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Monday, February 14, 2022

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Thursday, June 10, 2021

CALCULATE STOCK AND DIFFERENCE BETWEEN MARKET CAPITALIZATION

 


How to calculate returns from a stock?

 If P. is the price of a stock in period t and Po: is the price in the previous period, then returns from the stock during the period is defined as 

R. = ( P1 - Pt-i) /Pt-1

If the stock pays dividend D, during the period, then returns are defined as

 R = ( P. - Pe: + D ) / P.


 How to calculate the risk of a stock? 

 The risk of holding a stock is the standard deviation of returns from the stock during the period.  Variance is a yearly concept, and hence the risk of the holding period has to be adjusted to make it per annum.

  Consider the prices of a stock for a period of 100 days.  Then we can calculate daily returns and we will have 99 observations of returns.  If we draw the frequency distribution of the returns, then the standard deviation of the returns is the risk from holding the stock for the period.  If we As impose the condition of normality on the distribution of returns, then students familiar with statistics would know the probability of returns falling in between ( returns tl . 28 ).  That is, Based on past data, it is possible to have some idea about the extent to which returns can fall.  


What is portfolio risk?

 


A portfolio of stocks is a collection of stocks held by an individual.  For simplicity, let there be two stocks in the portfolio and let their share be w: and wz.  Then, portfolio risk is defined as so

 = Square Root of ( wi's:? - w - s2 ? + 2w: W2ps: S2 ) 

wheres, is portfolio risk, S, and sy are the standard deviations of returns from the two stocks, and p is the correlation of returns from the two stocks.  Clearly, if the returns from the two stocks are positively correlated, then the portfolio risk will be more than the sum of holding the two stocks and hence it is not rational to hold these two stocks in the portfolio.  On the other hand, if the returns from the stocks are negatively correlated, then portfolio risk would be lower than the sum of the individual risks.  The purpose of portfolio diversification is to hold assets whose returns are not positively correlated.  This is another way of saying not to put all eggs in one basket.

Difference between large-cap, mid-cap and small-cap firms 



The difference between large-cap, mid-cap and small-cap firms is in terms of market capitalization.  The market capitalization of a share is defined by the total paid-up shares of a company multiplied by the current price.  As prices keep changing, market capitalization keeps changing. 

                                                                                                                                  Large-cap companies tend to be large in terms of their operations and some examples will be ABB Limited, ICICI Bank Ltd., and Maruti Suzuki Ltd.

                                             Examples of mid-cap companies would include MRF, Havells India, Berger Paints and Castrol.  

                                         Some names of small-cap companies are Graphite India, KEC International, La Opala and Century Plyboard.  

                                                   The Sensex is a 30 company index of market capitalization;  turnover etc. and these are 30 large companies that are traded on the Bombay Stock Exchange ( BSE ).  Along with NIFTY, the index of the National Stock Exchange ( NSE ), the Sensex is an index of stock market sentiment There are also various indices available like the Mid Cap Index, FMCG index etc.

Sunday, May 30, 2021

IMPORTANCE OF INVESTING

 WHY IS INVESTING IMPORTANT?

Saving is the surplus of our income over our spending. normally, this lies in the savings bank account or fixed deposits with a bank. The money is very secure, earning a little rate of interest and it can be in hand as and when necessary (high liquidity). in contrast, this money could be invested for meeting long-term goals. whereas some investments may rise or fall in value over time, prudent investments would earn a lot more than the bank's savings account.

 It is significant to take into account the effects of inflation on our investments. Savings rarely beat the inflation (rises in prices ) rate; investments can.

fundamentally, the variation between savings and investment is that savings are simply idle cash whilst investments help our funds to raise over a period of time. One can meet his short-term requirements with his savings but to meet his long-term goals, he desires to make investments. Savings primarily help to protect the principal while investments help to make returns beyond the inflation rate.

VariousAvenues and Investments Alternative


Investment Avenues

Investment in any of the alternatives depends on the requirements of the investor. All have different needs. Before investing, these alternatives of investments need to be analyzed in terms of their risk, return, term, convenience, liquidity etc.

Equity Shares  

Equity shares are lasting financing sources for any business. These shares are issued to ordinary people and are non-redeemable in nature. Investors in such shares hold the right to vote, share profits and claim assets of a company.


