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STOCKS & MARKETS
Failure by regulators and exchanges to pinpoint what caused wild equities swings on May 6 might sap investor confidence in the stock market
As if individual investors lacked reasons to mistrust the stock market, along came May 6's gut-wrenching, 9.2 percent drop in the Dow Jones industrial average.
The rapid stock plunge — followed by an equally quick, partial rebound in which the Dow regained nearly half its losses — surprised retail investors. Days later, they are trying to digest the realization that the market action during the so-called "flash crash" has bewildered the pros, too.
"I still haven't heard a satisfactory answer as to what happened
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There is a connection between the stock market and the economy. It is noticeable how economic activity influences stock prices. The current state of the economy has major influence over how much money is being deposited into the economy as well as a consumer's confidence in their income. Whether an individual invests in the stock market or not, it will have an impact on everybody and every company. Every investor’s goal is to gain the most money from the stock market. To do so, much knowledge is needed which can help predict the outcome. There are techniques used by forecasters to predict whether the stock will go up or down. However, it will not be an exact approximation because no one
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Free Will vs. Determinism
Socrates: “What is the definition of determinism?”
Maria: “It, the theory or doctrine that acts of will and occurrences in nature or social or psychological phenomena are usually caused by preceding events or natural laws?
Socrates: “What is the definition of free will?”
Maria: “Free will is a voluntary choice or decision, freedom of humans to make choices that are not determined by prior causes or divine intervention, humanity has the freedom of choice, since our choices are ours in the first place, although they must have an explanation.”
Socrates: “Do you agree that every event has an explanatory cause?”
Maria: “Yes I would like to think that
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The stock market crash of 1929 played an important role in our nation's history. After the crash, United States turned to a great depression from its greatest period of prosperity. There are differences and similarities between the stock market of 1929 and the stock market of 2006.Unlike the stock market today, the government had no control over the market in 1929.§There were no laws to guide the market in 1929. As a result, the large investors ruled the market to increase their wealth.§Unethical activities, like insider trading, emerged in the stock market of 1929.§The government regulates stock market today. The Securities and Exchange Commission was established to punish
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PROPOSED RESEARCH TITLE:
AN INVESTIGATION INTO THE DOWNWARD TREND IN GLOBAL STOCK MARKETS: A CASE STUDY OF THE NIGERIAN STOCK MARKET
The history of stock trading and trading associations can be traced as far back as the 11th century when Jewish and Muslim merchants set up trade associations. After centuries of evolution, stock markets have become the symbol of commerce in the modern world. It operates in various countries and trades a range of securities. The world stock market capitalisation is estimated to be about $ 36.6 Trillion. The stock market has various functions such as capital mobilisation, investing opportunities, risk
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Why Did We Buy The Stocks We Selected?Being a fan of the music industry, our group decided to roll the die with one of the heavier music producers. We decided to choose Apple because of the recent success and popularity we have seen in the iPod as well as the new G5. We simply thought that the recent success of these two items would propel the stock in a positive direction. We chose HOT because we thought that the holiday season would bring in many travelers. Hotels would naturally have better business as more people travel across the world. Having ties to Sheraton and many other major luxury hotels we figured that HOT may have a chance to raise in value as the holiday season continues.What
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(a) Dependable law and regulationsThe existence of dependable laws and regulations, not only from the government but also from the enterprises themselves is a necessary conditions since these all the organizations to compete and cooperate with the oversea and worldwide companies.(b) Resolution of policy riskInvestor confidence in reliable property right and stable, market-oriented policies are a necessary condition for financial integration and the development of emerging stock markets. Announced market-oriented policies may be reversed, however, and are initially not fully credible. We argue that sustained privatization and liberalization programmes represent a major test of political
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A absolute Chinese stock market speculate theory
To be an investor especially a speculator who must know how to compete with others, we should both deal with hundreds of operation every year, in market coupled with thousands of up to date news everyday and compete with other speculators which makes market like a game. The reason why Chinese speculators call it as chips theory, is partly in response to serious market manipulation that market is more like a casino ,partly because game theory foundation. Along with security price fluctuate in secondary market, different trading volume appears in different price section which is formed to different buying cost region on one stock
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Team members must hold at least three meetings to discuss the joint project, and you are required to record collective activities and individual activities as detailed as possible in your logbook. For individual activities, they must be endorsed by the other member. No free-riding for the group project is allowed. I reserve the right to read your logbook to identify each member’s contribution to the group work.
