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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 is the difference between investing in shares and investing in physical assets?

Physical assets refer to commodities (gold, silver, copper, etc.), real estate (land or buildings), wine, art and other tangible assets. You will hear people use various terns such as commodities, real assets and other loosely defined terms. The physical assets have value if someone wants to put the assets to productive use. Gold will also have a value as an alternative to paper currency. Shares of stock in a publicly traded company are considered a financial asset where you are one of many owners of the company. Or you can buy shares in an index or fund made up of a group of companies. The performance of the shares can depend on many factors including the performance of the management and the behavior of the other investors.

What are the functions of primary market?

The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. The process of selling new issues to investors is called underwriting. In the case of a new stock issue, this sale is an initial public offering (IPO). Dealers earn a commission that is built into the price of the security offering, though it can be found in the prospectus. Features of primary markets are: * This is the market for new long term capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM). * In a primary issue, the securities are issued by the company directly to investors. * The company receives the money and issues new security certificates to the investors. * Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business. * The primary market performs the crucial function of facilitating capital formation in the economy. * The new issue market does not include certain other sources of new long term external finance, such as loans from financial institutions. Borrowers in the new issue market may be raising capital for converting private capital into public capital; this is known as "going public." * The financial assests sold can only be redeemed by the original holder.

What is Nifty stock?

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"

What is bullish sentiment in stock investing?

Part of the indication or sentiment is when the 200-day Moving Average - about the number of days in one trading year - crosses over and stays above the 50-da Moving Average - about the number of days in one 3-month trading period or quarter. === ===

Difference between retail fund and wholesale fund?

Retail are sales direct to the consumer and wholesale is when you sell to a distributor who then resells.

Who are institutional investors?

Institutional investors are organisations which pool large sums of money and invest those sums in companies. They include banks, insurance companies, retirement or pension funds, hedge funds and mutual funds, angel investor groups, venture capital groups, private investment clubs. If looking for funds to invest in, I'd recommend checking out the ratings at http://www.morningstar.com . if needing an investment, check out the listings of venture capital and angel capital investor groups at http://www.breadstreetinc.com

Functions of primary market?

the main service functions of primary market are as follows:

1) Organisation: deals with the origin of the new issue. the proposal is analyzed in terms of the nature of the security, the size of the issued timings of the issue and flotation method of the issue.

2) Underwriting: underwriting is a kind of guarantee undertaken by an institution or firm of brokers ensuring the marketability of an issue. it is a method whereby the guarantor makes a promise to the stock issuing company that he would purchase a certain specific number of shares in the event of their not being invested by the pubic.

3) Distribution: the third function is that of distribution of shares. distribution means the function of sale of shares and debentures to the investors. this is performed y brokers and agents. they maintain regular lists of clients and directly contact them for purchase and sale of securities.

Why do people invest?

I invest in cryptocu rrencies using Netcoins Exchange. These digital currencies will soon be the future of money.

How can a small investor diversify their stock portfolio?

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.

How would the price of a stock be affected by its dividend?

Paying a dividend costs the company and as such will decrease the value of the company and the stock. If all other factors are equal, a buyer would prefer a stock that is expected to pay the higher dividend. If Company A is expected to pay $10 per share annually and Company B $8, an investor who wants to make 8% would be willing to bid $125 for a share of Company A but only $100 for Company B. On the date that a dividend is effective, a company's stock will drop by the amount of the dividend because that amount will be paid to the person who owned the stock at the beginning of that day.

What is the outlook for the FMCG sector in India for 2012?

The FMCG Sector offers the most conservative or defensive options in the current market scenario. The consumption demand for FMCG products continues to be strong in both local and international markets. Also, the domestic consumption is growing irrespective of the interest rate cycle and the domestic economic scenario. As a result, the FMCG sector is expected to do well in the future.

What are the risks of countertrade?

It's pretty difficult (but probably NOT impossible) for the IRS to levy taxation.

What were the basic themes or goals of progressivism?

Democratizing government

Efficiency & good government

Regulation of giant corporations

Social justice

How do you achieve sustainable economic growth?

There are a variety of ways to attain and maintain sustainable development. For example, when you cut down trees replace them with new saplings. As long as the resource is renewable and we use that and continue to maintain that resource then we can attain sustainable development.

What is investment ratio?

it is the rati used in calculating the no and amount of funds investors contibuted to a company it is the rati used in calculating the no and amount of funds investors contibuted to a company it is the rati used in calculating the no and amount of funds investors contibuted to a company

What are capital market securities?

This is the common and fast way to determine the value of a publicly traded company. It is simply calculated by multiplying the number of shares outstanding by the share price. Logically, this would find the value of the company, since the company would be worth as much as the shares would be worth. This definition works for stocks, and certain mutual funds.

Discuss the recent development in Indian stock market?

India has the largest volume in stock trading. It is very difficult to make money in India by investing in stock markets. With a total of more than 5000 companies listed in NSE and BSE, the most important choice of choosing the company whose shares are to be bought becomes increasingly difficult. Once decided on the stock, one need to time the market as or long term investment are done to get a good profit on the investment. A trader should always have the eye for the investment. He has to follow the valuations at which to buy or sell. When we talk about the Indian share market, we talk about two exchange points:

What the inter- relation between stock market bond market property market?

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

Role of foreign institutional investors in Indian stock market with special reference to sensex tumbling?

what is role foreign investers in Indian stock market

why it is used foreign investment Indian stock market

what is role foreign investers in Indian stock market

why it is used foreign investment Indian stock market

what is role foreign investers in Indian stock market

why it is used foreign investment Indian stock market