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Investment Theory

Topics include Efficient Market Hypothesis, Capital Asset Pricing Model (CAPM), Arbitrage Pricing Theory, and investment strategies

364 Questions

What are the components of the investment process?

1. investor characteristics

2. investment vehicles

3. strategy development

4. strategy implementation

5. strategy monitoring

Can the president of the US have money in the stock market?

Before the white house any U.S. president was just another person. Once they have become President, they're still allowed to invest in the stockmarket as any other person would.

What are the steps involved in management directing?

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

Who bought out Alex Brown?

In 1997 Alex. Brown & Sons was acquired by Bankers Trust to form BT Alex. Brown. In 1999 BT Alex. Brown was bought by Deutsche Bank.

Why is short selling legal?

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 best day of the week to buy stocks?

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.

When did fixed commissions end?

I've been looking for the answer myself, of a related question, ("How MUCH were fixed commissions, as a percentage of the stock order?"), but all I've run across SO far, is a vague reference to fixed commissions being prohibited in the 1970's, which seems about right...

If a stock price goes down to zero can it come back up?

The stock could go back up as long as the company is still in business, or is sold or bought by a another business or corporation, otherwise no.

Briefly describe the steps in the risk management?

The steps in risk management assessment include identifying the hazards, specifying who could be harmed and how, and figuring out how to prevent it. Make note of the information, then put a plan into place. Review and update the plan as needed.

What are the basic goals for marketing?

The basic goals of marketing are focusing the resources and objectives of a company on the targets identified by marketing research. The company's products must move to the consumer market efficiently and profitably.

Is money the key to success?

Success is all in how you measure it. If you want to be wealthy and that is what you have become than you have succeeded, but if your success relies on your happiness then no. Money cannot buy true happiness, but it can satisfy you for a while. Money will always leave you wanting something more.

How is the Treynor ratio Annualized?

The Treynor Ratio is

(expected return - risk free rate) / beta.

Beta is dimensionless and cannot be annualized - the figure is the same whether you use daily, monthly or yearly returns.

The expected return and the risk free rate only need to be annualized. If they're based on daily returns, then raise them to the power (1+daily interest rate)^252 (assuming 252 trading days in one year).

See the link below for an example of a spreadsheet which calculates the Treynor Ratio

A person who makes loans and oversees savings accounts?

A person who makes loans and oversees savings accounts typically works in a banking or financial institution, often in a role such as a loan officer or bank manager. They evaluate loan applications, assess creditworthiness, and manage customer accounts to ensure proper savings and interest accrual. Their responsibilities may also include advising clients on financial products and helping them make informed decisions about borrowing and saving. Ultimately, they play a crucial role in facilitating financial transactions and promoting sound financial practices.

Why investment in mutualfund is riskless?

No, mutual fund investments are not riskless.

Since mutual funds invest in the stock marketthey carry the same risk that stock market has. If the price of stocks tumbles due to some reason, the value of a mutual fund goes down and hence our investment worth also goes down. Certain type of funds like debt funds and balanced funds do not bear the brunt of a stock market collapse but they suffer losses too, during an economic crisis.

Since an experienced financial expert is investing on our behalf the chances of us suffering a loss is considerably reduced but it is not RISKLESS

Would management pursue goals other than shareholder wealth maximization?

Of course yes, but maximizing shareholder wealth would be the primary goal of any organization that has shareholders.

Can banks invest in stock market?

Yes. But, they cannot invest the depositors money in the stock market. In the years since the financial crisis, central banks have leapt to the forefront of public policy making and have become major investors in stock markets.

What is index in stock exchange?

The index in a stock exchange refers to the indicator of the overall performance of the exchange. Usually a number of large conglomerates that are listed in the exchange are chosen for the calculation of the Index.

For Ex: The Sensex (Bombay Stock Exchange) comprise of 30 of the top companies in India. Each of these 30 companies has a weightage in the index and the price movement of these companies in either direction can influence the index.

What are the duties of Investment Manager?

An investment store manager is somebody who oversees assets and investments for their customers to get the most elevated conceivable profit for their cash. They are liable for dealing with the subsidizes given to them by customers in a suitable way, thinking about the customer's capacity to bear hazard, just as the customer's possible objectives and tentative arrangements. Asset managers are paid an expense for their work, which is a level of the asset's normal resources under administration.

An investment store manager is liable for exploring various sorts of investments to decide the most ideal choices for his/her customers. They comprehend their customer's inclinations (counting how much danger the customer is alright with), and attempt to locate the correct blend of investments, while likewise augmenting the profit for their investments.

Investment store managers need to showcase their administrations, their insight, and their associations to secure new customers. They at that point assist these likely customers with understanding why contributing with an asset manager is best for them. They should likewise keep on keeping their present customers included and sure about the condition of their assets by occasionally meeting with them to examine the advancement of their investments and give reports and outlines showing their exhibition.

A few obligations of an investment store manager:

Exploring different stocks or finances that might be in the information for ongoing item improvements, income explanations, or different reasons to endeavor to separate greatest incentive from a potential or current investment

Exploring expected people or organizations to focus as likely customers

Creating recommendations for planned customers, to assist these likely speculators with understanding their capacity to bear investment danger and how that can relate to their arrangements for what's to come

Getting ready reports for existing customers, to represent the accomplishment of their investments or to propose new investments that may help support their portfolio

Proceeding with training and licensure meetings, to have the option to offer a more extensive exhibit of administrations to new and existing customers.

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What is inverstment?

Inverstments are another fomr of investments.

What are 100 shares of the Tulsa Interstate Petroleum Company from June 19 1919 worth today?

Take the stock certificate to your local full service broker and they will reserch it for you. The company may have been bankrupt or merged and is almost impossible for an individual to track on his own.