FINS1612 Chapter Notes - Chapter 5: Capital Structure, Market Capitalization, Double Taxation
4 Nov 2020
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Investors buy shares to receive returns via dividends or capital gains . Depth - the extent to which large orders disturb or don"t disturb prices (measured by market capitalisation) Liquidity - ability to convert to cash at current market prices, volume of trading relative to size of the market. Efficient price discovery - speed & efficiency with which new information is reflected in the current share price. There is a wide range of choice as the asx has 2000 listed stocks in different industries as well as equity based managed products (etf, cfd, & derivatives) There are two types of risks that impact on security returns: Systematic - factors that generally impact the whole market, e. g. changes in economic growth or interest rates. Unsystematic - factors that impact specifically on the share price of a corporation e. g. ceo resignation, operations. Diversifying a portfolio usually reduces unsystematic risk but investors won"t receive higher returns for bearing unsystematic risk.
