Risk and Return Analysis of Common Stock Investment in Commerical Banks of Nepal (With Reference to Nepal Investment Bank, Everest Bank, Himalayanbank and Nabil Bank Limited)

Abstract

This study aimed at "Analysis of the Risk and Return of Common Stock Investment in Commercial Bank of Nepal". The descriptive research design has been employed for the study. The study used a secondary data for four banks which stayed in the NEPSE among twenty-eight banks which are operational at the moment in Nepalese banking sector. The pooled data of Four Nepalese commercial banks for the period 2012/13 to 2016/17 have been analyzed using different financial tools and statical tools. Data is obtained from banks annual report and Nepal Rastra banks annual supervision report. MPS, Total dividend, expected rate of return, Coefficient of variation, Beta coefficient of variation, systematic risk, CAPM etc have been taken as Risk and Return of Common Stock Investment in selected Bank indicators. As a result the study concluded that after compiling all the data, EBL has highest rate of return overall performance by taking more risk whereas NABIL has lowest rate of return among the sample banks. After analyzing the beta coefficient of four sample bank i.e EBL seems to be more aggressive and NIBL is least aggressive. Based on the finding, investment in HBL is desirable because it has lowest coefficient of variation among bank. It seems that correlation between HBL stock return and NIBL stock. It is observed that the investor can buy the stock of HBL bank. It is strongly recommend that HBL should adopt well management system to minimize unsystematic risk.