Finance Assessment Essay Example | Topics and Well Written Essays - 3250 words

Finance Assessment - Essay Example In this concept one stocks performance is benchmarked by the performance of another stock. The returns which will be generated are compared relatively to other stocks of similar nature operating in the markets (Gitman, 2003). The major difference between both the absolute and relative return is that absolute return is concerned about the returns which are generated from one particular asset or stock, whereas in relative return the stock is compared or benchmarked with the measures of other stocks. The most debated concept of Security Analysis and Portfolio Management is about the understanding whether a portfolio has been properly analyzed for the returns which the investors will get or understanding the relative performance of that particular stock in the markets (Deloitte, 2010). The investors need to redefine the definition of risk, how it is measured and how to deal with it and for this reason; investors create a portfolio of different stocks and securities. Alpha and Beta are th e tools used by the investors to assess their portfolios and measure whether or not their investments are generating the expected returns considering the risk they are taking. Assessing a portfolio in terms of both Alpha and Beta, the investor will have more control over the portfolio and he will maximize the returns by minimizing risk (Koba, 2012). The measurement of an investment on risk adjusted basis is called Alpha. Investors seek to minimize risk and increase returns (Loth, 2007). The stock prices are subject to volatility. The price risk associated to a portfolio determines the return expected by the investor. The additional return which an investor gets on a portfolio apart from the benchmark set is called Alpha. A negative Alpha of a portfolio shows underperformance (Faulkenberry, n.d.). Beta is a tool which is used to measure the volatility of risk associated to a portfolio as compared to the performance of the market. Regression analysis is used to calculate Beta. In othe r terms Beta is the propensity of investment return to respond to the market volatility. The lower the value of Beta, lesser will be the volatility of the stock with respect to the market. Both Alpha and Beta are popular tools used for the measurement of volatility. Alpha compares the asset returns on the investment to the risk adjusted expected returns whereas Beta is the movement of the asset along with the benchmark that has been set by the market. Alpha is very important for assessing the growth and the returns that are associated to the portfolio. It depends on the structure of the portfolio, the investor and the market which is being analyzed that which factor either the Beta or the Alpha will be critically significant for the investor (Seeking Alpha, 2011). With the varying school of thoughts the perceptions of the importance of Alpha or Beta vary. Alpha and Beta alone do not possess the potential to assess the risk instantly and adjust the portfolio for the returns. Alpha al one is not sufficient to assess the skills which are derived from the leverage of the portfolio. It is not suitable for a risk averse investor and may end up being a misleading performance measure for the investors. The value of Alpha itself is not sufficient for the assessment of the stock but it can be used if a benchmark of the portfolio is set. Beta does not possess this benefit. The direction of the market cannot be assessed by the benchmark Beta set for the portfolio. The use of Alpha and the speculations made by using it are very consistent. The

Loss Prevention Term Paper Example | Topics and Well Written Essays - 1000 words

Loss Prevention - Term Paper Example It was up approximately 15% from the previous year. This was the worst year and appeared to have been precipitated by the poor economic situation. According to Risk and Jillings (2011) shoplifting is on the increase due to hard times. In New Zeal children were being sent to still while their parents waited outside the store (Risk and Jillings 2011). Consequences of Inventory Shrinkage Inventory shrinkage due to shoplifting not only erodes profit margins but it also results in a loss of sales. This happens because store personnel do not realize quickly enough that shelves are available and that certain goods are not represented on these shelves. When a customer does not see the goods they want on the shelves they end up going to another competitor to purchased the items. Most Popular Item Shoplifted According to Bullock (2010), the UK-based Center for Retail Research indicates that cosmetics were the second most popular items stolen. The most targeted products within this group are ma keup, perfume, hair care, skin creams and tanning product. According to Barnfield of the Center for Retail Research (qtd. in Bullock 2010) these thieves are brand conscious as they focus on top brands like Oil of Olay, CoverGirl and Bumble and Bumble. Bulluck (2010) indicated that a Florida investigation described as Operation Beauty Stop uncovered a ring which sold items stolen from popular retailers such as Wal-Mart, Target and Sweetbay. These items were then offered for sale on EBay. Measures to prevent loss A number of measures can be used to prevent loss. These include the employment and use of security equipment. Although these measures are not foolproof they provide a means of reducing the cost of theft to companies and reduce the corresponding increase in selling price which arises from this type of shrinkage. Loss prevention officers According to McGoey (n.d.), retail loss prevention is a profession that has the responsibility of reducing inventory losses at retail stores. Loss prevention officers are the persons who manage security program in the stores. Their job is to reduce inventory losses that are not only caused by employee theft and shop lifting but due to fraud, vendor theft and accounting errors. They interact with both customers and other store employees whenever any such events occur. They have to exercise a certain level of professionalism when dealing with matters like these and so they have to be properly trained. Loss prevention officers are required to be observant, they should be able to think quickly and use good judgment to solve problems. They should be able to blend into the crowd so that they are not easily identified by would be shoplifters. Sensormatic security tags Sensormatic security tags are widely used in retail stores. They are pinned to merchandise and are not taken off until the customer pays for the merchandise at the cashier. The tags work in conjunction with checkpoint security systems and are further explained belo w. Checkpoint security systems Check point security systems involve the use of sensors called electronic article security (EAS) antennas (Loss Prevention Systems, Inc 2011). These sensors/antennas are placed at the entrance and exits points of the stores. They pick up signals from security tags on clothes, shoes, bags and other store merchandise. Therefore if a shoplifter attempts to leave a store with stolen