After reading this article “How does the stock market affect the economy?” it is obvious that the main topic of this article is about the stock market and how it affects companies and households. There are two main ideas of the article which I will summarize in this paragraph
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1. "As owners, what rights and advantages do shareholders obtain" (Cornett, Adair, & Nofsinger, 2014, p. 203)?
They are able to participate in the economic growth of publicly traded firms without having to manage business entities directly. They have the right to residual cash flows of corporate profits and often receive some of these cash flows through dividends. In addition, shareholders vote on the members for board of directors and other proposals for the company. Shareholder capital losses are capped in that they can only lose their initial investment. Stocks are very liquid and investors can enjoy this liquidity in both their entrance into the stock market
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assumptions used for the Black-Scholes option-pricing model as disclosed in the notes to the financial statements, as well as the market price of the stock on the last day of fiscal years 2011 and 2010, determine whether the change in value of each assumption (and stock price) between 2010 and 2011 positively or negatively impacts the estimated fair value of the options granted during 2011.
(page 33) As disclosed in General Mills’ 10-K, the market price of the stock on the last day of fiscal years 2011 and 2010 are $37.38 and $27.99, respectively, while the estimated fair value of stock options in 2011 and 2010 are $4.12 and $3.20, respectively. The increased market price can be a strong supporter
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The six forms of deferred (stock) compensation include: Incentive stock options, Non-statutory stock options, Restricted stock, Phantom stock plans, Discount stock options, and Stock appreciation rights.
* Incentive stock options entitle executives to purchase their companies’ stock in the future at a predetermined price.
* Compared to incentive stock options, non-statutory stock options do not qualify for favorable tax treatment. Executives’ pay income taxes on the difference between the discounted price and the stock’s fair market value at the time of the stock grant.
* Restricted Stock means that executives do not have any ownership control over the disposition of the
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Assignment on The Potential of Indian Stock Market to be of the top among Global market
Submitted by Submitted to
Irshad Hussain Mrs. Navleen Kaur
Enroll no . A1802009459
Sec - C
Amity international Business School
Indian Stock Market
The Indian stock exchanges hold a place of prominence not only in Asia but also at the global stage. The Bombay Stock Exchange (BSE) is one of the oldest exchanges across the world, while the National Stock Exchange (NSE) is among the best in terms of sophistication and advancement of technology. The Indian stock market scene really picked up after the opening up of the economy in the early nineties. The whole of
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term deposits give you a big return from the money you invested after waiting a long period of time? If you are a type of person that can accept a higher risk, you can invest your money in a stock market. In the financial market, stock refers to a supply of money that a company has raised. It comes from people who have given the company money in the hope that the company will make their money grow. The shares of stock are bought and sold in the stock market. The goal is to buy the stock at a low point, hold it for a time, and then sell the stock at a high point. The stock market investors include some of the richest people in the world. Bill Gates, the chairman of Microsoft, and Warren
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E15-5 Lump Sum Sales of Stock with Preferred Stock – Dave Matthews Inc.