Debentures or Bonds

Debentures or bonds are long-term investment options with a fixed stream of cash flows depending on the quoted rate of interest. They are considered relatively less risky. An amount of risk involved in debentures or bonds is dependent upon who the issuer is .
Following alternatives are available under debentures or bonds:
  • Government securities
  • Savings bonds
  • Public Sector Units bonds
  • Debentures of private sector companies
  • Preference shares

Money Market Instruments

Money market instruments are just like debentures but the time the period is very less. It is generally less than 1 year. Corporate entities can utilize their idle working capital by investing in money market instruments. Some of the money market instruments are

Mutual Funds

Mutual funds are an easy and tension free way of investment and it automatically diversifies the investments. In the case of an open-ended mutual fund scheme, the mutual fund is giving an assurance to investors that mutual funds will give support to the secondary market .In mutual funds also, we can select among the following types of portfolios:
  • Equity Schemes
  • Debt Schemes
  • Balanced Schemes
  • Sector Specific Schemes etc.

LifeInsurance and General Insurance

They are one of the important parts of good investment portfolios. Life insurance is an investment for the security of life. The main objective of other investment avenues is to earn a return but the primary objective of life insurance is to secure our families against the unfortunate event of our death. It is popular among individuals. Other kinds of general insurances are useful for corporates. There are different types of insurances which areas follows:

  • Endowment Insurance Policy
  • Money Back Policy
  • Whole Life Policy
  • Term Insurance Policy
  • General Insurance for any kind of assets.

Real Estate

Every investor has some part of their portfolio invested in real assets. Almost every individual and corporate investor invest in residential and office buildings respectively. Apart from these, others include:

  • Agricultural Land
  • Semi-Urban Land
  • Commercial Property
  • Raw House
  • Farm House etc

Precious Objects

Precious objects include gold, silver and other precious stones like the diamond. Some artistic people invest in art objects like paintings, ancient coins etc.

Derivatives

Derivatives mean indirect investments in the assets. The derivatives market is growing at a tremendous speed. The important benefit of investing in derivatives is that it leverages the investment, manages the risk and helps in doing speculation. Derivatives include:

  • Forwards
  • Futures
  • Options
  • Swaps etc

Non-Marketable Securities

Non-marketable securities are those securities that cannot be liquidated in the financial markets. Such securities include:

  • Bank Deposits
  • Post Office Deposits
  • Company Deposits
  • Provident Fund Deposits

 



Wednesday, May 19, 2021

STOCK MARKETING

Stock marketing,trading

A
stock market is a place where persons purchase/sell shares of publicly listed companies. The crucial market is where companies float shares to the population in an initial public offering (IPO) to raise funds.
technology

At present, because of the Internet and highly developed tools, buying and selling stock occur anywhere in India and from the overseas kingdom. There is no need to be physically present in exchange like NSE and BSE. Stock markets are a perfectly competitive market.

In basic terms, if ‘Raj’ wants to sell shares of ABC Company, the stock market will aid him to meet the seller who is keen to buy ABC Company. However, it is essential to note that a person can deal in the stock market only through a registered intermediary known as a stockbroker. The purchasing and selling of shares take place through an electronic medium.

Virtually all the shares traded in the stock trading are previously issued - trading does not involve the firm that issued the stock but the firm is still concerned about the price of its previously issued shares. 

1. The firm's owner's current stockholders want high share prices because that is the price they can sell in the market 

2. Previously issued shares are the perfect substitute for new public offerings - a firm cannot expect to receive a higher price for its new shares than the going price on its old shares.

UNDERSTANDING STOCKS

  1.  How to place a trade
  2. Know when to sell.
  3. Evaluate a stock 
  4. What makes stocks more
  5. Steps to get started
  6. Where to get advice 
  7. How margin works
  8. Why investor lose money


 Understanding the Stock Market

While today it is feasible to purchase almost the whole thing online, there is usually a chosen market for every article of trade. such as people drive to city outskirts and farmlands to purchase Christmas trees, visit the local timber market to buy wood and other compulsory stuff for home furniture and renovations, and go to stores like Dmart for their regular grocery supplies.

Giant Stock Markets


  •  NYSE (New York Stock Exchange)
  •  NASDAQ - America  
  •  Dow Jones 
  • Toronto stock exchange 
  • Tokyo Stock Exchange
  • London Stock Exchange 
  • Bombay Stock Exchange, India 
  • National Stock Exchange, India
  • Hong Kong stock exchange, Hong kong 
  • Shanghai stock exchange, China   

Top 10 companies in India by market capitalization

1 Reliance Industries 
2. Tata Consultancy Services (TCS) 
3. HDFC Bank 
4. Infosys
5. Hindustan Unilever (HUL)
6. Housing Development Finance Corporation Limited (HDFC) 
7. ICICI Bank 
8. Kotak Mahindra Bank
9. State Bank of  India (SBI) 
10. Bajaj Finance


TO know more Click Here: https://stockportmarketing.blogspot.com/2021/05/why-is-investing-important-saving-is.html