...Stock markets can be volatile, and the reasons particular stocks rise and fall can be complex. More often than not, stock prices are affected by a number of factors and events, some of which influence stock prices directly and others that do so indirectly. According to stock market guru Peter Lynch, an important point to remember when investing is that â??there is a company behind every stock and a reason why companies--and their stocks--perform the way they do.â? Ads by Google Used Cars from Be Forward Start From $499, Stock Daily 10000+ No1 UsedCars Exporter Best UsedCars beforward.jp Internal Developments Developments that can occur within companies will affect the price of its stock, including mergers and acquisitions, earnings reports, the suspension of dividends, the development or approval of a new innovative product, the hiring or firing of company executives and allegations of fraud or negligence. Stock price movements will be most drastic when these internal developments are unexpected. World Events Company stock prices and the stock market in general can be affected by world events such as war and civil unrest, natural disasters and terrorism. These influences can be direct and indirect, and they often occur in chain reactions. The social uncertainty and fear generated by the terrorist attacks on Sept. 11, 2001, affected markets directly as they caused many investors in the United States to trade less and to focus on stocks and bonds with less risk. An example of an...
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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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...An Assignment on Investment Management [FIN 364] Capital Market of Bangladesh Submitted to: Farhana Rahman Lecturer, School of Business UITS Submitted by: Shakerul Islam Tazu ID. 09510127 Eamin Zabed ID. 09510082 Farhana Yeasmin Lopa ID. 09510189 Rawnak Razzak ID. 08310026 UNIVERSITY Of Information Technology & Sciences Baridhara, Dhaka ------------------------------------------------- LETTER OF TRANSMITTAL December 18, 2010 Ms. Farhana Rahman Faculty of Business Administration School of Business UITS Subject: Submission of the Assignment on “Capital Market of Bangladesh”. Dear Madam, It is a great pleasure for us that we have the opportunity to submit the assignment on “Capital Market of Bangladesh”. We have tried our level best to put meticulous effort for prepare this assignment. Any shortcomings or fault may arise as our unintentional mistakes. We will wholeheartedly welcome any clarification and suggestion about any view and conception disseminated through this assignment. Thank you. Yours Sincerely, Shakerul Islam Tazu ID. 09510127 Eamin Zabed ID. 09510082 Farhana Yeasmin Lopa ID. 09510189 Rawnak Razzak ID. 08310026 ------------------------------------------------- Aknowledgement One of the most pleasant parts of writing this report is the opportunity to thanks those who have contributed to it. Unfortunately, in any establishment, the list of expression of thanks- no matter how all-embracing-...
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... 1. A company’s internally generated cash flow provides a source of equity financing. For a profitable company, outside equity may never be needed. Debt issues are larger because large companies have the greatest access to public debt markets (small companies tend to borrow more from private lenders). Equity issuers are frequently small companies going public; such issues are often quite small. Additionally, to maintain a debt-equity ratio, a company must issue new bonds when the current bonds mature. From the previous question, economies of scale are part of the answer. Beyond this, debt issues are simply easier and less risky to sell from an investment bank’s perspective. The two main reasons are that very large amounts of debt securities can be sold to a relatively small number of buyers, particularly large institutional buyers such as pension funds and insurance companies, and debt securities are much easier to price. They are riskier and harder to market from an investment bank’s perspective. Yields on comparable bonds can usually be readily observed, so pricing a bond issue accurately is much less difficult. It is clear that the stock was sold too cheaply, so Eyetech had reason to be unhappy. No, but, in fairness, pricing the stock in such a situation is extremely difficult. It’s an important factor. Only 6.5 million of the shares were underpriced. The other 32 million were, in effect, priced completely correctly. The evidence suggests that a non-underwritten rights...