(a) Fair Market Value of Common Stock (500 x $165) $ 82,500
Fair Market Value of Preferred Stock (100 x $230) $ 23,000
Allocated to Common Stock $ 78,199
($82,500 / $105,500 x $100,000)
Allocated to Preferred Stock $ 21,801
($23,000 / $105,500 x $100,000)
Total Allocation $100,000
Common Stock (500 X $10) $ 5,000
Paid-in Capital in Excess of Par –
Common Stock ($78,199 - $5,000) $ 73,199
Preferred Stock (100 x $100) $ 10,000
Paid-in Capital in Excess of Par –
Preferred Stock ($21,801 - $10,000
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the company. People want to be sure that while they dedicate time and energy to an organization, they are in turn taken care of by the company. In some cases, the level of benefits offered to employees can be a deal-breaker for someone. In my professional career, I have been only recently been offered a stock option plan, in addition to a comprehensive medical benefits plan. With my current company, employees are offered stock twice a year at a discounted rate of 5% below the current market price. Obviously, this sort of deal for employees is enticing, to say the least. Employees who take part in my company’s stock option plan have the potential to save and earn some money if the stock
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segment | $71B: Telecom: $39BWireless: $28B | $27.3BBusiness Mkt: $14.1BMass Market: $6.4BInternational: $3.9B |
Bond Rating | B+ | A+ | B |
Table 1: Company Summary
M&A Offers and Premium
In February 2005, Verizon and Qwest presented their final bids as described below
Verizon’s offer: $23.5 per share of MCI stock, $8.75 in cash and $14.75 in Verizon stock; This results in a valuation of $7.6B; Minimum stock exchange ratio will be 0.4062 shares of Verizon stock for each share of MCI. Verizon’s offer is a 1.18% discount (including synergies). MCI stockholders are bound lose value of their share if they accept Verizon’s offer.
Qwest’s offer: $26 per share of MCI stock, $10.50 per share
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Nonconstant Growth Valuation
A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the company’s dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 7% thereafter. The company’s stock has a beta of 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock’s current price?
Required rate of return = Rs=Rf+B(Rrm-Rrf), so 7.5+(11.5-7.5)*1.2=12.3... D0 = 2, D1 = 2.4, D2
= 2.88, and D3 = 3.08. PV for the dividends= 4.42. P2= 46.10. Stock price= 50.50
LL Incorporated's currently outstanding 11% coupon bonds have a yield to maturity of 8
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Upon analysis of the Seagate Technologies case, the arbitrage opportunity exists in the fact that Seagate’s stock price is undervalued. An investor would purchase the Seagate stock, sell on the market at the fair value, and collect profit. As this arbitrage opportunity is recognized, other investors (or MBA students) would also purchase Seagate stock (regardless of the fact that they invest in Seagate with their own capital or borrowed from the bank, since these is an arbitrage opportunity, there will be profit realized) , the price of the stock would eventually rise to fair value, eliminating the arbitrage opportunity.
The reason Seagate stock was undervalued was due to lack of
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, you divide the dividend at the end of the year (D1) by the price of the stock today (Po) minus the floatation or selling cost (F) and then adding that number to the constant growth rate (g). This can be calculated in the formula below:
Kn = (D1 / Po â€“ F) + g
The issuance of new stock must be closely monitored by investors and financial management as this could cause a drop in stock prices caused by the company selling more of its shares than the market can actually take in.
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maturity date of longer than 10 years. Most bonds will pay a fixed interest rate over the entire life of the security. These types of securities are sold in the capital market.
• Capital – Money that is used to generate income or make an investment. This can be raised by either debt or by issuing shares.
• Debt- The amount of money owed by a firm or person for money borrowed. Firms borrow money by selling debt securities. There are money market debt, which must be repaid within one year, note debt has a maturity date of 1 to 10 years, and any debt with a maturity date of longer than 10 years is called a bond.
• Yield – This is the percentage return paid on a stock in the form of
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24th May, 2014
Important to note that the value of the Certificate of Deposit increase in value in relation with the inflation rates, i.e. CD always track inflation rates. Thus, if during 2007 the inflation rate in the US was 4.1% and the average return in a Certificate of Deposit (CD) was 3.65%, in such case it would have been rational for the investor to invest in CD as the value of CD would have increased in par to 4.1% inflation rate
I totally disagree with the statement as it only depends upon the individual as how they are playing in the stock market. An individual can be described as an investor or gambler
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STEPHENSON REAL ESTATE RECAPITALIZATION
1. If Stephenson wishes to maximize the overall value of the firm, it should use debt to finance the $45 million purchase. Since interest payments are tax deductible, debt in the firm’s capital structure will decrease the firm’s taxable income, creating a tax shield that will increase the overall value of the firm.
