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Tag Archive: Share price


Are Markets Overvalued?

Very common statement from the market analysts these days for the Indian stock market.  India Overvalued but the blogrally will continue.  Although based on valuation metrics, Indian equities are now trading at a significant premium to stocks in other EM countries some analyst claim this too.

We have consistently outperformed the market! … Sensex is now overvalued.

“The stock market is overvalued.” “The stock market is undervalued.”

Which one of these statements is true? Well I don’t know.  May be both

Thanks to quirks of the most popular way of measuring a stock’s valuation: the price/earnings ratio.

While no one disagrees about what the “P” is when calculating the ratio, there is no consensus on how to Continue reading

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Risk Arbitrageur

Takeover Target

Talking about Arbitrage – drama film directed by Nicholas Jarecki and starring Richard Gere. A troubled hedge fund magnate desperate to complete the sale of his trading empire makes an error that forces him to turn to an unlikely person for help.

It is well-known that risk arbitrageur play an important role in the market for corporate control. After a tender offer, the trading volume increases dramatically in large part because of risk arbitrageurs activity.They take long positions in the target stock, in the hope that the takeover will go through. They are also usually hedged by taking short positions in the acquirer’s stock. Continue reading

Market Efficiency

Markets are said to be efficient if the market price is an unbiased estimate of the true value of the investment. It means imagesthat a market that is over pricing all assets has become inefficient. Market efficiency can go up or down from time to time. An efficient capital market has the following features:

  • Operational efficiency– low transaction cost and transaction should be quickly completed.
  • Pricing efficiency: prices should fully and fairly reflect all information.
  • Allocational efficiency: capital market through the medium of pricing efficiency allocates the funds where they are best used.

There are three different levels or forms of efficiency. Continue reading

The Risk Arbitrageur

Talking about Arbitrage –  drama film directed by Nicholas Jarecki and starring Richard Gere. A troubled hedge fund downloadmagnate desperate to complete the sale of his trading empire makes an error that forces him to turn to an unlikely person for help.

It is well-known that risk arbitrageur play an important role in the market for corporate control. After a tender offer, the trading volume increases dramatically in large part because of risk arbitrageurs activity. Continue reading

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