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

Finance - Assignment ExampleThe expected return figures obtained for these four companies be justified as they reflect in part the general trend observed in the divers(a) sectors. Watson and Head (2007) suggests that Biotech companies are expected to incur high cost of initial investment in enquiry but with time they record high returns owe to the sale of their innovative products. The findings concur with those of Brown et al, (2012) who nevertheless(prenominal) proposes that the high returns for pharmaceutical companies increase exponentially as the new products market crap increases. On the other hand, Construction companies can be termed as safe investments as they deal 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 industry in Australia. The banking sector is dependent on the countrys economy and income levels of the people as disc ussed by Mishkin and Eakins (2006). They state that since Australia is a developed country, over 90% of the people above 18 years of age ope score bank accounts. With more people saving notes 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 may have disposable income to use in leisure, they prefer international destinations during seasons such as winter when the temperatures are genuinely low. In addition, the competition in the sector, makes it a less profitable sector especially for small and forte companies.There are three major methodological setbacks associated with the Gordons growth model. Firstly, it is assumed that the growth rate is constant which might not necessarily be the case. Secondly, for stocks of growing