Archive for the ‘stocks’ Category
Thursday, May 13th, 2010
In this section we return to the transparency of financial markets, which was introduced in Chapter 1. The degree of transparency is relevant because it influences traders’ strategies, hence the pricing process. However, given the great variety of aspects, assessing the effects of pre-trade transparency on market quality is complicated, so it is not surprising that the results offered by the literature differ significantly depending on the market structure considered and the type of information revealed.
If one models transparency as the increased visibility of the liquidity suppliers’ order flows, the effects of pre-trade transparency on market quality will show the benefits of the reduction in adverse selection costs for liquidity and uninformed traders’ welfare.
Clearly, when liquidity suppliers can screen informed and uninformed traders, they can also offer liquidity on better terms to the uninformed. If, however, pre-trade transparency is modelled as the visibility of traders’ identification codes, the effects on market quality can differ, as has been shown by Foucault, Moinas and Theissen (2007) and Rindi (2008). Finally, an often-debated question is the relationship between clients and intermediaries, given that the latter enjoy privileged information on the motivation for their clients’ trades and can exploit this by acting as a counterpart in the trades (dual capacity trading (Röell, 1990) or trading before the clients (front running)).
Tags: get out of debt, income, international markets, money issues, revenue
Posted in real estate, research, stocks, strategy elements, taxes | Comments Off
Sunday, October 25th, 2009
The level of implied volatility is a widely used indicator for risk appetite, and, on the individual company level, for the uncertainty related to future earnings. It is also considered a good measure of equity-market risk, because the higher the implied volatility the higher the price of equity options, and thus the higher the cost of insuring against equity-market downturns. Corporate bond spreads reflect the compensation that the investors demand for taking on credit risk. While the debt and equity markets’ estimates of risk, as explained by the Merton model, tend to move together, temporary disconnections do occur. The combination of low levels of implied equity volatility and wide credit spreads suggests the potential for the credit spreads to tighten, as the divergence in the equity and credit market eventually gets corrected. Conversely, when implied equity volatility appears high relative to credit spreads, credit markets are more optimistic about business risks in the corporate sector. The decoupling in the second half of 2003, however, was not an indication that credit spreads were rich relative to implied equity volatility. Rather credit markets were faster to cash in on the reduced risks in the corporate sector because of the massive balance sheet deleveraging, especially in the telecom sector.
Corporate managers were selling off assets, issuing equity and keeping cash for the debtholders, as opposed to using the cash to buy back stock for the first time in 10 years. By the end of the year, equity volatility came down significantly, closing the gap in the assessment of risk.
Tags: foreclosure, loans, mortgage, shares, tax, taxes, tenancy, Tenancy-in-Common, tenant, trade value
Posted in payments, profitability, real estate, research, stocks, strategy elements, taxes | Comments Off
Monday, August 3rd, 2009
The best business plans tend to look like a truck ran them over. They are well-thumbed, heavily annotated, and popping their staples or bursting their bindings. That means they’re being used. The worst plans are clean, pristine documents that went straight from the printer into the file cabinet. That means they’re not being used. That may mean that nobody needs them, which might suggest that the company is continuing to follow the same old routes to get to the same destinations. Or it might mean the business plan isn’t worth the paper it’s printed on for those who should be following it. Either way, the company may be in serious trouble.
Tags: business plans, documents, marketing schedule, methodology, sales
Posted in companies, funds, innovative marketing, management, stocks | Comments Off