MONTH SALES January 20 February 21 March 15 April 14 May 13 June 16 July 17 August 18 September 20 October 20 November 21 December 23
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
The monthly sales for Yazici Batteries, Inc., were as
follows:
a) Plot the monthly sales data.
b)
i) Naive method.
ii) A 3-month moving average.
iii) A 6-month weighted average using .1, .1, .1, .2, .2, and .3,
with the heaviest weights applied to the most recent months.
iv) Exponential smoothing using an a = .3 and a September
forecast of 18.
v) A trend projection.
c) With the data given, which method would allow you to fore-
cast next March’s sales?
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