Beta and Return Estimation

In: Business and Management

Submitted By nehelynia
Words 8300
Pages 34
Coursework analysis
Contents
* Introduction of HSBC * Beta and CAPM model analysis * Advantages and disadvantages about the data * Advantages and disadvantages about the CAPM model * Conclusion * Appendix * Bibliography and references

* INTRODUCTION OF HSBC HOLDINGS PLC

HSBC Holdings Plc. is a global banking and financial services company headquartered in Canary Warf, London, United Kingdom. It was founded by the Hong Kong and Shanghai Banking Corporation in 1911. It was originally created to pursue and establish exchanges between Europe and Asia using the Midland Bank as a connecting link. The first branch was opened in 1865 in Hong Kong and Shanghai.
Over the last century HSBC expanded from Asia to 4 other continents including Africa, Europe, North and South America. The financial statements show that HSBC has successfully established services in more than 87 countries, with more than 7,500 offices and more than 100 million customers. The annual statements indicated that its assets are more $2.418 trillion.
HSBC is listed in the London Stock Exchange market. It is included in the FTSE 100 company list earning deservedly the 3rd place in the table list with the 10 largest companies measured by market capitalization with equity equal to £118 billion, coming after BHP Billiton with £148 billion and Royal Dutch Shell with £135 billion.
FTSE 100 is arguable the most useful tool for the estimation of the market returns, which in later use can help to valuate market prices for a specific UK company listed in LSE, estimating future prices and forecasting possible threats in the present value of investments.

* BETA AND CAPM MODEL ANALYSIS

* Beta
The first thing that has to be done, in order to estimate the rate of return of an asset is to calculate the beta, which is a measure of the investment’s portfolio risk. The…...

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