Finance Assignment Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Finance Assignment Case Solution

FIVE types of financial institutions

There are different types of financial institutions, which are providing finance related services to their customers, and some of the financial institutions are given below:

Commercial Banks

It is expected that commercial banks are providing safe keeping services for the money, which customers own and provide convenient services to their customers such as depositing cash, transferring funds, withdrawal of cash. In addition to this, commercial banks also provide credit card and debit card services, therefore there is no need to carry large amount of cash in hand, and hence, with the presence of commercial banks there are less chances of theft and loss of money which was common in earlier days.

Investment Banks

Investment bank has different operations than the commercial banks as these banks deal in huge variety of investment services in different projects from organization and government.Moreover, investment banks provide different kind of services such as underwriting debt and equity offerings and investment banks act as intermediaries and also act as a broker for institutional clients. Moreover investment banks also provide advisory services and also help companies in their initial public offering processes. Therefore, it is expected that investment banks face less regulations as compared to the commercial banks however,they operate under the management of the different regulatory bodies such as SEC.

Insurance Companies

Insurance companies provide insurance services to greater number of people and they charge a premium from the beneficiaries on annual or semiannual basis.

Brokerages

It is expected that a brokerage provides intermediary services to the buyers and sellers of the financial instruments or shares and they charge commission against these services. There are different types of brokerage such as full service and discount. In full service, the brokers provide full time guidance in order to manage portfolio. On the other hand,in discount services, the clients manage their own research in order to manage their portfolio.

Investment Companies

It is expected that investment companies provide the opportunity to their investors in order to invest in well managed and diversified portfolios along with other investors which help the clients in order diversify their risk. Investment companies provide facility of buying securities such as mutual funds, which could help the investors in order to invest in a more secured bonds or funds.

Expected return from each investment

The expected return is the sum of all its probabilities and their return. The return expected as the outcome of investment made on Scerp is 11.65% and on Horn is 15.15%.

Standard deviation from each investment

The Standard deviation for the investment in Scerp and Horn is 1.77% and 2.15% respectively.

Rank the investments based on coefficient of variation

The coefficient tells the investor the volatile nature of any investment. It determines the risk involved in an investment towards its reward ratio. Scerp has a volatility or standard deviation of 1.77% with an expected return of 11.65%, whereas, the coefficient of variance for the investment is 0.15 (1.77%/11.65%). On the other hand,The Horn has a volatility or standard deviation of 2.15% with a expected return of 15.15%, and apart from that, the coefficient of variance for the investment is 0.14 ( 2.15%/15.15%).Finance Assignment Case Solution

The Horn has a low risk involved in investment as compared to Scerp, however Scerp has less volatility in it, but it also has low expected returns. Therefore, the investor will choose Horn to invest in..........

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