Capital and Subscription Rights, Stock Trading, and Investment Funds

Posted on Aug 28, 2024 in Economy

CAPITAL AND SUBSCRIPTION RIGHTS

Large corporations raise equity capital, and their shareholders obtain additional income through the sale of preemptive rights.

We must distinguish the following questions:

  • The ratio of shares outstanding prior to enlargement and to issue new NxV EXPRESS
  • Expansion during the subscription rights is cleaved from the old stock and is traded on the market independently. Every action has a right to an old subscription.
  • If the rights holder does not give the order to sell them or apply them to the subscription of new shares, it automatically sells on the last day of the expansion because otherwise, it is lost.
  • If we take into account the value of the issuance of new shares, we can distinguish:
    • Actions at the same released: the owner of the old shares receives a free appropriate pair, indicated by L.
    • Actions partially released: a percentage released from the reserves (for L% released)
    • They can be issued with a premium: the securities are acquired by a value greater than face value. It is noted with a percentage of nominal value (150%, 50% is the premium).

THEORETICAL VALUE OF SUBSCRIPTION RIGHTS

The value of subscription rights is determined by supply and demand in the market where traded.

To establish a reference price to calculate the theoretical value of the subscription rights: Ds = Nn (Vv-Vn) / Nv + Nn

SALE OF SHARES

To buy or sell shares, an order must be given to the broker in charge.

These dealers must be members of the stock exchange belonging to one of the following companies:

  • Securities firms
  • Brokers
  • Credit

The person who wishes to enter the market at their own risk should open a securities account in the chosen intermediary and deposit funds.

The investor may also sign a management contract portfolio with a broker who regularly reports the results.

A) TERM OF OPERATIONS

  • Cash: credit the securities account and cash position, or vice versa, carries on the same day the order is processed immediately or later.
  • Credit: the purchase or sale is cash settled, but the shares or the money of the operation are borrowed.

B) STOCK ORDERS

The sale or purchase order must contain all information necessary for proper implementation:

  • Type of operation
  • Identification of the payer
  • Name and number of titles affected
  • Deadline for pre-order
  • Execution-mode

C) ORDER ARRANGEMENTS

  • For the best part: when buying securities at the lowest price possible and selling to the highest in the first session listed.
  • Limited: when dialing a lower price (ceiling) for sale and a higher price for the purchase.
  • About: is a limit order with a range of oscillation.
  • Linked: it determines the purchase of a value to the sale of another.

C / CONCEPT AND STRUCTURE OF INVESTMENT FUNDS

Financial investment funds (FIF) are assets invested in financial assets owned by a group of investors called to participate.

Administration, management, and representation deals with a management company (management companies of collective investment institutions) that are corporations and are paid a commission for their services. These funds also have a depository institution, which may be a credit institution or brokerage company that will take charge of collections and payments from the fund activity, in addition to custody of all securities that comprise its investment portfolio.

D / TYPES OF INVESTMENT FUNDS AND PORTFOLIO COMPOSITION

They are grouped into two categories:

  • RANKING:
    • Accumulation Funds: add or subtract the amount of participation increases or decreases in equity achieved.
    • Funds allocation: periodically distributed among the participants increases in value to experience their heritage.
  • TYPE:
    • Money Funds: consist of fixed-income securities and repos, public or private, that become money rapidly. (View) and bank accounts.
    • Bond funds: These are similar to those above.
    • Bond funds mixed: most of the investments are in bonds (70 to 90%) and other actions.
    • Mixed equity funds: with a high proportion of equities, for example, 50%.
    • Equity funds: most or all of the portfolio shares.
    • Fondtesoro: invest in public debt.
    • Real Estate Investment Funds: born to finance the construction of rental housing (90%), active where they invest, the money they receive from their members.

E / FEES AND EXPENSES OF THE INVESTMENT FUNDS


– Subscription fee: when you buy the shares.
– Management fee: the charge of managing the fund.
– Committee of deposit: the cobra the depositary of the fund.
– Commission for refund is paid when returning to the part is all or part of your investment.