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Semi-Strong form level of EfficiencyThis level states that share prices reflects all available public information. (past and present information). If the market has achieved this level, then fundamental analysis will not enable investors to earn consistently higher than average returns. Fundamental analysis involves the study of company’s accounts to determine its theoretical value and thereby find any undervalued share. Fundamental theory states that every share in the market has an intrinsic value, which is equal to the present value of cash flows expected from the security. Tests to prove semi-strong form of efficiency have concentrated on the ability of the market to anticipate share price changes before new information is formally announced. These tests are referred to as Event Studies. E.g. if two companies plans to merge, share prices of the 2 companies will change once the merger plans are made public. The market would show semi-strong form of efficiency if it were able to anticipate such changes so that share prices of the company would change in advance of the merger plans being confirmed. Other events that can affect share prices are:a) Stock splitsb) Death of CEO of companyc) Investment in major profitable projectsd) Changes in dividend policy, etc
Q. Compute the dividend policy and the value of the firm? Rate of Return: (i) 15% (ii) 10% (iii)8% Cost of Capital (Ke) = 10% Earning per share (E) = Rs. 10 C
Borrowing Funds to Purchase Bonds There are several sources available to borrow funds. When securities are purchased with borrowed funds then the mo
1. List five different types of resource that a company might consider hiring or leasing. Explain why the might choose these option instead of outright purchase 2. List three di
7. Bill Peters is the investment officer of a $60 million pension fund. He has become concerned about the big price swings that have occurred lately in the fund’s fixed income sec
Tokyo Stock Exchange In the 1870s, a securities system was introduced in Japan and public bond negotiations began. This resulted in a demand for public trading institution, whi
The relative change in the yield for each treasury maturity is known as a shift in the yield curve. When the change in the yield for all the maturities is same, t
Robert Litterman and Jose Scheinkman were the first to study how changes in the shapes of the yield curve affect the total return on the Treasury securities. The histor
The securing of the working capital needed for the support of raises in accounts receivable and inventory related with an organizations initial expansion time.
how would you judge the potential profit of bajaj electronics on the first year of sales to booth plastics and give your suggestion regarding credit limit.Should it be approved or
• Debtors :- Working Capital tied up in debtors must be estimated on the basis of cost of sales (excluding depreciation): [Cost of goods produces (that is raw materials + wages
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