marketing management and have gained expertise in that sphere, I have acquired substantial knowledge on that field. The very fast way to be a marketing executive and a marketing strategy planner can be derived from the empirical knowledge of the core market values of an organisation. It needs profound and skilful insight of the person who is deployed for the work. In terms of the strategic planning, I have moulded myself in such a way that any sort of product or service marketing can be accelerated and executed with a fruitful ease (Faludi 2013). The following report is structured in a certain way that exhibits different categories of the career planning methodologies and the theories. The career planning procedure strictly follows different theories of career development (Lent 2013). Resume writing: Name : Mobile: Email: Objective: Upon the successful completion of study, I shall be able to write a professional resume that represents the skill of mine, experience and academic strength and background. Academic Details: Career Preparation: Analysing skills and ability required for creating a strong marketing career option and creating them to my own skills: I have set my skills during my academic sessions. I consider myself to be innovative, highly confident while communicating with people, able to catch the psychological level of the receiver of my message. Using of Career Planning Process: The career planning process is going to be Demonstration of Job seeking skills: my job seeking skill only remains high level of confidence and understanding of required subject. I have the ability; so far I have judged myself, to handle the difficult situation with calm attitude without being perplexed in my deed and decision. I try to hit the best job offer with ease so that no hazardous time is spent without any productivity. Using MBTI tools: Myers-Briggs Types indicator is an assessment tool that is used to evaluate the self strength of person. MNTI tool is widely used in the world among innumerable business aspirant. The basic four parameters for the test are as follow: Focus of Attention Retrieval of Information Decision making Process Dealing Capacity (Furnham and Crump 2015) There are two types of attention focus- extroversion and introversion. In my case I have analysed that I am quite extrovert in focusing my attention level. I do not seem to be chained while creating attention of the people around me. I am often called out- spoken however, I do consider it as my skill. The skill of retrieval off information is based on two different sets. These are sensing and intuition. I believe that I own the first set as I do not have intuition power. I sense information with the help of my understanding of the surrounding and the subject matter I am entitled to deal with. Though there are two different ways of making decision based on the retrieved information- the way of thinking and the way of feeling, I prefer to make my decision depending on both of the ways. I try to judge the situation thus validating thinking skills of mine and then make my decision what I feel best. I deal with the world with perseverance. I do not believe in judgment as judgement often i s falsified. Having realised the above characteristic traits I plan to use the strengths in need. Since I opt for marketing sector, I further plan to advance my strength in different situation- May that be adverse or that might be positive to the person. Different theories have different characteristic traits that help understand the behavioural pattern of a professional. S most of the theories have focused on the psychological and behavioural characteristics of a person that helps him or her develop his or her personality in accordance with the chosen career option. I have adopted the trait and Factor theory while determining my career option as a marketing executive and strategic advisor (Brown 2015). Justification of the Theory Chosen: Trait theory was first developed by Parson in the year 1909. According to the theory, there are three step schemas that form the basis of the first theoretical scaffold of a career plan. Most of the career planning methods are based on trait and factor theory. The theory was developed in the foundation of vocational guidance movement. Having analysed the strength of personality I can state that the theory gives me option and scope to change the shortcomings in to strength. Identification of my own short comings has been easy while using the six schema model of Parson. It has been proven so authentic that the government of New Zealand has chosen the model as the prime instrument to advice the youth in order to go for their most suitable career option(s). According to Frank Parsons, the idea of career should encompass the talent and passion a person builds inside him or her. For example, a girl who has the talent of playing football should opt for football as a career. Hence, personali ty, skill and talent, the three schema of a person lead him or her towards best opportunity. I have judged myself fit for marketing since I have good communication skill, and skill of reading ones mind. Marketing needs a personnel to be smart in terms of judging the psychology of a customer and the motive of the customer behaviour; in terms of grabbing proper and most suitable opportunity of the market growth. While understanding the entire marketing option, I have realised that I own certain skill of creating value of the market. Though my basic career plan is captivated in being a marketing executive, I want my career to be advanced to become an organisational leader. To be an organisational leader in the field of marketing means showing required path to hundreds of subordinates. Though I have used the word subordinate I do not strive to become a leader who considers the juniors inferior to the leader. I believe in maintaining democracy in a business organisation. This is how I can become a leader who is loved by everyone. Information Integration and Goal Setting: Long Range Career Goal: I plan to put my career in a long range goal. My career plan does not limit itself in a short run framework. I do not want to see myself becoming established in a short term position. Hence, I further focus my career plan in to the level of being an organisational leader. The leadership effort needs to be strengthened as I still have certsin drawbacks. I look forward to become a marketing executive so that I can achieve certain training with the help of live task in the market as I value the struggles that an executive faces in his or her initial stage of working. My interest in this field includes interaction with people, client handling pressure situation, learning outcome from daily on field tasks. This career would allow me to become highly capable of becoming a business leader as I would develop a firm concept of the market that I would deal with while working. Personal Strength Need for Change I need to change some of my attitudes towards my work order. I often become confused when I receive loads of prioritised works. I have the set back to select the top most priorities. I need t change the level of management and I ought to become skilful in multi tasking methods. Favourable