Risk and return, portfolio diversification and the Capital Asset Essay

Risk and return, portfolio diversification and the Capital Asset Pricing Model; The cost of equity (Starbucks Co.) - Essay Example (Valuebasedmanagement.net, 2011) This paper will therefore provide computation and will also discuss the cost of equity of Starbucks besides computing the cost of equity for Nestle and McDonalds to make a comparison. Further, cost of equity will also be calculated by using dividend discount model as well as arbitrage pricing theory. The above calculations show that the overall cost of equity for Starbucks is 11.82% based on the data provided. This value is higher than the cost of equity of an average firm on the S&P 500 index thus indicating that the overall risk profile of Starbucks may be higher than an average firm. It may be due to the fact that the investors, considering the dynamics of the industry and particular performance of the firm in the industry, may not be willing to put their bets on Starbucks. The cost of equity should have been lower than an average firm on the S&P considering the overall market strength of Starbucks and brand power. The above comparison between McDonalds, Nestle as well as Starbucks shows that the return on equity for other two firms is lower as compared to Starbucks. The lower cost of equity of these firms suggests that these firms have relatively stable risk profile due to their stronger financial performance as well as fundamentals. What is also important to note that these firms are diversified in nature whereas Starbucks is only relatively focused on the sale of coffee only? It is therefore of no surprise that the cost of equity of such firms is relatively lower than Starbucks Dividend discount model is another important model to find out the fair values of the stock based on the dividends. (Investopedia.com, 2011 ). This model considers dividends as the future cash flows to be received and accordingly the price of the stock is calculated by using following formula: Thus the expected rate of return is obtained by considering a linear combination of different macroeconomic factors combined with

Drug Designing with the Aid of Computers Essay Example | Topics and Well Written Essays - 2250 words

Drug Designing with the Aid of Computers - Essay Example Drug Designing is an exceptional Example of a field that has been benefited immensely by the use of computers. Molecular imaging has made great revolutions in the designing of drugs. DRUG DESIGNING: Drug Designing can be termed as a method whereby drugs can be invented by targeting a specific biological molecule and then designing new medications based on the relevant information. If narrated simply, the designing of a drug may involve the following generic processes: The cause of the disease to be identified The target to be attacked is identified The ‘Lead Compound’ is identified. Tests are carried out for the ‘Lead Compound’ Trial conducted in clinics Drug approved Present day drug design extensively relies on computer based molecular modeling techniques. Computer Drug Design has been known to have possessed exemplary technologies that conduct the drug development process speedily. Computer Based Drug Designing Methodologies are preferred over Traditional Drug Designing capabilities because: TRADITIONAL DRUG DESIGNING is: †¢ â€Å"Random trial and erroneous †¢ Time consuming, †¢ Comparatively much more expensive †¢ Very low in output (1 in 100,000)† (Huang, n.d.) In Comparison to the above mentioned properties of traditional drug design Computer Aided Drug Design Methodologies are thought to be: †¢ Structural in Nature †¢ Specifically Targeted †¢ Automatic †¢ Much Faster than the Traditional Methods †¢ Much lower in cost †¢ Having a comparatively much higher success rate than the traditional method. Molecular modeling is a popular method of drug design. It is a science by means of which molecular structures are represented numerically. Their behavior is then simulated by making use of the equations from quantum and classical physics. It is with the use of this molecular modeling via computers that computer aided drug designing finally gets executed. The first step in the approach towards drug design by this methodology is the identification of a molecule that may be critical to the pathogen of any specific disease. The molecular structure of the target molecule that has been identified is now resolute. Sufficient molecular information is essential in order to proceed further on with the designing of the drug. The structure of the target molecule, as discussed above, is used to construct a ligand. The recognition of the target protein is the next step followed by the ways by which it would be bound. The point of concern here is that the structure of proteins is very versatile in nature. Proteins change the structure of their molecule when they are undergoing different functions. Types of Molecular Modeling â€Å"Based on the type of information at hand, either ligand based or molecular based design methods are selected.† (Daharwal, 2006). The proposed combinations are very rapidly generated by computers that instantly display an entire list of the proposed molecules. Molecular Modelling screens through large databases of chemical ligands and molecules of compounds. In doing so, it identifies the molecules that may become potential drugs. The above process is termed as Molecular Docking. SIMULATIONS FOR DRUG DESIGNING Since protein structures are rapidly changing and cannot be predicted computers are essentially used to simulate the dynamically changing structure of molecules. Hihg performance computing is often used to assist. For example, at the