2. Since Stephenson is an all-equity firm with 12 million shares of common stock outstanding, worth $48.50 per share, the market value of the firm is:
Market value of equity = $48.50(12,000,000)
Market value of equity = $582,000,000
So, the market value balance sheet before the land purchase is
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Volume–VII, Number–02, July-December, 2012
Effects of Interest Rate and Exchange Rate on Volatility of Market Index at Dhaka Stock Exchange
DEWAN MUKTADIR-AL-MUKIT * ABSTRACT The paper investigates the effects of the exchange rates and interest rates on stock market performance by using monthly time series data for the economy of Bangladesh, over the period of 1997 to 2010. This study uses econometric techniques of measuring the long and short term relationship between variables using the concept of Cointegration and Error Correction Model and analysis of Variance Decomposition. Causal relationships have been investigated using Granger causality test. By employing Cointegration technique
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A stock exchange is a place where a range of listed financial assets are bought and sold. The share market refers to that part of the stock exchange where companies are listed and are known as public corporations. The financial systems in most developed economies will include at least a stock exchange. The main class of financial asset quoted and traded on a stock exchange are ordinary shares or common stock. A share is a financial asset that represents an ownership share in a company.
The stock exchange
Copyright 2011 McGraw-Hill Australia Pty Ltd PPTs to accompany Viney, Financial Market Essentials
Copyright 2011 McGraw-Hill
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price will increase. If there is a negative change then the stock price will decrease.
Task 3: Bond Evaluation
AirJet Best Parts, Inc. would like to issue 20-year bonds to obtain remaining funds for the new Mexico plant. The company currently has 7.5% semiannual coupon bonds in the market that sell for $1,062 and mature in 20 years.
1. What coupon rate should AirJet Best Parts set on its new bonds to sell them at par value? (10 pts) 6.92%
2. What is the difference between the coupon rate and the YTM of bonds? (10 pts) The coupon rate is the fixed rate of income which the bond provides in for the purchase of the bond and the YTM fluctuates throughout the years that that bond is used.
3. What factors will contribute to the riskiness of these bonds? Explain in detail your rationale. (20 pts)
4. What type of positive and negative covenants may AirJet Best Parts, Inc. use in future bond issues? (10 pts)
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Efficient market hypothesis is widely accepted by academic community as a cornerstone of modern financial theory. Fama (1970) gives detailed definition of this theory and states that efficient market is a market that stock prices quickly and fully reflect all available and newly released information, where majority of participants are rational in their decision making process and where an investor is not able to outperform the market through any analyses, because of actual price of stock shows its intrinsic value. Naturally such revolutionary hypothesis did not occur suddenly.
In 1990 Louis Bachelier in his "Theory of Speculation" paragraph gave definition of
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Market Value Common Stock = $11 Market Value Common Stock = $8 to $13
EPS = $1
Current ttl assets = $120m
Debt ratio = 30% Debt ratio = 35%
if they borrow $12M (Debt Ratio = (36+12)/132 = 48/132)
Debt ratio = 36%
then they issue stocks worth $12M (Debt Ratio = (36+12)/(132+12) = 48/144)
Debt ratio = 33%
- if they borrow $12M to finance it's initial surveys they can offer warrants
- it is favorable to the lender since if debt is issued with warrants and if the surveys of minerals
prove to be favorable, market value of
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Answers to Chapter 9 Questions
1. This is because stock market movements are sometimes seen as predictors of economic activity in a country. This is also because corporate stocks may be the most widely held of all financial securities. Most individuals own stock securities either directly through stock purchases or indirectly through pension fund and mutual fund investments, and thus their economic wealth fluctuates closely with the market.