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...I. History of London Stock Exchange A. Early days (1693—1801) 1. Coffee House The early history of the London securities market can be traced back to the seventeenth century. A broker called John Castaing began to issue a list of stock and commodity prices called “The Course of the Exchange and other things” at his office in what was known as Jonathan’s Coffee-house. It is the earliest evidence of organized trading in marketable securities in London. 2. Royal exchange This is something similar to the exchange that we see today. The Royal Exchange not only housed brokers but also merchants and merchandise. However, this was the birth of a regulated market and, as such, had its teething problems in the shape of unlicensed brokers. B. Opportunities (1801—1914) 1. Establishment On 3 March, 1801, the first regulated institution of the London Stock Exchange was formed and the modern Stock Exchange was born. 2. First codified rule book In February 1812, the General Purpose Committee confirmed a set of recommendations, which later became the foundation of the first codified rule book for the Exchange. With its new governmental commandments and increasing trading volume in place, the Exchange was progressively becoming an accepted part of the financial life in the City. The government used the Exchange's organized market to raise the enormous amount of money in the wars against Napoleon. C. During the Wars (1914 —1945) 1. The...
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...BASED ON FREE-FLOAT The Karachi Stock Exchange (Guarantee) Limited Stock Exchange Building, Stock Exchange Road, Karachi-74000 UAN: 111-00-11-22, Fax: (92-21) 2462640, E-mail: info@kse.com.pk, Web-site: http://www.kse.com.pk TABLE OF CONTENTS Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Brief of KSE Indices Contents Page No. 1 2 3 5 6 7 8 8 8 8 Introduction of KSE-30 Index Free-Float Methodology Pre-Requisites to Qualify for Inclusion in KSE-30 Index Selection Criteria Base Period Maintenance of KSE-30 Index Review Period On-line Computation of the Index Adjustment for Cash Dividend, Bonus, Right and Newly Issued Capital Composition of Companies included in KSE-30 Index based on June 30, 2005 List of Companies included in the KSE-30 Index on the basis of Re-composition as on June 30, 2010 11. 18 12. 19 KSE-30 Index 1. BRIEF OF KSE INDICES The Karachi Stock Exchange is maintaining two indices, which are in place i.e. KSE 100 Index and KSE All Share Index. Both the said indices are market capitalization-based indices. The KSE 100 Index was introduced in 1991 and comprises of 100 companies selected on the basis of sector representation and highest market capitalization, which captures over 80% of the total market capitalization of the companies listed on the Exchange. Out of 35 Sectors, 34 companies are selected i.e., one company from each Sector (excluding Open-End Mutual Fund) on the basis of the large market capitalization and the remaining...
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...Indian market overview: How stock market works? If you'd like to buy a share of stock in any publicly traded company you'll most likely need the services of a brokerage firm. Though it's possible to buy and sell shares of stock on your own, there are some practical and legal problems with this approach. The securities industry is highly regulated, so you can't just hang a shingle and start selling stocks to the general public, unless you're properly registered and licensed. A brokerage firm is a dealer of stocks and other securities that acts as your agent when you want to buy or sell stocks. Most trading of stocks happens on a stock exchange. These are special markets where buyers and sellers are brought together to buy and sell stocks. The best known stock exchanges are the Bombay Stock Exchange and the National Stock Exchange. The Bombay Stock Exchange is one of the largest stock exchanges in the world, listing over 4,500 companies. The BSE SENEX is the major stock index of the Bombay exchange, comparable to the DOW industrials in the US. The National Stock Exchange of India is also based in Mumbai (Mumbai used to be called Bombay) and regularly trades in volumes exceeding that of the Bombay Stock Exchange. The main stock index of the National Stock Exchange of India is the S&P CNX Nifty, or just Nifty for short. Apart from equities, the NSE also deals with trades of futures, debt and foreign currencies. When most people think of a stock exchange, they picture a scene of...
