INTRODUCTION
Indian economy is full of investment opportunities that need to be explored to earn profits. To grab the opportunities, one of the platforms is provided by stock market.
Stock market is the collection of buyers and sellers of stocks (shares) and other innovative instruments like options, derivatives, swaps, etc. It not only provides required funds for boosting the business but also provide a common trading place through the mechanism of stock exchanges.
Over the time period, Indian Stock Market has emerged as a promising market. Till date, there are 24 stock exchanges in India with BSE and NSE being the prominent and OTCEI and other regional stock exchanges.
“BSE, established in 1875, is considered to be one of Asia’s fastest stock exchanges, with a speed of 200 microseconds and one of India’s leading exchange groups and the oldest stock exchange in the South Asia region. Bombay Stock Exchange is the world's 10th largest stock market by market capitalization at $1.7 trillion as of 23 January 2015.”www.bseindia.com/ More than 5,000 companies are
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The theory discusses the relationship between different securities and then draws inter-relationships of risks between them. It assumes that investors are “risk averse” and so the investment decisions should be based on efficient portfolio concept depicting the investor’s preference for maximum return for the given level of risk or minimum risk for the given level of expected return. Also, securities with low or negative covariance amongst them can help reduce the risk. Roy (1952) independently developed the “safety first” model with similar features to Markowitz model but due to earlier publication of Markowitz, he is regarded as the “godfather” of portfolio theory. Tobin (1958) enlarged the Markowitz’s analysis by putting forward separation theorem suggesting manner of fund allocation between risky and risk-free
As a key feature of Graham’s book “The Intelligent Investor” the Margin of Safety is essential for the value investor, meaning for both Enterprising and Defensive Investor. It is a concept of choosing the best and undervalued Stocks or bonds. Graham’s theory led him to four very simple.
Investing in stocks involves owning part of a company’s equity which effectively enables the shareholder to receive a portion of the company’s earnings and assets in form of dividends. Stocks are generally categorized as either common stocks or preferred stocks whereby common stock allow investors to vote on key issues but do not guarantee of dividends (Markowitz 78). Preferred stocks on the other hand do not provide voting rights but assure stockholders of dividend payments. Investing in stocks offers investors comparatively high returns relative to treasury securities but the investments also have high inherent risk. Stocks are purchased through licensed stockbrokers who range from the discounted order-taking online brokers, to the pricey full-service brokers and money managers (Sourd 112). Despite the type of broker an investor opts for, the stock market has the potential to generate high returns through an investment strategy. One of the main strategies employed is diversification which involves the purchasing of different stocks with varied performance and rates of returns in order to spread out the risk of the individuals stocks across a portfolio. Investing in stocks is therefore one of the most profitable alternatives of personal financial planning, and should be considered as one of the investment vehicles that generates an additional income stream.
Stock Exchange is the fundamental stage that gives the facilities used to trade the company stocks and other mutual funds or bond which is related to company. Either you can buy or sell the stock only when it is listed on an exchange. India's top stock exchanges are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). That is the place where the stock buyers and sellers can meet.
Stock investment means you are purchasing a share of the company, therefore the company’s success determines the value of your investment. Buying stocks is not a difficult process; clarification of some important terminology and differentiation helps gives you the foundation to start investing.
There are only a handful of stock market exchange sites such as; the American Stock Exchange (AMEX), the New York Stock Exchange (NYSE), and the National Association of Securities Dealers Automated Quotations (NASDAQ). Each site has several similarities as well as differences. An essential difference between the exchange sites is their trading principles. The NYSE was founded in 1792, and has more of an auction market; whereas NASDAQ was founded in 1971, and is more of a dealer market. (Weinburg,
Two of the largest stock exchanges in the USA are NASDAQ and NYSE. They both use different trading tools. Trades on NASDAQ are entirely automated, the NYSE uses designated specialist for each stock who act as a human backstop in case something goes wrong with electronical trading. NASDAQ has made a name for its self as an exchange for successful technology companies such as Microsoft, Intel and Oracle. It is the 2nd largest Stock exchange in the world by market cap; NYSE is the largest.
This assignment is concerned with your understanding of the key issues relative to portfolio analysis and investment. In completing this assignment you are to limit your scope to the US stock markets only. Use the Cybrary, the Internet, and course resources to write a 2-page essay which you will use with new clients of your financial planning business which addresses the following issues and/or practices:
Moreover, it is not difficult to learn how and where to invest, it is actually easier than doing many other things in the business field. The time value of money is an important factor to consider when thinking about investing in the market stock. Investing in the market stock can generate profit in the long and short run instead of keeping the same amount without investing or just looking for interest which is limited. The following are pros and cons of stock market investing:
Capital Asset Pricing Model (CAPM) is an ex ante concept, which is built on the portfolio theory established by Markowitz (Bhatnagar and Ramlogan 2012). It enhances the understanding of elements of asset prices, specifically the linear relationship between risk and expected return (Perold 2004). The direct correlation between risk and return is well defined by the security market line (SML), where market risk of an asset is associated with the return and risk of the market along with the risk free rate to estimate expected return on an asset (Watson and Head 1998 cited in Laubscher 2002).