External Condition Unfavourable external Condition Growing competition in among the companies in exploiting best of the labour market. It would help me creating best chance for getting a job in a business organisation. It would give me opportunity in choice making process pertaining to the best companies to work with. Weakened labour market and less opportunity of working in a business organisation. Strategies to reach Goal Availability of Resource: I would prefer to choose multi strategy method in fulfilling and capitalising my career plan. First, I would decide to give myself extra edge by edifying with core knowledge of the marketing arenas. Moreover, I would prepare a chart for the best and not so recognised companies. I would prefer start my career with the latter one as I would have the better opportunity to prove myself in creating market scope for the new entry organisation. Resources can be judged in different ways. First, monetary resource, second academic resource and third, professional resource. More than academic resource I would prefer to go forward with the professional resource as it will provide me with direct experience of working. The work experience can be counted something more valuable than the academic experience as it involves direct tasking method. Conclusion: As per the discussions on the career planning options, marketing personnel needs to have different career planning opportunities if the skills are duly set and linked with the set of goals. The goals encompass the plan for the dream job and creation of competencies. This is how the external and internal strength of a person can be addressed so as to construct a platform for the dream career. Recommendation: Discrepancy and ethical lacuna is obvious while designing a framework for ones career planning. The first and the foremost criteria for the framework are to concretise the skills and goals so as to create a bridge between these two components. If goals are properly associated with the skills, it shall be easier for the aspirants to meet the target. In marketing sector, the growing demand of consumer products also helps in the growth of employment as the sale and marketing strategies need skilful mind and confident attitude. The future generation should take care of these two basic components. Reference: Brown, D., 2015.Career information, career counseling and career development. Pearson. Faludi, A., 2013.Essays on planning theory and education(Vol. 20). Elsevier. Furnham, A. and Crump, J., 2015. The Myers-Briggs Type Indicator (MBTI) and Promotion at Work.Psychology,6(12), p.1510. Hung, K. and Petrick, J.F., 2016. Developing a measurement scale for cruising motivations. Lent, R.W., 2013. Career?life preparedness: Revisiting career planning and adjustment in the new workplace.The Career Development Quarterly,61(1), pp.2-14. Ong, J.C., 2017. Bringing MBTI to closure and mindfulness to life. Patton, W. and McMahon, M., 2014.Career development and systems theory: Connecting theory and practice(Vol. 2). Springer. Sharf, R.S., 2016.Applying career development theory to counseling. Cengage Learning.

Urban Evangelism Essays - Urban Studies And Planning,

Urban Evangelism Go Ye Into All the World and you will be my witnesses in Jerusalem, and in all Judea and Samaria and to the ends of the earth. Acts 1:8 This commandment, given by Christ to his apostles, was one of action. First they were to go into their homes, or Jerusalem, then to their community, or Samaria, and then finally to the ends of the earth. The Christian church of today, however has lost sight of that directive. For too many years now we have sent thousands of missionaries abroad while ignoring the mission field next door. While many may witness in our homes few move out into the community, especially when that community is in an urban area. Joshua 8:7 says take the city. The LORD your God will give it into your hand. Now more than ever this call to take the city must followed by believers. The current population of the world is 5,983,000,000 (World POPClock, 1:57 p.m., April 28, 1999). Of those estimated 6 billion people, two thirds of them will be living in cities by the year 2000 (Giradet 1). By ignoring the call to evangelize the cities for Christ, upwards of 4 billion people my be lost. The shear numbers involved in urban evangelism should serve as all call to arms. The church must be involved in the cities of the world both physically and socially. Amos Howley says that Every social act in an exercise of power, every social relationship is a power equation (Hurst 92) Within that power equation, who better to serve at a catalyst for social action than the creator of power Himself. The Holy Spirit will enable the saint, but to effectively minister in the urban culture one must know the history, understand the lifestyle, and apply cultural relevancy to each and every action. First, a definition of exactly what the term urban means is essential. Benjamine Tonna in his book Gospel for the Cities gives a definition of urban that encompasses many of the far reaching aspects of this illusive term. Urbanhere covers all the things that characterize the fact of the metropolisThe central interest is in the process of urbanization, which can be defined as the phenomenon by which millions of men and women move en masse from rural to metropolitan areas, and - more importantly - which transforms the lifestyle (Tonnna 5). It is difficult if not impossible to characterize an urban area strictly in term of numbers or density. It requires far more than quantitative analysis but also qualitative analysis to understand the culture and lifestyle as well as the pure data. With this definition in mind, the history of the migration to cities must also be more fully understood. The industrial revolution spurred on a mass migration to the cities in the early part of this century. As jobs in manufacturing began to appear in large clusters at a particular city so did thousands workers to fill those positions. The boom in cities occurred at an astounding rate. while the total world population doubled during the first half of the present century, that of the cities with a population of more than 100,000 quadrupled (Tonna 49). This boom began in the United States and continued throughout the world for the next 30 to 40 years. Although the interests of the large corporations, and capitalization in general were well served through the advent of the city, more often that not the city was not a place where individual needs were met. The process of urbanization is unique from all other cultural migrations in that it was the creation of a privileged few for monetary gain and not a migration as a reaction to a social need or problem as had been the pattern in the past. Cities such as Madras and Calcutta, Hong Kong and Singapore were born as support bases for imperialist interests; they exercised commercial, administrative, and military function. These cities, and many others, in Latin America and Africa as well, sprang up from the concerns of the European population residing in them and the interests of the overseas metropolitan centers - mot from the needs of the local population (Tonna 11). This kind of development