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and whoever wants to be first must be slave of all. For even the Son of Man did not come to be served, but to serve, and to give his life as a ransom for many.”

1 Feb 2018


Hi Friends,     

.Hedging against  Inflation:  The rate of return should ensure a cover against inflation to protect against a rise in prices and fall in the purchasing value of money. The rate of return should be higher than the rate of inflation; otherwise, the investor will experience loss in real terms.     

Staving tax: Tax is unavoidable.  Different income levels and investment options attract different tax rates.  The tax rate may vary with the period of investments for a specific option. Certain investments offer tax incentives.  The investor tries to minimize the tax out flow and maximize tax return.      

 Market Analysis: The stock market mirrors the general economic scenario.  The growth in gross domestic product and inflation is reflected in stock prices.  Recession in the economy results in a bear market.  Stock prices may fluctuate in the short run but in the long run, they move in trends, i.e., either upwards or downwards.  The investor can fix his entry and exit points through technical analysis.    

  Long position:  You buy 100 shares of Reliance Industries.  Then you decide to exist your position.  So you sell your 100 shares, it means closed your long position, getting rid of your shares.     

 Short position:  Selling something you don’t currently own short position.   

  Company analysis and capital appreciation:  The purpose of company analysis is to help the investors make better decisions.  The Company’s earnings, profitability, operating efficiency, capital structure and management have to be screened.  These factors have a direct bearing on stock prices and investors returns.  The appreciation of stock value is a function of the performance of the Company. A  Company with a high product market share is able to create wealth for investors in the form of capital appreciation.     

 Future Value:  The future value of securities can be estimated by using a simple statistical technique like trend analysis.  The analysis of the historical behavior of price enables the investor to predict the future value.     

 Diversification:  The main objective of diversification is the reduction of risk in the form of loss of capital and income.  A diversified portfolio is comparatively less risky than holding a single portfolio.     

 Market intermediaries:  A wide range if market intermediaries participate in the primary and secondary markets, Merchant bankers, clearing and settling  houses, credit rating agencies, depositories, debentures, trustees, banks and brokers act as market intermediaries at various levels.

Stock Derivatives:  A stock derivative is an investment whose value is derived from the value of one or more underlying securities.  It can be bonds stocks, stock indices etc.  Common examples of derivative instrument are futures and options.

Thanking you,                                                                             see you later.

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