...Real World Applied Learning Project: Personal Products (PG) A Basic View of Fundamental of Stock Market Fundamental Analysis: 1. Discuss the impact of the general level of economic activity (Observe the performance of the 10 leading indicators for the past 6 months. Compare this with changes in stock prices and interest rates http://www.conference-board.org/pdf_free/press/TechnicalPDF_4457_1334824007.pdf Comments: from September 2011 to Mar 2012, the US leading index has slightly increased from 93.2 to 95.7. In the same period, the Lagging index has been similarly increasing from 112.1 to 114.4. The increasing leading index shows that our economy is growing slowly but should continue with a positive economic outlook. The Lagging Index is growing too and could indicate things aren’t going well. Although with some research it is shown that unemployment is down. The reason for the slow growth in the lagging index is from commercial and industrial loans outstanding have increased. It shows the U.S. economy is growing slowly and should continue that way for the next several months. Comments: From September 2011 to March 2012, you see an increase in several major leading indicators. The average weekly claims of state unemployment insurance have vastly declined from 408.3K to 364.4K. This shows that the economy is improving with more employment available. New orders for consumer goods have increased steadily in this time period from 116,882 to 121,511. Demand...
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...Chapter 13 * What is the definition of capital market efficiency? An efficient capital market (EMH) is one in which stock prices fully reflect available information (i.e. stock market prices are good estimates of underlying intrinsic value). * What conditions generally lead to market efficiency? * Rationality * Independent Deviations * Arbitrage * What are the three forms of market efficiency? * Weak form * Security prices reflect all information found in past prices and volume. * Implication? * Semi-strong form * Security prices reflect all publicly available information. * Strong form * Security prices reflect all information—public and private. * What are the implications of market efficiency for corporate finance? * The price of a company’s stock cannot be affected by a change in accounting cosmetics, e.g., stock splits. * Financial managers cannot “time” issues of stocks and bonds unless they have special information. * A firm can learn from market reactions to the firm actions. * However, if financial managers have special information, and try to use it, markets will react. This could also suggest that market prices may not always be equal to intrinsic value. * What are the empirical challenges to market efficiency? * Bubbles * Consider the tech stock bubble of the late 1990s. The AMEX Internet...
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...27 THE BASIC TOOLS OF FINANCE WHAT’S NEW IN THE SIXTH EDITION: There are two new In the News boxes on “A Cartoonist’s Guide to Stock Picking” and “Is the Efficient Markets Hypothesis Kaput?” LEARNING OBJECTIVES: By the end of this chapter, students should understand: the relationship between present value and future value. the effects of compound growth. how risk-averse people reduce the risk they face. how asset prices are determined. CONTEXT AND PURPOSE: Chapter 27 is the third chapter in a four-chapter sequence on the level and growth of output in the long run. In Chapter 25, we discuss how capital and labor are among the primary determinants of output and growth. In Chapter 26, we addressed how saving and investment in capital goods affect the production of output. In Chapter 28, we will show some of the tools people and firms use when choosing capital projects in which to invest. Because both capital and labor are among the primary determinants of output, Chapter 28 will address the market for labor. The purpose of Chapter 27 is to introduce the students to some tools that people use when they participate in financial markets. We will show how people compare different sums of money at different points in time, how they manage risk, and how these concepts combine to help determine the value of a financial asset, such as a share of stock. KEY POINTS: Because savings can earn interest, a sum of money today is more valuable than the same sum of money...
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...preferred stock. F 5. Convertible preferred stock exercise. T 6. Allocating proceeds between debt and detachable warrants. F 7. Allocating proceeds from nondetachable warrants. T 8. Intrinsic value of a stock option. F 9. Compensation expense in fair value method. T 10. Service period in stock option plans. F 11. Accounting for nonexercise of stock options. F 12. Accounting for stock option forfeiture. T 13. Cumulative preferred stock and EPS. F 14. Restating shares for stock dividends and stock splits. T 15. Stock dividend and weighted-average shares outstanding. F 16. Preferred dividends and income before extraordinary items. T. 17. Reporting EPS in complex capital structure. F. 18. Dilutive stock options. T 19. Contingent issue shares. F 20. Reporting EPS for income from continuing operations. Multiple Choice—Dilutive Securities, Conceptual Answer No. Description d 21. Nature of convertible bonds. d 22. Recording conversion of bonds. b 23. Definition of bond sweetener. c S24. Reasons for issuing convertible debt. a S25. Reporting gain/loss on conversion of bonds. d S26. Accounting for conversion of preferred stock. b 27. Recording conversion of preferred stock. d 28. Bonds issued with detachable stock warrants. d 29. Debt equity features of debt issued with stock warrants. d 30. Classification of stock warrants outstanding. d P31. Bonds issued with detachable stock warrants. c P32. Distribution of stock rights. ...