2. While common stockholders can potentially receive unlimited dividend payments if the firm is highly profitable, they have no special or guaranteed dividend rights. Rather, the payment and size of dividends is determined by the board of
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Brake System Market by Application (PC, LCV, HCV, Off-Highway, Wagon, Locomotive, and RTV), Type (Disc and Drum), Technology (ABS, TCS, ESC, and EBD), Rolling Stock and Locomotive (Air, EP, ECP, and others), and Region - Global Forecast to 2020
Released On 13th October 2015
Asia-Oceania is estimated to dominate the brake system market for automotive. The growth can be majorly attributed to the increasing demand of vehicles across the region. As of 2015, China and Japan are estimated to lead the brake system market for automotive in the region, whereas the Indian brake system market for automotive is projected to be one of the fastest growing markets. This growth can be attributed to
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On the Relationship between stock return and exchange rate: evidence on China
Yaqiong Li a b , Lihong Huang b
The Business School, Loughborough University ,UK
College of Mathematics and Econometrics, Hunan University, Changsha ,Hunan ,China
Abstract The purpose of this paper is to investigate the relationship between RMB exchange rate and A-share stock returns in China, in particular in Shanghai stock market. We find that both stock returns and RMB nominal exchange rate are integrated of order 1. The Engle–Granger cointegration test is then performed, suggesting that there is not a long-run equilibrium relationship between stock returns and RMB exchange rates at 5
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10.5. Increasing Retreaded Tyre Market
11. Competitive Landscape
11.1. Nokian Tyres Limited
11.2. Nizhnekamskshina Joint Stock Company
11.3. Bridgestone C.I.S Limited Liability Company
11.4. Cordiant Open Joint Stock Company
11.5. Altai Tyre Open Joint Stock Company
11.6. Goodyear Russia Limited Liability Company
11.7. Michelin Russia and CIS
11.8. Continental Kaluga Limited
11.9. Yokohama Russia Limited Liability Company
11.10. Pirelli Tyre Russia
11.11. Belshina Open Joint Stock Company
12. Strategic Recommendations
13.1. Russia Economic Outlook
List Of Tables
Table 1: Russia Vehicles Production, By Segment, 2009 - 2013
Table 2: Russia Tyre
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derivative market to act as a protective strategy in case of stock prices moving down as the investor can sell the asset at a formally agreed price and also for speculation purposes. A put option will be in-the-money (ITM), if its strike price is higher than the price of the underlying asset in the market. A put option is out-of-the –money (OTM) if its strike price is lowers than that of the underlying asset. A put option is at-the-money (ATM) if its strike price is the same or near the price of the underlying asset.
From the graph, the relation between the put price and volatility is linear, that is the two changes directly proportionally, if one increases, the other increases and the
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Running Head: ARE YOU AN INVESTMENT ANALYST?
PepsiCo and Coca Cola
ACC 557/Financial Accounting
March 02, 2014
Many organizations in the world have to share in the market. These organizations need to have a competitive advantage in the market. The discussions in this paper will include two organizations, about their descriptions, stock prices due to events, and stock analysis for both organizations. The name of the organizations this paper will mention will be PepsiCo and Coca Cola. These organizations are part of the beverage industry and provide several different food products for
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Ogden- Chapter 14- Dividend policies and stock repurchases
Cash dividends are the two principal means by which a firm pays cash to shareholders. In an ideal market, the result of a dividend payment is that the firms stock price falls by the per share amount of the dividend.
Stock Repurchase- the firm uses cash to retire some outstanding shares, buying shares from any investors who choose to dell. In an ideal market, a firms stock repurchases reduce its shares outstanding as well as the firms assets (cash) but have no effect on the market price of the shares
Three things you need to determine with dividends
1) Whether the firm should pay a dividend
2) How much the dividend
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opened its initial public offering in 2006 on the New York Stock Exchange for 34.00 and today has excelled over 750.00 continuing prosperity and growth as they have entered the global competition in the market. An impressive growth pattern has prompted MasterCard to find the 2nd spot next to Visa Incorporated and trampling other small competitors in the market. (The Motley Fool, 20313)
As a payment processing company, MasterCard, Inc. bills the banks, credit unions and firms taking payment from customers for the service of processing credit and debit transactions. The common misconception of credit cards is that the company responsible for processing the payment carries the debt until paid
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as per Constant Growth stock is r(s) must be greater than g. Because if g is greater than r(s), then the evaluation will lead to infinite stock price, which is quite impossible for any company or firm to have a constant growth that is quite greater than r(s) forever. Valuation by constant growth stuck is possible only if following conditions are satisfied:
Stock price Volatility: Highly volatile because new information about the company, such as Research and Development results, new product launch and responses of market causes frequent and sometimes large changes in stock prices.
