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Investment Theory
Topics include Efficient Market Hypothesis, Capital Asset Pricing Model (CAPM), Arbitrage Pricing Theory, and investment strategies
1,117 Questions
How do you pronounce baccalaureate?
- 1 answer
Back-ah-LOR-ee-et
The "et" rhymes with "set" or "pet"
What are the trading hours of the London Stock Exchange?
- 1 answer
LSE Hours of Operation
Trade Reporting 07:15 - 07:50
Opening Auction 07:50 - 08:00
Continuous Trading 08:00 - 16:20
VWAP 16:20 - 16:30
Closing Auction 16:30 - 16:35
Order Maintenance 16:35 - 17:00
Trade Reporting Only 17:00 - 17:15
Holidays when the LSE is closed:
New Year's Day
Easter
May Bank Holiday
Spring Bank Holiday
Summer Bank Holiday
Christmas
Note:
UK Time is Greenwich Mean Time (GMT). Summer (Daylight-Saving) Time is observed in UK Time, where the time is shifted forward by 1 hour; 1 hour ahead of Greenwich Mean Time (GMT+1).
What is the advantages and disadvantages of multiple regression analysis?
- 1 answer
Advantages:
The estimates of the unknown parameters obtained from linear least squares regression are the optimal.
Estimates from a broad class of possible parameter estimates under the usual assumptions are used for process modeling.
It uses data very efficiently. Good results can be obtained with relatively small data sets.
The theory associated with linear regression is well-understood and allows for construction of different types of easily-interpretable statistical intervals for predictions, calibrations, and optimizations.
Disadvantages:
Outputs of regression can lie outside of the range [0,1].
It has limitations in the shapes that linear models can assume over long ranges
The extrapolation properties will be possibly poor
It is very sensitive to outliers
It often gives optimal estimates of the unknown parameters.
What does IN PLAY mean in the stock market?
- 1 answer
In play trading stocks are stocks that are featured in news, triggered by events such as earnings reports, company press releases, rumors of a company buyout, government reports, market analyst ratings and financial news.
This can trigger an ongoing rally in the stock price. This does not indicate a safe investment either short term or long term.
The time frame for an in-play stock is typically short term (a few days or intraday).
In-play stocks mentioned in financial news outlets get attention from investors who trade on market reaction to news, looking for News to stimulate better-than-average trading volume and move stock prices.
Good news can inflate stock prices, which can lead to intraday or subsequent sessions pullbacks. Bad news can create oversold situations that attract new investors who want to buy at low prices.
Why should investors use beta?
- 1 answer
IN THE FIELD of investing, the term the 'beta' of a stock or share is an indicator of the movement of that stock's share price in relationship to the movement of share prices in the market as a whole. It is a comparative measure of an individual stock's past price volatility.
If a particular stock has a beta of 1 this means that the movement of its price has exactly matched the general movement of all prices in the market, i.e. there was an extremely close relationship with percentage value movements of the stock and that of the market.
But if a stock has a beta of 0 (zero), the movement of its price in the market has been seen to be the opposite to that of the general movement of prices in general in the market as a whole.
Therefore investors should give careful attention to the beta of a stock they are considering investing in.
ALTHOUGH the past is no sure guide to the future, market analysis attempts to spot trends -in the hope that, just maybe, the past IS a guide to the future!
Based on the assumption that a stock's beta (of past performance) is a good guide to its potential future performance, an investor who wants to 'run with the market' might choose a stock with the highest beta, i.e. the closer to 1 the better. They therefore expect, based on the past, that the stock's price will correspondingly rise when general market prices rise. On the other hand, the investor must expect the stock's price to fall when general market fall, and by a similar percentage.
But a stock with a beta of 0 (zero) closely counter-matches the market, and when markets have fallen, the beta 0 stock has risen by the same percentage, and when markets have risen, the beta 0 stock has fallen by a similar percentage.
AN INVESTOR who wants to 'beat the market', especially in a falling market economy, will look for stocks with low betas, but of course, they also run the risk of their stock losing value when the market is rising!