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...CHAPTER-1 1.1 Abstract: As Bangladesh is a developing country, the corporate finance is growing very slightly in our country. One of the important aspects of a corporation is its "Dividend Policy" that affects the financial structure, flow of funds, liquidity, price of stocks, and shareholder's satisfaction. This paper attempts to determine how the Beximco Pharmaceuticals Ltd (BPL) uses its dividend policy to increase the value of the firm and the impact of dividend policy on its stock price. We tried to illustrate and analyze net income, earning per share, cash dividend, stock dividend, dividend payout ratio and right share for empirical analysis of dividend distribution of Beximco Pharmaceuticals Ltd (BPL).The expectations of dividends by shareholders helps them determine the share value, therefore, dividend policy is a significant decision taken by the financial managers of any company. 1.2 Introduction: Dividend Policy is concerned with taking a decision regarding paying cash in the present or paying an increased dividend at a later stage. The firm could also pay in the form of stock dividends which unlike cash dividends do not provide liquidity to the investor; however, it ensures capital gains to the stockholders. The expectations of dividends by shareholders helps them determine the share value, therefore, dividend policy is a significant decision taken by the financial managers of any company. . 1.3 An Overview of Beximco Pharmaceuticals Ltd (BPL): Beximco Pharmaceuticals...
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...the guide is aimed at new Bloomberg users, and will provide an overview of how to use a Bloomberg terminal. If you are a more experienced user, or if after reading this guide you want to go into more detail on Bloomberg's capabilities, please be on the lookout for the Advanced Guide to Bloomberg which will soon follow. (For more, see Day Trading Strategies For Beginners.) In this Basic Guide, we will examine how to sign up for, install and access Bloomberg. We will then go on to covering basic navigation on the Bloomberg system. Navigating Bloomberg is somewhat unique in that the system uses a special keyboard with some keys that are different from those found on a "normal" keyboard. Therefore, the navigation section of this guide will be important to newcomers. After gaining a working knowledge of these basics, in chapter four we will then move on to discuss some of the market and news monitor functions that are available on Bloomberg. Chapter five will focus on the basics of analyzing securities on Bloomberg. Advanced functionality in this area will be covered in the Advanced Guide; in this Basic Guide we will focus more closely on the types of analysis that Bloomberg allows users to perform. Finally, chapter six will provide some tips and tricks for navigating Bloomberg and getting the maximum possible benefit from this remarkable machine, while chapter 7 will provide a summary and conclusion. Beginner's Guide To The Bloomberg Terminal: Installation And Access There...
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...Stock Market Assignment The stock market plays an important role in businesses today. Becoming an investor proved how important it is to understand the stock market. This assignment gave me the opportunity to research and invest in different companies and to learn about the stock market. I also had the opportunity to watch the S&P 500, NYSE, and the NASDAQ, and reflect on market changes and challenges. When choosing stocks to invest in, I was looking to create a diverse portfolio by choosing a variety of industries, price ranges, well known companies and some that were new to me. I visited their websites, read mission statements, and reviewed past performance, learning as much as I could about each company before investing. I viewed the price graphs using ClearStation when looking for companies to invest in. I was looking for companies who have had a gradual but consistent increase in stock price over the past three to six months. I was not willing to invest in a company who had extreme jumps in price. Overall I invested almost $200,000 in twelve different companies. Coke, Hertz, Best Buy, Crocs, Toro, and Bud were all brands I invested in because they were well known to me. These companies or products have been around for years and have a long standing relationship with the consumers. I was able to use the website ClearStation to view past stock market performance before investing. One of the things I was looking for in the mission statement or website was...