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...SUMMER TRAINING REPORT ON INVESTMENT STRATEGY OF INVESTOR IN STOCK MARKET AT Submitted in partial fulfillment of the requirements of Post Graduate Diploma in Business Management Under the guidance of Faculty guide Company guide Miss. Sudhi Sharma Mr. Prabhpreet Singh Submitted By: Priyanka Singh PGDM III SEM (2010-2012) Roll No. -1370 Dr. Gaur Hari Singhania Institute of Management Research Jaykaylon Colony, Kamla Nagar, Kanpur-208005 ACKNOWLEDGEMENT I would like to express my gratitude to all those who gave me the possibility to complete this project. I would like to thank my college authorities for providing me the opportunity to work with one of the most prestigious organization. I want to thank the Head of training department Prof. Sunil Gupta for giving me permission to commence this project in first instance, to do necessary research work. I would like to extend my thanks to Kotak Securities Ltd for granting me this project. My sincere thanks to Mr. Prabhpreet Singh, Branch Manager, Kotak Securities Ltd, Kanpur for his valuable suggestions and who has been a great source of inspiration for me to work hard with sincerity. I would also like to thank Miss. Saumya...
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...that well-performed stocks continue to outperform their peers while poor-performed stocks continue to underperform. Thus, more mutual funds use this powerful strategy to draw a broad range of investors by getting higher risk-adjusted returns. AQR is a hedge fund based in Greenwich, Connecticut, offering investing products that applies price phenomenon known as momentum. This case study enables investors to get a closer look at AQR’s momentum fund. Comparison of momentum specifications In order to analyze the momentum effect of different specifications, stocks were divided into ‘winner’ stocks and ‘loser’ stocks according to their rankings. From the data we can see that the decile spread portfolio return is the highest among these momentum specifications. One may argue that the spread between decile 10 and decile 1 is largest and it also has the highest volatility. After adjusting for volatility (using Sharpe Ratio), the decile spread momentum advantage is reduced but still very significant. According to Figure 1.1 and 1.2, raw spread returns witness a sharp decrease as the chosen percentile of highest and lowest stock return increases. After adjusted by volatility, the difference becomes flatter but still significant. From the graphs we can see that the volatility-adjusted return of decile spread is higher than the UMD spread, which means buying top 10% winner stocks and shorting bottom 10% loser stocks earns more profit than buying top 30% winner stocks and shorting bottom...
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...CHAPTER 7 Stocks, Stock Valuation, and Stock Market Equilibrium 1 Topics in Chapter Features of common stock Valuing common stock Preferred stock Stock market equilibrium Efficient markets hypothesis Implications of market efficiency for financial decisions 2 The Big Picture: The Intrinsic Value of Common Stock Free cash flow (FCF) Dividends (Dt) D2 D1 D∞ + + ... + (1 + rs )1 (1 + rs)2 (1 + rs)∞ ValueStock = Market interest rates Market risk aversion Cost of equity (rs) Firm’s debt/equity mix Firm’s business risk Common Stock: Owners, Directors, and Managers Represents ownership. Ownership implies control. Stockholders elect directors. Directors hire management. Since managers are “agents” of shareholders, their goal should be: Maximize stock price. 4 Classified Stock Classified stock has special provisions. Could classify existing stock as founders’ shares, with voting rights but dividend restrictions. New shares might be called “Class A” shares, with voting restrictions but full dividend rights. 5 Tracking Stock The dividends of tracking stock are tied to a particular division, rather than the company as a whole. Investors can separately value the divisions. Its easier to compensate division managers with the tracking stock. But tracking stock usually has no voting rights, and the financial disclosure for the division is not as regulated as for the company. 6 Different...
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...Hypothesis ABSTRACT The random walk hypothesis is a key instrument used in the analysis of forecasting in the economic and financial market. It is used primarily in the forecasting of the prices of stocks. This is useful to determine and forecast the prices of stocks given previous stock prices. This paper discusses the basis of the hypothesis, the two types of random walk hypothesis, its framework, methodologies and the analysis of its repercussions. INTRODUCTION The random walk hypothesis states that stock price changes have the same distribution and are independent of one another, so the past movement or trend of a stock price or of the market as a whole cannot be used to predict its future price or any possible future trends. The concept originated in the late 1800s from Jules Regnault, a French broker, and Louis Bachelier, a French mathematician, whose Ph.D. dissertation titled "The Theory of Speculation". The same ideas were later developed and studied further by Paul Cootner, an MIT Sloan School of Management professor, in his 1964 book The Random Character of Stock Market Prices. The term was popularized by the 1973 book, A Random Walk Down Wall Street, by Burton Malkiel, a professor of economics at Princeton University, and was used earlier in Eugene Fama's 1965 article "Random Walks In Stock Market Prices”. The theory that stock prices move randomly was earlier proposed by Maurice Kendall in his 1953 paper, “The Analytics of Economic Time Series, Part 1: Prices”...
