Financial Portfoli analysis & technical analysis ( risk ) Essay

Financial Portfoli analysis & technical analysis ( risk ) - Essay Example However procuring more capital through bond issue is likely to enhance the risk position of the business (Carter & Van Auken, 1990). The returns earned by the firm on the share prices are seen to be highly fluctuating. Returns on equity are also seen to be lower than the returns on bond. This indicates that the company pays off a large amount of its year end profits as interests to bondholders. As a result of the earnings available to shareholders becomes less. It also implies that the company does not earn adequate levels of earnings to cover both interests and tax related expenses. Considering the returns which the form provides to both the shareholders and the investors of bond, majority investors would prefer to invest in the bonds of the company (Reilly & Brown, 2011). Standard deviation essentially measures the deviation from the mean value. In case of the standard deviation values for the equity and bond, it is preferred that the results remain high. When the standard deviation values are high, it would indicate that the returns provided to the shareholders and bondholders are high. From the tabulated results it can be seen that the standard deviation value of returns provided to share holders are lower than the returns provided to the bondholders, indicating that investing in bonds is likely to be more profitable. Variance analysis is essentially the analysis of mean values. The higher the variance, it is predicted that the average value of the data set is high. In case of the variance calculated for the Emirates National Bank PJS stock and bond, it is seen that variance costs in respect of bond are higher than stock. Both covariance and correlation co efficient are adequately low for the company. This is due to the vast difference in the mean values of both the data set procured for stock and bond returns. From the overall analysis it is understood that investing the company’s bond would be more profitable