Empirical Finance Coursework Essay Example | Topics and Well Written Essays - 1000 words

Empirical Finance Coursework - Essay Example These risks emerge due to the uncertainties associated with the future. Therefore, investment basically is a risk-inclusive undertaking, and individuals’ levels of risk taking vary depending on investment instruments and the expected returns. Successful investments must take into account relevant strategies that should aid the realization of the investment objectives. A number of investment strategies in the UK investable universe are evaluated and assessed for their performance: Small Cap vs. Large Cap Portfolios Volatility of returns is the principle determinant of whether a portfolio is a small cap or a large cap. The size of a company is determined by its market capitalization, a situation that further defines that company’s market cap. A small cap portfolio is defined by a market capitalization that is between 300 million and 2 billion. An amount less than this will enter the portfolio into a lesser marker cap, normally referred to as the micro-cap. Small cap portf olio is characterized by high volatility in the market, and the price of the stock keeps fluctuations due to the underlying market uncertainties. Large cap portfolios on the other hand are the direct opposite of small cap portfolios. Large cap portfolios are less volatile in the market, and the prices of these stocks are therefore relatively constant over time (Fama and French, 2011, p.46). Investors that prefer less volatile portfolio often opt for the large cap portfolios. However, this does not rule out risk prevalence in investment. Large cap portfolios are characterized by market capitalization of about 10 billion and above. This kind of portfolio experiences hardships in in and out trade activities. As a result, price swings are minimized, leading to the realization of consistency in its price. Value vs. Growth Portfolios Investors have different motives for investment. While some opt to invest in value stocks, others prefer growth stocks. These stocks share some common charac teristics, but their distinguishing features outline the outstanding difference between the two stocks. The valuing of stocks is done with regard to market trends, incorporating risks and benefits to the value of the stocks. Investors prefer undervalued stocks, so that once the prices of the stocks changes, they are in a position to reap huge investment returns. Value stocks are depict the flowing features: less than 10 % price earnings ratio, less than 1 price to earnings growth, current assets that are twice the current liabilities, matching debt and equity and share prices that are at par with the tangible book value or even less (Fama and French, 2011, p.53). Growth stocks are defined by their outstanding feature of expansion and ability to generate more and more returns with time. They are referred to as growth stocks because they have the ability to diversify the underlying portfolio. Growth stocks are characterized by a growth rate that is strong and reliable. This is to say that the portfolio remains vibrant and beneficial over a long period of time. It is important to account for the fact that different companies grow at different speeds and rates, and it essential that an investor be accommodative in regard to growth portfolios. Equity returns are also strong with growth stocks. Company-industry comparison is used to determine the strength of the stock returns. Growth stocks are characterized by per share earnings that surpass the industry’

Country Assessment of China Research Paper Example | Topics and Well Written Essays - 500 words

Country Assessment of China - Research Paper Example Because China culture is largely based on Confucianism, Chinese people show great respect for their elders (Kwintessential). Chinese are more of a collectivist society; as such, an individual would sacrifice his or her needs for the group’s objective. Face is very important in Chinese society because no one likes to embarrass their superiors. Also, most communication in China is done through non-verbal communication (Kwintessential). Body language is just as important as what is spoken. Any overaggressive behavior is likely to be frowned upon as losing control is to lose face. Because Confucian philosophy believes that all relationships are not equal, there are differences in the way the employers and employees should be treated (WorldBusinessCulture). Seniority is very important when it comes to Chinese business management practices; managers demand respect from their employees in the same way that an old person would from a young person. Business is China is very formal; managers inform their subordinates what task they should be doing, and there are never any complaints from the employees. A manager is like a father figure to his employees (WorldBusinessCulture). The manager expects loyalty and commitment, and in return he will offer support for his employees. Because the Chinese government is Communist, it takes a hard line when it comes to business. This has eased up in recent years as the government has opened up the country to foreign investors. The Chinese economy could now be thought of as capitalist, even though the government is still Communist. The managers of most large Chinese domestic firms are linked in some way to the ruling Communist Party, and the government often places pressure on businesses to go a certain way (WorldBusinessCulture). Besides this, the United States of America has long held the view that the Chinese government manipulates its