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...retrieve information. APPROACHES TO INFORMATION TECHNOLOGY INFRASTRUCTURE INVESTMENT 1. Fundamental Approach: The basic tenets of the fundamental approach, which is perhaps most commonly advocated by investment professionals, are as follows: There is an intrinsic value of a security and this depends upon underlying economic (fundamental) factors. The intrinsic value can be established by a penetrating analysis of the fundamental factors relating to the company, industry, and economy. At any given point of time, there are some securities for which the prevailing market price would differ from the intrinsic value. Sooner or later, of course, the market price would fall in line with the intrinsic value. Superior returns can be earned by buying under-valued securities (securities whose intrinsic value exceeds the market price) and selling over-valued securities (securities whose intrinsic value is less than the market price). APPROACHES TO INFORMATION TECHNOLOGY INFRASTRUCTURE INVESTMENT (continued) 2. Psychological Approach: The psychological approach is based on the premise that stock prices are guided by emotion, rather than reason. Stock prices are believed to be influenced by the psychological mood of the investors. When greed and euphoria sweep the market, prices rise to dizzy heights. On the other hand, when fear and despair envelop the market, prices fall to...
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...Shareholders An investor can be from a number of different sources. On one hand, they could be a major corporation that not only sells its own stock, but also owns shares in other companies. On the other hand, they could be a first time investor looking to exercise some extra money and see if they can turn a profit. Either way, the stock market can be a confusing and intimidating place. Every investor needs to have a basic understand of where the shares of stock are coming from and what exactly is involved. To help with this elementary understanding, we will observe and address few questions. 1. What are the distinguishing characteristics between different shares of stock? 2. What are the benefits to the investor? 3. What is par value and why is it important? What Are The Distinguishing Characteristics Between Different Shares of Stock To fully understand and grasp the full concept we need to break it all down into bite sized, comprehensible pieces and the New Oxford American Dictionary helps to provide these definitions. In order to become a shareholder in a company an individual needs to purchase shares of stock. A share is considered to be a portion of a larger amount that is divided among a number of other shareholders that also contribute to the company. Stock is the capital that is being raised by a company through issuing the shares to the general public or to other corporations. The individuals...
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...Realized Rates of Return: rAvg=t=1nrtn Standard Deviation of the Sample Returns: σ=S=t=1n(rt-rAvg)n-1 In Excel use =Average and =STDEV functions Measuring Standalone Risk: Coefficient of Variation Coefficient of variation = CV=σr Risk Aversion and Required Rate of Return Assume risk aversion for investors Textbook Example: Basic Food’s Price up to $150 from $100 Sale.com Price down to $75 from 100. Difference in return, 20%-10%= Risk Premium Risk in Portfolio Context Expected return on portfolio=Weighted expected return=rp=i=1nwiri Portfolio Risk Stocks can be combined into portfolios which then become less risky to riskless depending on the correlation of the assets. Stocks with a ρ=-1 are perfectly negatively correlated. The inverse is positively correlated. Expected ρ also called R = t=1n(ri,t-ri,Avg)(rj,t-rj,Avg)[t=1n(ri,t-ri,Avg)2][t=1n(rj,t-rj,Avg)2] Where i and j are stocks ri,t is the actual return for stock i in period t and ri,Avgis average return during n period sample Or just use =CORREL function in Excel Diversification does NOTHING to reduce risk if stocks are perfectly positive correlated!!! Diversifiable Risk VS Market Risk Almost...
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...Chapter 08 Stock Valuation Multiple Choice Questions 1. What is the model called that determines the present value of a stock based on its next annual dividend, the dividend growth rate, and the applicable discount rate? A. zero growth B. dividend growth C. capital pricing D. earnings capitalization E. discounted dividend 2. Which one of the following is computed by dividing next year's annual dividend by the current stock price? A. yield to maturity B. total yield C. dividend yield D. capital gains yield E. growth rate 3. Which one of following is the rate at which a stock's price is expected to appreciate? A. current yield B. total return C. dividend yield D. capital gains yield E. coupon rate 4. Which one of the following types of stock is defined by the fact that it receives no preferential treatment in respect to either dividends or bankruptcy proceedings? A. dual class B. cumulative C. non-cumulative D. preferred E. common 5. A company has two open seats, Seat A and Seat B, on its board of directors. There are 6 candidates vying for these 2 positions. There will be a single election to determine the winner of both open seats. As the owner of 100 shares of stock, you will receive one vote per share for each open seat. You decide to cast all 200 of your votes for a single candidate. What is this type of voting called? A. democratic B. cumulative C. straight D. deferred E. proxy 6. You want to be on the board of directors of Wisely Foods. Since you are...