Estimated stock value of Temp force for Different inputs:
D(o) = $2.00 | | | |
| Required rate of
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include more stocks than this example because it normally takes more than 30 stocks (Statman, 1987) for a portfolio to be qualified as a well diversified portfolio.
Beta measures the systematic risk (non-diversifiable risk) of a stock. Mysterious as it may sound, it can be easily found out by regressing the stock’s monthly excess return (return in excess of risk free rate) on market monthly excess return according to the following model:
R_it-R_ft=α_i+β_i (R_mt-R_ft )+e_it
the dependent variable Y the independently variable X
R_it is the return of stock i on month t;
R_ft is the risk free return on month t, normally a 3-month treasury
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:40pm on 04/22/2010
$28.31 - $34.13 is the 52 week high and low
10. Get at least 3 Stock Analyst Opinions on this stock. Indicate the key reasons the analysts rate this stock as a “buy” “sell” or “hold”. Do you agree with the analysts?
On 3/19 Standpoint initiated VZ with a “Buy”
On 2/9 Bernstein upgraded VZ to a “Market Perform”
On 1/28 Argus downgraded VZ to a “Hold”
Will you invest money in this stock?
After comparing Verizon with it competitors I would say yes for the long term investment. After looking at the financials of VZ and there competitors (especially AT&T) as an industry I would say VZ’s stock has not kept up with its competitors. The others are doing much better
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suggests that market participants receive and act on all relevant information as soon as it becomes available. Proponents of the EMT believe that there is perfect information in the stock market. That means whatever information is available about a stock to one investor is available to all investors. Everyone has the same information about a stock; the price of the stock should reflect the knowledge and expectations of the investors. The information used for supply and demand is obtained because of this theory. http://www.investorwords.com/1672/Efficient_Market_Theory.html#ixzz1EYpfB4dm
McConnell, C.R., Brue, S.L., & Flynn, S.M. (2009). Economics: Principles, Problems, and
Policies (18th ed.). New York: McGraw Hill/Irwin.
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shed some light on the issue. Since prices of stocks are mainly determined by company fundamentals, monetary policy can have only short term effect on stock prices. Even in the short run, effect of interest rates on stock prices is less clear-cut, and in a less developed capital market like Bangladesh, stock prices do tend to respond, for short term, to new reform measures and government incentives.
1. Introduction Bangladesh Bank (BB) adjusted its monetary policy stance during 2005 in order to contain inflationary pressures and facilitate stability in the foreign exchange market. At the end of 2005, interest rates on NSD certificates (government borrowing instruments from the non-bank
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an investment made at some point in the past. Good performance would require the investment to provide a measurable reward-to-volatility trade-off and to consistently outperform the major markets such as the S&P 500 and Russell.
Miller’s methodology includes buying low-price, high intrinsic-value stocks, researching areas of the market that look least promising, the lowest average cost wins, high price stocks can still be good (Wal-Mart and Microsoft), think long-term and anticipate rather than reacting, mixture of cyclically underpriced stock and secularly underpriced stock, be aggressive when stocks are low and less when stocks are high, and finally they must be able to take risk for
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De Angelo and Masulis, Kim (1988) and Miller (1986) supported that dividend paid can greatly reduce tax costs as tax clientele effect. As another theory, agency costs, Jensen and Meckling (1976) argued that the dividend payments reduce the agency cost; the managers would not use the cash to reinvestment.
