Finance assignment Example | Topics and Well Written Essays - 2500 words

Finance - Assignment ExampleThe expected return figures obtained for these quartette companies are justified as they reflect in part the general trend observed in the various sectors. Watson and Head (2007) suggests that Biotech companies are expected to buzz off high cost of initial coronation in research but with time they record high returns owing to the sale of their innovative products. The findings concur with those of dark-brown et al, (2012) who further proposes that the high returns for pharmaceutical companies increase exponentially as the new products market reach increases. On the other hand, Construction companies gutter be termed as safe investments as they have less risk, since most of the capital for such companies is held up in assets (Boritz, 2006) and (Megginson, 1996). This sector has high returns on investment owing to the booming real estate effort in Australia. The banking sector is dependent on the countrys economy and income levels of the people as discu ssed by Mishkin and Eakins (2006). They state that since Australia is a developed country, over 90% of the people above 18 years of age operate bank accounts. With more people prudence money with the banks, there is enough money to offer loans to businesses and individual thus making it a profitable sector. In contrast to this, the travel and leisure industry is highly affected with seasonal tourism experienced in Australia as reported in An Introduction to Technical Analysis (1999). Although most people whitethorn have disposable income to use in leisure, they prefer international destinations during seasons such as winter when the temperatures are very low. In addition, the competition in the sector, makes it a less profitable sector especially for small and medium companies.There are three major methodological setbacks associated with the Gordons appendage model. Firstly, it is assumed that the growth rate is constant which might not necessarily be the case. Secondly, for stock s of growing