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...- Contents 1. Over view of market ………………………………………. pg.03 Types of financial market ▪ Money market …………………………………… pg.04 ▪ Capital market …………………………………… pg.04 Market infra structure 2. Stock exchange………………………………………………... pg.05 ▪ Introduction…………………………………….. pg.06 ▪ History………………………………………….. pg.06 ▪ Securities……………………………………….. pg.07 ▪ Types of operation……………………………… pg.08 ▪ Trading process in S.E………………………….. pg.09 ▪ Role of S.E……………………………………… pg.10 ▪ Listing of securities in S.E……………………… pg.12 ▪ Ownership of S.E……………………………….. pg.14 ▪ Future of S.E……………………………………. pg.14 ▪ Other types of S.E………………………………. pg.15 3. Functions of stock exchange………………………………. pg.16 4. World major S.E…………………………………………….. pg.21 5. Stock exchange of Pakistan…………………………….. pg.23 ▪ Karachi stock exchange (K.S.E)………………. pg.24 ▪ Lahore stock exchange (L.S.E)………………… pg.30 ▪ Islamabad stock exchange (I.S.E)……………… pg.32 1. Over view of market Over view of market 1. Market:- ▪ A public place where buyers and sellers make transactions...
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...GLOBAL STOCK MARKETS: A CASE STUDY OF THE NIGERIAN STOCK MARKET RESEARCH BRIEF The history of stock trading and trading associations can be traced as far back as the 11th century when Jewish and Muslim merchants set up trade associations. After centuries of evolution, stock markets have become the symbol of commerce in the modern world. It operates in various countries and trades a range of securities. The world stock market capitalisation is estimated to be about $ 36.6 Trillion. The stock market has various functions such as capital mobilisation, investing opportunities, risk distribution etc. The major stock exchanges in the world today include New York Stock Exchange, London Stock Exchange, Frankfurt Stock Exchange, Italian Stock Exchange, Hong Kong Stock Exchange and Tokyo Stock Exchange. There have been various stock market crashes in the past such as the Wall Street crash of 1929, the crash of 1973/74, the 1987 crash; called black Monday, the dotcom bubble of 2000 and the more recent crash in 2008 caused by the subprime mortgage crisis in America. The economic crisis of 2008 which originated in America spread to various economies in the world and their stock markets were affected. It reduced the value of stocks around the world by as much as 41% and affected both major and emerging stock markets. The Nigerian stock market is an emerging market in Africa. After attaining the position of one of the most profitable, efficient and fastest growing equity market in the...
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...Fall? Introduction Watching the ups and downs of stock prices can be enough to make you seasick. If you own stocks, you've undoubtedly followed their prices with a feeling of either satisfaction or disappointment, depending on how your investments have done. Short-term swings can be bewildering, and sometimes it seems as though stock prices follow a logic all their own. Even so, it is possible to break down stock performance in ways that help distinguish solid growth from inflated expectations. Case Study in Rising Prices: Wal-Mart A stock's price is determined by its fundamentals (how the company has actually performed) combined with its valuation (how much the market is willing to pay for that performance and the promise of future growth). Similarly, when a stock's price goes up, that rise comes from either (1) growth in the underlying business or (2) an increase in the stock's valuation, as the market becomes more optimistic about the company's future. As an illustration of these two drivers of stock performance, consider the history of Wal-Mart WMT. In the 1970s and 1980s, Wal-Mart was the quintessential growth stock. It was profitable, with returns on equity consistently above 20%. Year after year, its revenue and earnings grew by more than 25%, often by more than 30%, as it opened new stores all over the country. As a result of this consistent growth, the annualized return of Wal-Mart's stock from 1970 to 1990 was about 35%. That's an impressive figure...
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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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