▼
Saturday, 29 April 2017

Primary aim of management is to increase the book value and the market value of the company.

›
The primary aim of management is to increase the book value and  market value of the company. Book Value Book value (sharehold...

Risks of Equity Securities

›
Preference shares are less risky than common shares. Putable common shares are less risky than callable or non-callable common shares. ...

Convertible Preference Shares or Preferred Stock

›
Preference shares can be classified into the following categories: Cumulative Non-cumulative Participating  Non-participating Convert...

Return Characteristics of Equity Securities

›
The two main sources of an equity security's total return are: Capital gains from price appreciation Dividend income The total ...

Psychological Biases

›
Loss Aversion Behavioural finance asserts that investors exhibit loss aversion, that is, they dislike losses more than they like comparab...
Friday, 28 April 2017

Behavioural Finance

›
Behavioural finance looks at investor behaviour to explain  why individuals make the decisions that they do,  whether these decisions ...

Momentum and Overreaction Anomalies

›
Overreaction Investors tend to inflate (depress) stock prices of companies that have released good (bad) news. Studies have shown that...

Earnings Surprises

›
Several studies have shown that although earnings surprises are quickly reflected in stock prices most of the time, this is not always the ...

Closed-End Investment Fund Discounts

›
Several studies have shown that closed-end funds tend to trade at a discount (sometimes exceeding 50%) to their per share NAVs. Theoretic...

Objectives of Market Regulation

›
Control fraud or deception of uninformed market participants. Control agency problems by setting minimum standards of competence for age...

Characteristics of a Well-Functioning Financial System

›
Timely and accurate information on the price and volume of recent transactions.  If timely information is not available, a seller may not ...

A Dealer Market

›
A dealer market (quote driven market or price driven market) consists of individual dealers who are assigned specific securities. These...

Private Placements

›
In a private placement, securities are not offered to the public. Companies sell securities directly to a group of qualified investors, u...

Risk Objectives

›
An example of an absolute risk objective would be that the client does not want to lose more than 5% of her capital over a particular perio...

The Investment Policy Statement

›
The Investment Policy Statement (IPS) An investment policy statement is an invaluable planning tool that adds discipline to the investm...

Investment Constraints

›
Liquidity Liquidity refers to the ability to readily convert investments into cash at a price close to fair market value. Investors may...

Return Objectives

›
Absolute return objectives sate the percentage return desired by the client.  The return may be expressed on a real or nominal basis. Re...

Measures of Returns

›
Holding period return Arithmetic or mean return Geometric mean return Money-weighted return Annualised return Return on a portfolio ...

Return-Generating Models

›
A return generating model is a model that is used to forecast the return on a security given certain parameters. A multi-factor model us...

Risk Management

›
What is risk? Risk encompasses all of the uncertain environmental variables that lead unpredictability of outcomes. Taking risk is ...