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...Chapter 08 Stock Valuation  Multiple Choice Questions  1. What is the model called that determines the present value of a stock based on its next annual dividend, the dividend growth rate, and the applicable discount rate? A. zero growth B. dividend growth C. capital pricing D. earnings capitalization E. discounted dividend  2. Which one of the following is computed by dividing next year's annual dividend by the current stock price? A. yield to maturity B. total yield C. dividend yield D. capital gains yield E. growth rate  3. Which one of following is the rate at which a stock's price is expected to appreciate? A. current yield B. total return C. dividend yield D. capital gains yield E. coupon rate  4. Which one of the following types of stock is defined by the fact that it receives no preferential treatment in respect to either dividends or bankruptcy proceedings? A. dual class B. cumulative C. non-cumulative D. preferred E. common  5. A company has two open seats, Seat A and Seat B, on its board of directors. There are 6 candidates vying for these 2 positions. There will be a single election to determine the winner of both open seats. As the owner of 100 shares of stock, you will receive one vote per share for each open seat. You decide to cast all 200 of your votes for a single candidate. What is this type of voting called? A. democratic B. cumulative C. straight D. deferred E. proxy  6. You want to be on the board...
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...vs Secondary Market The primary market is direct from the company issuing the stock or bond to the buyer. The secondary market is after the initial public offering, people buy and sell on the stock exchange, NASDAQ or over the counter market or the pink sheets. For example, IBM issues some new stock. Someone buys it (usually an underwriter, but maybe the public). Assuming IBM sells direct to the public and I buy it for $50 and it goes up to $ 60 and you want to buy it and I want to sell it. So I sell through a broker and you buy through a broker which represents a sale in the secondary market. The word "market" can have many different meanings, but it is used most often as a catch-all term to denote both the primary market and the secondary market. In fact, "primary market" and "secondary market" are both distinct terms; the primary market refers to the market where securities are created, while the secondary market is one in which they are traded among investors. Knowing the functions of the primary and secondary markets is key to understanding how stocks trade. Without them, the stock market would be much harder to navigate and much less profitable. We'll help you understand how these markets work and how they relate to individual investors. Primary Market The primary market is where securities are created. It's in this market that firms sell (float) new stocks and bonds to the public for the first time. For our purposes, you can think of the primary market as being synonymous...
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...confidence that this Principle has a good quotient of basic value. "The Wave Principle" is Ralph Nelson Elliott's discovery that social, or crowd, behavior trends and reverses in recognizable patterns. Using stock market data as his main research tool, Elliott discovered that the ever-changing path of stock market prices reveals a structural design that in turn reflects a basic harmony found in nature. From this discovery, he developed a rational system of market analysis. Elliott isolated thirteen patterns of movement, or "waves," that recur in market price data and are repetitive in form, but are not necessarily repetitive in time or amplitude. He named, defined and illustrated the patterns. He then described how these structures link together to form larger versions of those same patterns, how they in turn link to form identical patterns of the next larger size, and so on. In a nutshell, then, the Wave Principle is a catalog of price patterns and an explanation of where these forms are likely to occur in the overall path of market development. Elliott's descriptions constitute a set of empirically derived rules and guidelines for interpreting market action. Elliott claimed predictive value for The Wave Principle, which now bears the name, "The Elliott Wave Principle." Although it is the best forecasting tool in existence, the Wave Principle is not primarily a forecasting tool; it is a detailed description of how markets behave. Nevertheless, that description...
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...Daniel Gleason Stock Evaluation Project Hanesbrands Incorporated HanesBrands Inc. is a consumer goods company that produces leading brands such as Hanes, Champion, Playtex, and Wonderbra. They design, manufacture, and sell very basic apparel such as T-shirts, bras, panties, men’s underwear, kids’ underwear, casual-wear, activewear, socks and hosiery. HanesBrands Inc. focuses mostly on then basic apparel sector of the apparel industry, It can be characterized as the type of items one would find being replaced a lot, such as t-shirts, underwear, and socks. Unlike other Apparel sectors, Hanes, as a basic apparel provider is not driven by fashion or popularity, in contrast they are driven by peoples basic needs and keeping it affordable. They focus in on certain attributes of comfort, feel and value, while remaining current with regard to consumer trends. Aside from the big name brands HanesBrands has to offer like Champion, Hanes, and Playtex, they also produce brands that you may have never heard of such as Just My Size , L’eggs , barely there , Wonderbra , Gear for Sports , Stedman , Zorba , and Rinbros. But HanesBrands as a corperation has continued to invest in their largest and most popular brands, such as Hanes to achieve their future growth goals. The apparel sector is a highly competitive and quickly moving sector, that is hard to enter as a company. HanesBrands Inc. has a extremely wide economic moat in its sector. An economic moat, a term coined by Warren...
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