An investor who wants to take a more cautious/conservative approach, the middle-way, may choose a stock that falls partway between (a) 'responding with the market, one way or another!, and (b) being 'independent of the market'. In this case they might select a stock with beta of 0.5 which might better suit their expectations and attitude to risk.
MORE INFORMATION: CALCULATING THE BETA
The beta is computed using regression analysis. In our simple examples we have basically compared a beta of 1 with a beta of 0. However, if a stock's price responds with the market but shows co-related increases/falls that are actually 50% greater than that of the market, they will have a beta of 1.5
And if the stock still rises and falls with the market but its percentage increases and falls are double that of the market, it will have a beta of 2.
CONCLUSION
You can see, then, that the beta is a very interesting and important measure of a stock's past performance (in 'price' terms) in relationship with the stock market as a whole. But is the past a good guide to the future? It seems that the jury is still out on that one!
- For more information, see Related links below.
What does the job market look like for lawyers in the future?
- 1 answer
Very bad. Lawyers are dime a dozen.
What is the formula for Dynamic Momentum Index?
- 1 answer
Calculating the DMI is identical to calculating the RSI,
except the number of time periods used in the DMI calculation changes each day based on volatility.
What effect does a reverse stock split have on the price of shares given we have 1600000 shares outstanding and the share price is 35 cents and the split is reverse 1-20 what is the final price?
- 1 answer
There will be 80000 shares (=1600000/20) at a price of 7 dollars (0.35*20). In the end the market value of the firm will be the same.
What the inter- relation between stock market bond market property market?
- 1 answer
Bond prices have an inverse relationship with interest rates. As bond prices rise, yields will fall. Typically this is bullish for stocks as investors move to the equity markets to look for better returns. In this situation the stocks and bond markets generally trend in line with one another. In a deflationary situation, this situation is reversed and stocks and bond prices move inversely. Bond futures can be used as a leading indicator for the stock market
What are the steps involved in management directing?
- 1 answer
1. establishment of standard
2. fixation of the standard
3. compairing actual performance with standard performance
4. finding out the deviation
5. correcting the deviation
How can a small investor diversify their stock portfolio?
- 1 answer
You can use index funds or exchange traded funds to track a broader market index. This gives you exposure to many different types of companies, without your individual research required. Furthermore, your money is allocated between many sectors, so if financial companies hit a rough patch, perhaps your oil companies will be doing well. For large-cap (large-cap = big company!) international exposure, there are a lot of good options for you. The most diversified funds will have exposure to the largest sectors of the US economy, and are generally linked to a broad market index (like the Dow Jones or S&P). For diversification, stick with the index funds, as they will incorporate a variety of company types. The most widely held index fund type is the S&P 500 index funds. These, however do not diversify down into mid and small caps. or international. One might want to ad these other indeces as well for a more diversified portfolio. bonds also need to be diversified - a total stock bond index fund is a good start there...look at VTSAX, VGTSX and VBMFX as a starting point-other companies have these type funds. If you wish to own individual stocks, over 1100 companies have Dividend Reinvestment Plans (DRPs). These are companies that, at a minimum, allow you to reinvest your dividends in their stock at no fees. Many of these companies have Optional Cash Purchase Plans (OCPs) that allow you to purchase additional shares in the company at no fee. Usually, you must own at least 1 share in the company. After that you can register in the DRP and purchase shares with the dividends or through the OCP. See the link for more information on DRPs.
What is the role of Nigerian stock exchange in Nigerian economy?
- 1 answer
The Nigerian stock exchange sends nices letters to people telling them the won a very special Nigerian lottery. If you ever receive one of these letters be sure to pay the small (very large) tranaction fee, and you will become an instant millionare!
What does contract discontinuance transactions on your Hartford statement mean?
- 1 answer
Just a guess, but I would assume it means that your contract has been discontinued, or ended.
What is the objective of portfolio management and investment analysis?
