High profits may be warranted
Article Abstract:
Stock warrants are financial instruments allowing investors to gamble on the direction of share prices. They may be volatile, and shareholder rights are limited. Warrant holders are not always permitted to receive shareholder perks or go to shareholder meetings. Warrants are geared, so offer the opportunity of achieving equity exposure for a smaller outlay than if shares were purchased directly. Market prices of warrants tend to differ from their intrinsic value, and warrants initially trade above their instrinsic value since there is more likelihood of their reaching the price at which they can be sold for a profit.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1996
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Avoid the boringly predictable
Article Abstract:
Share price changes are reasons for buying options, and volatility can increase the chance of making a profit. The volatility of the share price is one component of its value, and a highly volatile share is more likely to see major changes over a given period of time. There are a number of ways of measuring the volatility of a share price. These measures include the past performance of the share price, showing its historical volatility, and the implied volatility, or market verdict on volatility during the option's life.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1996
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Why shareholders are overpaid
Article Abstract:
Returns on equities are high since investing in equities involves greater risks than using fixed-interest vehicles, but this does not explain the equity premium. The premium is the additional sum above levels that are justified by risk alone. The equity premium is a phenomenon found in market economies. A number of explanations have been suggested, and they include an aversion to risk, transaction costs such as those involved in processing information, and a wrong assessment of risks.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1996
User Contributions:
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