Yamhash Inc. was formed in 2016 with authorization to issue 5000,000 shares of Rs.10 par value common stock and 300,000 shares of Rs.100 par value preferred stock. Out of these, 40% are cumulative and...

Yamhash Inc. was formed in 2016 with authorization to issue 5000,000 shares of Rs.10 par value
common stock and 300,000 shares of Rs.100 par value preferred stock. Out of these, 40% are cumulative
and 60% are non-cumulative preferred stock. Considering the survival of the company, Yamhash Inc. is
also planning to investment in marketable securities. For this sake, three stocks have been identified i.e.
PSO, ENGRO, and PIA. After rigorous calculations and estimations it is found that all three stocks seem
moderately correlated and the association found among all stocks is 0.35. The risks associated with all
three stocks are 2%, 16% and 8% whereas historical returns are 8%, 15% and 12% respectively.
Company is planning to invest 1 million in each stock. Existing shareholders are demanding dividend as
no dividend is yet paid by the company. During 2016, 50% of cumulative and non-cumulative preferred
stocks were issued at par and 1200,000 shares of common stock were sold for Rs.16 per share. The
preferred stock is entitled to a dividend equal to 15 percent of its par value before any dividends are paid
on the common stock. On May 2018, rest of the preferred shares was issued along with 500,000 common
shares. In 2019, company is planning to declare dividend totaling Rs. 9,700,000.

Considering the above information, you are required to compute a single accounting number that is
reported most frequently in the media and receives by far the most attention by investors and creditors.
Also explain with numerical figures and calculations that how diversification has minimized the risk for
the company.(financial management book)