The project is done to find out the impact of stock split on the stock market. In our project, we have made use of event study methodology to assess the accuracy of stock price reaction of 39 public listed Indian companies in National Stock Exchange (BSE) in the year 2006 and onwards. The abnormal returns (actual returns-returns from regression line) results were taken for 20 days before and after the announcement date to test whether the result is significant or not (Level of significance=5%). The project shows that there is no significance difference in the price level before the announcement date while after the announcement date, there was a significant difference in the price level for few days(level of significance being 5%) The project supports the hypothesis that Indian stock market is semi strong efficient.
According to Investopedia (Asset Allocation Definition, 2013), asset allocation is an investment strategy that aims to balance risk and reward by distributing a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon. There are three main asset classes: equities, fixed-income, cash and cash equivalents; but they all have different levels of risk and return. A prudent investor should be careful in allocating each asset class to his portfolio. Proper asset allocation is a highly debatable subject and is not designed equally for everybody, but is rather based on the desires and needs of the individual investor. This paper discusses the importance of asset allocation, the differences and the proper diversification within the portfolio.
In 2003, Capital Market Authority (CMA) was established under the Capital Market Law (CML) to act as regulatory supervisor for the capital market. Capital Market Authority regulate and supervise different critical issues such as market conduct, merger and acquisitions, corporate governance, and issuance of financial tools such as mutual funds, IPOs and Sukuks “Islamic bonds”. Thus, the establishment of CMA defined a new stage of financial liberalization in the country. CMA established the legal and regulatory platform to open up the Saudi capital market, support the privatization effort and increase public participation in the market while promoting efficiency and transparency. Furthermore, in March 2007, Tadawul exchange was re-incorporated as joint stock Company with a capital of USD 320 million to increase autonomy for the exchange. After the formation of CMA, the Saudi capital market continuously evolving in term of breadth, depth and complexity. In March 2010, the number of listed companies increased to 139 from 76 back in 2001 as local companies started to look at capital markets to fund their future financing needs. Due to the increasing in investors participation, Tadawul’s total market capitalization at a compound annual growth rate “CAGR” of 34.8% to SAR 1.9 trillion which about USD 507 billion between 2003-2007. Due to the financial crisis in 2008-2009 the market capitalization for Tadawul declined to SAR 1.2 trillion, which about USD 320 billion. Between the years of 2003-2007, the stock market activity grew in a fast pace without interruption in term of value, volume, and market cap along with rising in the number of transactions. The total trading volume of shares on Tadawul Stock Exchange increased at a CAGR of 11.4% between 2003-2009. The
The stock market is an essential part of a free-market economy, such as America’s. This is because it provides companies the capital they need in exchange for giving away small parts of ownership in their company to investors. The stock market works by letting different companies sell stocks to gain capital, meaning they sell shares of their company through an exchange system in order to make more money. Stocks represent a small amount of ownership in a company. The more stocks a person owns, the more ownership they have of that company. Stocks also represent shares in a company, which are equal parts in which the company’s capital is divided, entitling a shareholder to a portion of the company’s profits. Lastly, all of the buying and selling of stocks happens at an exchange. An exchange is a system or market in which stocks can be bought and sold within or between countries. All of these aspects together create the stock market.
What is the stock market? Businesses share part of the company by selling stock, or shares of ownership. When investors own shares of a company, that company is considered public because the general public has an ownership stake in that company. At the high ranks of the companies are the board of directors, whose job it is to make sure the business’s managers are working in the best interests of the multiple owners and shareholders. Companies sell shares so they can expand their businesses and make them better, such as by building manufacturing plants, buying other companies, and developing new and improved products to keep their business profitable. America’s railroads, steel manufacturers, car companies, and telephone companies all started with the help of money from opening up their business to the Stock Market. The Stock Market started in the 1920’s. People who were smart enough to buy them back then could build up a fortune since the market was growing so rapidly. One wh...
Using the Modern Portfolio Theory, overtime risk assets will provide a higher expected rate of return, as compensation to the investors for accepting a high risk. The high risk will eventually lower collecting asset classes to the portfolio, thus reducing the volatile risk, and increasing the expected rates of return. Furthermore the purpose of this theory is to develop the most optimal investments portfolio which would yield the highest rate of return while ascertaining the risk for the individual or corporate investor.