Granularity Adjustment and Risk Measures †MyAssignmenthelp.com

Question: Discuss about the Granularity Adjustment and Risk Measures. Answer: Introduction: The returns provided by Bendigo and Adelaide Bank Ltd are mainly depicting the overall viability, which could provide higher retunes from investment. In addition, the overall returns on annual basis are mainly at 15.74%, which depicts the overall viability of the investment. Moreover, the unsystematic risk if also at 1.25386%, which is relatively low and could reduce the risk from changing policies. The overall returns are mainly helpful in generating higher return from investment. However, the overall beta is mainly at 1.11, which is relatively high, which in turn could increase risk from investment. On the contrary, Gagliardini and Gourieroux (2013) argued that higher beta in stock directly indicate vulnerability of the stock, which in tune could hamper return from investment. The overall shares of Bendigo and Adelaide Bank Ltd has a relevant higher beta, which might increase risk of the portfolio and raise the negative impact that could be depicted from capital market. Hence, investment in the stock could be depicted to only 10% of the portfolio, where the beta could be negative and reduced with adequate diversification. The main reason behind the reduced investment is the stock is high beta, which increase risk from investment. Valipour et al. (2015) mentioned that use of diversified portfolio could help in reducing the risk from investment and adequately compensate for the high beta stocks. Reference: Gagliardini, P. and Gouriroux, C., 2013. Granularity adjustment for risk measures: Systematic vs unsystematic risks.International Journal of Approximate Reasoning,54(6), pp.717-747. Valipour, M., Amin, V., Kargosha, M. and Akbarpour, K., 2015. Forecasting stock systematic risk using Heuristic Algorithms.Journal of productivity and development,1(1), pp.36-41.