- 1 answer
to increase the values of portfolio consisting some security.
To give the optimum returns to the investor.
To give maximum return i nless risk.
Answer:The main reason why people have professionals manage their portfolio is to leverage their expertise in order to generate maximum wealth from their investments. A well-managed portfolio will not only take care of diversification, but also allocate resources per the investor's financial objectives and appetite for risks. Besides, portfolio management makes sure there is constant monitoring of your investments. Many companies have forayed into this area of financial service. One such company is GEPL. It offers investment portfolio management services to help its clients realize their financial goals.
How much do stockbrokers make?
- 1 answer
too much
What is the best day of the week to buy stocks?
- 1 answer
The correct technical answer is it depands. However you can notice following three things as a general pattern in some weeks.
1. Monday morning: Sometimes the market goes down due to
a). Previous week had a positive trend and the market was overated, so need to get balance
b). In last Friday or over the week end there were some information about bad news about economy or market.
c). People are uncertain about somthing expected to happen during the week and speculates risk.
So its a good time to buy.
2. Tues day morning: If the market went up on Monday rapidly due a reverse reason mentioned in number one it has to be balaned in next day. So the price goes down.
3. Friday morning: Market was having a really good week and stocks were over valued. People starts realing this and starts selling back or slow down the buying. So the price goes down.
What is repaid to the investor on a bond's maturity date?
- 1 answer
The principle and interest.
What are the best investments during recession?
- 1 answer
THE ABSOLUTE BEST INVESTMENT DURING A RECESSION IS TO PAY OFF YOUR DEBT AS MUCH AS POSSIBLE. A NEST EGG OF SIX MONTHS OF INCOME IS ALSO A GOOD IDEA.THE NEXT THING TO UNDERSTAND IS WHAT TYPE OF RECESSION WE'RE FACING.I BELIEVE WE ARE FACING AN INFLATIONARY RECESSION WHERE THE COST OF ALL THE NECESSITIES OF LIFE WILL INCREASE IN COST[I.E. FOOD,GAS,HEALTH CARE]WHILE WAGES WILL BE FLAT OR DECREASE. ASSETS SUCH AS REAL ESTATE AND STOCKS WILL DECREASE IN VALUE AS EARNINGS FROM THESE ASSETS WILL ALSO DECREASE.MANY PEOPLE HAVE ALREADY MADE SUBSTANTIAL AMOUNTS BY SHORTING CYCLICAL SECTORS OF THE STOCK MARKET SUCH AS HOME BUILDING STOCKS. BY FINDING WAYS ON BETTING ASSETS WILL DECREASE IN TERMS OF DOLLAR COSTS LARGE GAINS COULD BE MADE. GOLD AND GOLD STOCKS HAVE ALSO INCREASED DRAMATICALLY AS PEOPLE HAVE SOUGHT A HISTORICALLY SAFE HAVEN INVESTMENT.AS THIS IS BEING WRITTEN IN JANUARY 2008, A C.D. PAYING AROUND 5% IS NOT A BAD MOVE FOR PEACE OF MIND AND EASE OF INVESTMENT.FOR THOSE WHO LIKE TO TAKE MORE RISK I WOULD LOOK AT PENNY MINING STOCKS AS A EXAMPLE OF AN INVESTMENT THAT HAS BEEN OVERLOOKED AND COULD PROVIDE PROTECTION FROM THE WEAKNESS OF THE DOLLAR AS THE FEDERAL RESERVE ATTEMPTS TO FLOOD THE WORLD WITH DOLLARS TO PREVENT A FULL BLOWN DEPRESSION.
Forget this rubbish...If it has to be typed in capitals and you trust it, then seek competent advice. And by all accounts forget the worst investments of all (penny mining stocks) that are just pure speculation. Go for 100% capital guaranteed fund investments and then sit back and RELAX (sorry for the capitals).
How many companies are listed under SEBI?
- 1 answer
SEBI stands for Securities and Exchanges Board of India. It is the governing body for all stock market related instruments in the country. No company is listed in it.