Meanwhile, Miller and Rock (1985) suggested that the dividend announcement provides information to estimate the firm’s current earnings. In addition, Baskin (1989) proposed that dividend could be used as a proxy for the risk of future earnings. So, the dividend policy which is controlled by manager may affect stock market risk and reduce volatility.
This study is based on various
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add value are to research the market by observing the economy cycle. To well understanding the market demand and supply relationship inside the market would effectively show the current market trends.
The new strategy was stock picking strategy. In fact to maximize the returns and minimize the risk by jumping out the price the index tracking to. Sarah needs to picking some small stocks that easier to find the price trends. Therefore, her portfolio risk would be eliminated and the performance would be improved.
She is a contrarian investor. She invested during the economy downturn with lower price and selling them on top of the market after the economy recovered after September 1990, it can
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market will react positively (all things being equal). Therefore, the dividend discount model will be unable to “capture” the increase of the stock price as there will be no increase in the dividends paid. However, we know that a lot of these companies are very valuable and profitable. Another problem with this model is that you have to make many assumptions in order for the formula to work. You are going to have to predict whether a company will continue to pay the same dividend, or whether it will continue paying dividends at all. If you do not guess right, the formula becomes worthless. 9) If the company chooses to retain some of its profit and reinvest later, we need to implement Total
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), Commercial Paper (CPs), Bills of Exchange and other such instruments of short-term maturities (i.e. not exceeding 1 year with regard to the original maturity)
Capital market is a market for long-term debt and equity shares. In this market, the capital funds comprising of both equity and debt are issued and traded. This also includes private placement sources of debt and equity as well as organized markets like stock exchanges.
Capital market can be divided into Primary and Secondary Markets.
In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. Secondary market is an equity trading avenue in
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, risk is the part of a security’s stand-alone risk that can be eliminated by diversification
* Market risk is measured by a stock’s beta coefficient:
* Beta is also defined as the slope of a regression line
* If b = 1.0, stock has average risk.
* If b > 1.0, stock is riskier than average.
* If b < 1.0, stock is less risky than average.
* Most stocks have betas from 0.5 to 1.5
* The Security Market Line (SML) is part of the Capital Asset Pricing Model (CAPM)
* SML: ri = rRF + (RPM)bi
* RPM = (rM - rRF)
* Inflation increases the rM by however much I equals (ex. I= 3%, rM increases 3%). Slope remains the same. Moves entire SML
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-based M&A and employee
6. Improves corporate behaviour
Tasks for stock exchanges
• Supervision of trading to ensure fairness and efficiency
• The authorisation of market participants such as brokers
and market makers
• Creation of an environment in which prices are formed
efficiently and without distortion (price discovery or price
• Organisation of the settlement of transactions
• The regulation of the admission of companies to the
exchange and the regulation of companies on the exchange
• The dissemination of information.
Stock market efficiency
An efficiency capital market is a market that is efficient in
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What is economic? Economic is a study of how people make choices among the alternatives. Since the resources that are available to world are very scarce, it is important to study economic in order to make the best choice that can maximize the total profits. Real life cases are the best examples for studying economic concepts. In this paper, there are three real life cases that illustrate economic concepts base on the Case in Point boxes from the Course Reader. The first case will define the economic concepts: choice, scarcity, and cost. The second case will describe how the stock market puts supply and demand to work. The last case will present the effects can be caused by private and
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computations of possible profits and losses and the sensitivity analysis, we have concluded that the best investment strategy for the company would be writing a 50 put option (January 21, 1995 maturity date) on AT&T Corporation stock as this would yield the highest possible profit for the company. With the risk ranking 4th from the lowest and its return ranking 1st, the return of this strategy compensates for its risk.
We recommend that the company should write a 50 put option (January 21, 1995 maturity date) on AT&T Corporation stock as this gives the highest possible profit for the company. As for the investment strategies, the company should diversify its portfolio by diversifying its criteria. It should include stocks that are intended primarily for option trading. It should also consider stocks with a high growth rate of earnings per share and stocks that offer regular and high dividends. A dynamic combination of these strategies that adapts to the changes in the market could yield high returns for the company.