Understanding Financial Statements and Investment Strategies: A Comprehensive Guide
1)Structure finan.Statement: Balance sheet: a statement showing the financial position of the business. At a certain date(usially the end of the financial year); single document (easy to read, interprete and analise, judging its creditworthiness, its value as an investment.
2)Forms of balance: -account form balance sheet in two columns with liabilities on the left and assets on the right.-Report form balance sheet, more modern form listing assets, liabilities and ownership capital one under the other. 3) Functions of investment dealer: buy the offer from the company and their resell it to the investors. Is underwriting function receive the diference or spread between the price and they pay for the offer and the price at which the offer is resold to the public.4)Services: advising, preparation of the prospectus, pricing the issue, selling the offer, standby arragement and over-subscription.5)AdvPIssue: measure of the company’s popularity and prestige in the market, possibility of performing the financial results and face up to the financial results competitors in the branch, way of advertising, additional source of obtaining long term financing, high standard of accountancy and finance. DISAD.PISSUE:
financial statements must be frequently publicised, value of the company highty depended on speculation (market value, accountant value).6)Initial costs(exclude underwtriting or sell expensives), Interests costs(indicates that the yield on private placement is above that on public offering).7)Yield: the rate of income received by investor from a security, ussually expressed as a percentage of its cost or the current price of the security. 8)Types of securities:
9)Factors style invest: caoital amount, value of opened positions, changeability of share prices, signals of the market penetration, levels of the support, signals of the exit from the market, harvests of oscillators and indicators of the technical analysis administered by the investor, length of the investment period, level of aversion to the risk, leght of experiencing the investor on the market. 10)Types of investing:
-Investing in the course of the session (Intraday trading) – temporal range of few minutes. The style is using dynamic growth waves lasting till 15 minutes.- Investing in a day (Daytrading) – temporal range for a dozen or so minutes up to a few hours. The style is using dynamic growth waves lasting for 15 minutes to 2 – of 3 hours-. Fast investing (Momentum or velocity trading) – keeping the position is taking out in this case c halves of the investment day. Dynamic changes lasting share prices are being used for a few hours. -Investing a few days over a distance area of (Swing trading) – investment horizon from 1 up to 4 days. Investing in a short span of time (Position trading) – investment horizon from 5 days to 3 months, Investing in the average period of time (Intermediate – of water heaters trading) – investment horizon from 3 months to 12 months, Investing in the long term (Long – of investing water heaters) – investment horizon longer than months.
,>
12)ForwVSFuture:(Individual agreement between counterparties, Non-standardized contract, The date of delivery good is settled, The contract is cleared in the end of maturity, Frequently the good is delivered or cleared, Risk of counterparties’ insolvency is more probable A contract is not limited.)(The good is traded on the stock exchange, Standardized contract, Delivery of good is possible in the settled period of time, Contract is cleared daily, It is closed before the maturity, Clearing House limits the risk of counterparties’ insolvency is more probable, There are limits of change price daily; it makes a contract safed.) 13)Policy of divid:It is connected with making a decision about the payment of profits or reinvestment funds in the company. Optimal:This is the specific policy of dividends when the company reaches the balance between current paid dividends and future economic growth. The result of this action is maximization of company’s value. 14) Black schole model:foto. 15)rights of share owner:Property rights: NEW SHARES DIVIDENDS RIGHTS TO THE PARTS OF BUNKRAPT COMPANY Non-property rights: VOTING 16)methods of evalu.Shares: The accounting approach (Net value assets method: CALCULATION The balance sheet value of a company reduced by its liability Net value assets didived by the issued amount of shares ), The liquidation approach (This method is applied when the company is to stop the economic activity or is to join the activity with another company. The liquidation value of the company is equaled the price one can get on the market at the moment of offering. SPOT PRICE ), The multiplier approach (It is called ratios or compared method. The value of a company is estimated by comparition of the price of shares another company which is similar to it. Both companies operates in the same branch of economy. The following ratios are taken into the account: Earning per share, Price of the share to accounting value, Price of the share to the sale level. ), The income approach(Discounted dividends model: Constant value dividend model, Gordon’s model, Two-stage model, Three-stage model.). 11)types derivatives:
-forward (A tailored contract between two parties, where payment takes place at a specific time in the future at today’s pre-determined price.)-future (Futures are contracts to buy or sell an asset on a future date at a price specified today. Futures contract differs from a forward contract in that the futures contract is a standardized contract written by a clearing house that operates an exchange where the contract can be bought and sold. )-
Options
Options are contracts that give the owner the right, but not the obligation, to buy (in the case of a call option) or sell (in the case of a put option) an asset. -warrants (there exists certain long-dated options as well, known as Warrant (finance). These are generally traded over-the-counter. ) –
swaps (Swaps are contracts to exchange cash (flows) on or before a specified future date based on the underlying value of currencies exchange rates, bonds/interest rates, commodities exchange, stocks or other assets. ).