Finance assignment Example | Topics and Well Written Essays - 1250 words

Finance - Assignment Example These Advisory services provide the clients to grow. A Financer: as a financer it provides their clients i.e. the local, state and national governments to finance and expand the infrastructure. It also works for the clients to transact, support, manage, innovate and invest (The Goldman Sachs Group, Inc. (GS), 2015). The profit on the investments is known as the rate of return, it can be of two types. Firstly are the Dividends that paid to the shareholders out of the profits of the organization in the form of returns of the investments made by the shareholders. The dividend rate is announced by the Board of Directors of the organization. Secondly, the return is in the form of Capital Gain/Loss. Mostly, the capital gain is reinvested by the shareholders to get new shares of the company. The total return can be calculated by adding the Dividends and the Capital Gain. Where Rs denotes the rate of return from investment in the company’s shares, DY denotes the dividend yield that provides investors the idea about the actual percentage of returns paid out to the shareholders in the form of dividends, and CG is the capital gain that shareholders can achieve from their holding in the company’s shares. The dividend yield can be calculated using the following formula. Where, D1 is the dividend expected in period 1 that is determined by applying an estimated growth rate of dividends to the dividend paid in period 0, P0 refers to the price of the company’s shares in period 0 and P1 is the stock price in period 1. It helps in measuring the risk of change in the value of the company’s stock in relation to the change in the value of the market index. It is mainly used to compare the risk of one stock with other stocks. The measure can help investors make their investment decisions based on their risk assessment and acceptance of risk. The value of beta equal to 1 represents that