Companies are listed either in the NSE or the BSE which are the registered stock exchanges in the country
What is the accuracy of the investment casting process for steel?
- 1 answer
There are two main controlling factors in this process
When an investment casting sets it generally shrinks upto a few millimetres from its cast size. Depending on the complexity of the component being made more advanced machinery or more skilled die makers may be required to produce the required shape. In a premium casting upto 1/8 of a millimetre is attainable- to achieve this however there will high set up costs due to the following items. When designing the die to accomodate for post-cast shrinkage the number and complexity of calculations and simulations will be large. The cost and machining time for the die cutting, and the cost of the materials involved will be much higher. The die will require a long post-process, both before production commences and between batches to maintain die consistency and quality. For a commercial standard casting this tolerance will be around +/- 0.5mm depending on the complexity of shape. On the lowest budget this can grow to as high as +/- 2mm. All the above applies for castings <0.5kg.
What does the daily volume traded means to the investor?
- 1 answer
It reflects the liquidity of that market. The more shares, barrels of oil, pork bellies that are traded means that product is easier to sell (more liquid) so the price of that product is more accurate and adjusts smoothly rather than jumping.
You can also look at it in terms of supply and demand. If the volume traded is low then it suggests less people are willing to sell, meaning the product may cost more. The flip side of this is there may be few people willing to buy.
For securities with large numbers of outstanding shares, for example, the volume traded normally is a response to news or changing market conditions.
A Ryzner
Why is short selling legal?
- 1 answer
Why shouldn't COVERED shorting be legal? (Naked shorting--selling stock you don't plan to deliver--is illegal for one very good reason: it completely hoses the market. If you sell Acme to me but don't deliver it, and then I sell the Acme I bought to Joe but I can't deliver it because you won't, and Joe sells Acme to Frank but can't deliver it because it never existed in the first place, Joe, Frank and I all get hurt; you laugh all the way to the bank.)
A covered short is a risky way to capitalize on market downturns. I couldn't ever bring myself to do it, but it's okay.
What is the difference between over trading and over capitalisation?
- 1 answer
Over Trading :
A company which is under-capitalized will try to do too much with the limited amount of capital which it has. For example it may not maintain proper stock of stock. Also it may not extend much credit to customers and may insist only on cash basis sales. It may also not pay the creditors on time. One can detect cases of overtrading by computing the current ratio and the various turnover ratios. The current ratio is likely to be very low and turn over ratios are likely to be very higher than normally in the industry concerned.
Under Trading:Under-trading is the reverse of over-trading. It means keeping funds idle and not using them properly. This is due to the under employment of assets of the business, leading to the fall of sales and results in financial crises. This makes the business unable to meet its commitments and ultimately leads to forced liquidation. The symptoms in this case would be a very high current ratio and very low turnover ratio. Under-trading is an aspect of over-capitalization and leads to low profit.What is Nifty stock?
- 1 answer
The "Nifty Fifty" was also a term used for 50 large cap stocks in USA in the 1960s and 1970s. The Nifty Fifty included companies like Disney, American Express and IBM. S&P CNX Nifty is a well diversified 50 stock index accounting for 22 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds.
