Security analysis and portfollio management presentation
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Security analysis and portfollio management presentation
- 3. Empirical test is based on experiments on practical experience & not on ideas. As Ex. Past data of any firm or company. It is generally evaluated by computer simulations. The test is statistical evaluation.
- 4. In 1900, a French mathematician named Louis bachelier wrote a paper suggestion that security price fluctuation where random. In 1953, Maurice Kendall in his paper reported stock price series is wondering one they appeared to be random each successive changes is independent of previous one. In 1970, fama stated that efficient market fully reflect the available information. If markets are efficient security price reflect normal return for their level of risk. Fama suggested that efficient market hypothesis in 3 categories they are weak form the semi- strong form and strong form,
- 5. 1) Weak walk 2) Semi-strong walk 3) Strong walk
- 6. Current price reflect all information in the past prices and traded volume. In weak efficient market short term traders may earn a positive return. There are two rules in weak walk- ◦ 1) filter rule ◦ 2) run test
- 7. Efficient market hypothesis stats that the security price adjust rapidly to all publically available information. The price reflect the past price data, the available information regarding earning of the corporate, dividend, bond issue, right issue, merger, acquisition And so on. Investor can earn profit on a short run price.
- 8. Strong walk is fully reflected on security price. Represent and extreme hypothesis which most observe do not except to be literally true.
- 9. Technical analysis is the way by which we predict trend in price. We can predict the price by two method- ◦ Exponential smoothening ◦ Trend analysis
- 10. A method of evaluating that in tails attempting to measure it`s intrinsic value by examining related economic financial other qualitative and quantitative factors. Study every thing that can affect the securities value`s including macro economic factor and company specific factor.
- 11. Produce the value that an investor can compare with the security price, current price, with the aim of figuring out what short of position to take with the security.