Wk4 Discussions Assignment Example | Topics and Well Written Essays - 500 words

Wk4 Discussions - Assignment ExampleSome of them might not be conscious of the dynamics baffling in the investment of securities. Others might be conscious of the securities investment but do not clear which security bequeath give a better return than the other. If Mr. Lynch answers this question, more investors from other industries go out be interest on security investment.Mr. Lynch can let us know how to derogate trade risks since avoiding it by diversification is impossible. He will suggest other avenues investors can use to sully the risks associated with the type of security they have invested. Expectations of investors are high return, but market risk being include in the equation then the possibility of high return becomes slim. If investors have been armed with that kind of information regarding securities investment, we can be rest assured the number of investors in securities will increase. This will be a boost to our nations economy.To calculate the cost of equity division of cost of structure will need the use of Capital Asset Pricing feigning (CAPM) or by Dividend Growth Model (DGM). The cost of debt can be calculated by use of historical (coupon) interest rate or market based interest rateThe techniques used to calculate the figure of divisional cost of heavy(p) are referred to as pure play approach. This technique is used to calculate riskier division is the security market line (SML) while for conservation division subjective approach technique would be used to estimate the cost of capital. The main challenge experienced during the estimation of the cost of capital for a division is that it exactly has securities for to trade in the market, so it is a problem to notice the risk of division in the markets