These shares are
"Name" , "Sector,"NSE Code"
"ABB Ltd. ","ELECTRICAL EQUIPMENT","ABB"
,"ACC Ltd. ","CEMENT AND CEMENT PRODUCTS","ACC"
,"Ambuja Cements Ltd. ","CEMENT AND CEMENT PRODUCTS","AMBUJACEM"
,"Axis Bank Ltd. ","BANKS","AXISBANK"
,"Bharat Heavy Electricals Ltd. ","ELECTRICAL EQUIPMENT","BHEL"
,"Bharat Petroleum Corporation Ltd. ","REFINERIES","BPCL"
,"Bharti Airtel Ltd. ","TELECOMMUNICATION - SERVICES","BHARTIARTL"
,"Cairn India Ltd. ","OIL EXPLORATION/PRODUCTION","CAIRN"
,"Cipla Ltd. ","PHARMACEUTICALS","CIPLA"
,"DLF Ltd. ","CONSTRUCTION","DLF"
,"GAIL (India) Ltd. ","GAS","GAIL"
,"HCL Technologies Ltd. ","COMPUTERS - SOFTWARE","HCLTECH"
,"HDFC Bank Ltd. ","BANKS","HDFCBANK"
,"Hero Honda Motors Ltd. ","AUTOMOBILES - 2 AND 3 WHEELERS","HEROHONDA"
,"Hindalco Industries Ltd. ","ALUMINIUM","HINDALCO"
,"Hindustan Unilever Ltd. ","PERSONAL CARE","HINDUNILVR"
,"Housing Development Finance Corporation Ltd. ","FINANCE - HOUSING","HDFC"
,"I T C Ltd. ","CIGARETTES","ITC"
,"ICICI Bank Ltd. ","BANKS","ICICIBANK"
,"Idea Cellular Ltd. ","TELECOMMUNICATION - SERVICES","IDEA"
,"Infosys Technologies Ltd. ","COMPUTERS - SOFTWARE","INFOSYSTCH"
,"Infrastructure Development Finance Co. Ltd. ","FINANCIAL INSTITUTION","IDFC"
,"Jaiprakash Associates Ltd. ","CONSTRUCTION","JPASSOCIAT"
,"Jindal Steel & Power Ltd. ","STEEL AND STEEL PRODUCTS","JINDALSTEL"
,"Kotak Mahindra Bank Ltd. ","BANKS","KOTAKBANK"
,"Larsen & Toubro Ltd. ","ENGINEERING","LT"
,"Mahindra & Mahindra Ltd. ","AUTOMOBILES - 4 WHEELERS","M&M"
,"Maruti Suzuki India Ltd. ","AUTOMOBILES - 4 WHEELERS","MARUTI"
,"NTPC Ltd. ","POWER","NTPC"
,"Oil & Natural Gas Corporation Ltd. ","OIL EXPLORATION/PRODUCTION","ONGC"
,"Power Grid Corporation of India Ltd. ","POWER","POWERGRID"
,"Punjab National Bank ","BANKS","PNB"
,"Ranbaxy Laboratories Ltd. ","PHARMACEUTICALS","RANBAXY"
,"Reliance Capital Ltd. ","FINANCIAL INSTITUTION","RELCAPITAL"
,"Reliance Communications Ltd. ","TELECOMMUNICATION - SERVICES","RCOM"
,"Reliance Industries Ltd. ","REFINERIES","RELIANCE"
,"Reliance Infrastructure Ltd. ","POWER","RELINFRA"
,"Reliance Power Ltd. ","POWER","RPOWER"
,"Siemens Ltd. ","ELECTRICAL EQUIPMENT","SIEMENS"
,"State Bank of India ","BANKS","SBIN"
,"Steel Authority of India Ltd. ","STEEL AND STEEL PRODUCTS","SAIL"
,"Sterlite Industries (India) Ltd. ","METALS","STER"
,"Sun Pharmaceutical Industries Ltd. ","PHARMACEUTICALS","SUNPHARMA"
,"Suzlon Energy Ltd. ","ELECTRICAL EQUIPMENT","SUZLON"
,"Tata Consultancy Services Ltd. ","COMPUTERS - SOFTWARE","TCS"
,"Tata Motors Ltd. ","AUTOMOBILES - 4 WHEELERS","TATAMOTORS"
,"Tata Power Co. Ltd. ","POWER","TATAPOWER"
,"Tata Steel Ltd. ","STEEL AND STEEL PRODUCTS","TATASTEEL"
,"Unitech Ltd. ","CONSTRUCTION","UNITECH"
,"Wipro Ltd. ","COMPUTERS - SOFTWARE","WIPRO"
List of companies in Belgium stock exchange?
- 1 answer
It's impossible to list out all the companies. There are thousands of stocks in the Belgium stock exchange.
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