investor

Examples of investor in the following topics:

• Investor Preferences

  • The significance of investors' dividend preferences is a contested topic in finance that has serious implications for dividend policy.
  • The role of investor preferences for dividends and the value of a firm are pieces of the dividend puzzle, which is the subject of much academic debate.
  • Investor preferences are first split between choosing dividend payments now, or future capital gains in lieu of dividends.
  • The investor's preference between the current cash dividend and the future capital gain has been viewed in kind.
  • Investor preferences play an uncertain role in the "dividend puzzle," which refers to the phenomenon of companies that pay dividends being rewarded by investors with higher valuations, even though according to many economists, it should not matter to investors whether or not a firm pays dividends.

• Relationship Between Dividend Payments and the Growth Rate

  • From an investor's point of view, the fundamentals of a company are of the utmost importance.
  • One such fundamental that that investors take into account is how much capital is distributed to investors, and conversely how much capital is kept from investors.
  • Capital is distributed to investors via dividend payments and, indirectly, through capital gains.
  • Capital that is kept from investors is known as retained earnings.
  • As they mature, they tend to return more of the earnings back to investors.

• Assessing Control

  • The profit or loss of the investor includes the investor's share of the profit or loss of the investee.
  • A substantial or majority ownership by another investor does not necessarily preclude an investor from having significant influence.
  • The investor's share of the profit or loss of the investee is recognized in the investor's profit or loss.
  • The investor's share of those changes is recognized in other comprehensive income of the investor .
  • The investor's share of the profit or loss of the investee is recognised in the investor's profit or loss.

• Setting the Target Payout Ratio

  • Investors seeking high current income and limited capital growth prefer companies with high Dividend Payout Ratios.
  • However investors seeking capital growth may prefer lower payout ratios.
  • Some investors, such as young people saving for retirement, may prefer higher returns later than smaller cash distributions now.
  • The Target Payout Ratio depends on what investors the management of a company are trying to attract, and what current investors' expectations are.
  • As they mature, they tend to return more of the earnings back to investors.

• Answers to Chapter 9 Questions

  • Investors are usually risk averse.
  • Investors prefer to hold liquid securities.
  • Investors prefer to invest in securities that entail low information costs.
  • Investors prefer to invest in securities that have lower taxes.
  • Preferred habitat theory is investors prefer a certain bond.

• Residual Dividend Model

  • This model can lead to unpredictable and inconsistent dividend returns for the investor.
  • The Residual Dividend Model is an outgrowth of The Modigliani and Miller Theory that posits that dividends are irrelevant to investors.
  • This school of thought believes that investors do not state any preference between current dividends and capital gains.
  • What investors want are high returns - either in the form of dividends or in the form of re-investment of retained earnings by the firm .
  • The firm paying out dividends is obviously generating income for an investor; however, even if the firm diverts some earnings for investment opportunities, the income of the investors will rise later, assuming that those investments are profitable.

• Market Actors

  • Specifically, market actors include individual retail investors, institutional investors such as mutual funds, banks, insurance companies and hedge funds, and also publicly traded corporations trading in their own shares.
  • Some studies have suggested that institutional investors and corporations trading in their own shares generally receive higher risk-adjusted returns than retail investors .
  • An investor is someone who allocates capital with the expectation of a financial return.
  • They are especially important to the stock market where large institutional investors dominate.
  • It is generally only open to certain types of investors specified by regulators.

• Interest Rate Parity Theorem

  • Investors use Interest Rate Parity Theorem to price forward contracts.
  • International investors use arbitrage to price a forward contract.
  • Thus, the investor locks into a forward contract today for a fixed exchange rate protecting the investor from the exchange rate risk.
  • Investor is indifferent between investing in the United States and Malaysia.
  • An investor would earn a negative return of 0.8.

• Introduction to Stocks, Commodities, and Markets

  • The stock market and other capital markets allow investors to buy and sell stocks continuously.
  • They are a source of income for investors.
  • Stock values reflect investor reactions to government policy as well.
  • If the government adopts policies that investors believe will hurt the economy and company profits, the market declines; if investors believe policies will help the economy, the market rises.
  • Investors also can turn to magazines and newsletters devoted to analyzing particular stocks and markets.

• How Stock Prices Are Determined

  • Investors are attracted to stocks of companies they expect will earn substantial profits in the future; because many people wish to buy stocks of such companies, prices of these stocks tend to rise.
  • On the other hand, investors are reluctant to purchase stocks of companies that face bleak earnings prospects; because fewer people wish to buy and more wish to sell these stocks, prices fall.
  • Falling rates, conversely, often lead to higher stock prices, both because they suggest easier borrowing and faster growth, and because they make new interest-paying investments less attractive to investors.
  • For one thing, investors generally buy stocks according to their expectations about the unpredictable future, not according to current earnings.
  • If enough investors become worried about falling prices, they may rush to sell their shares, adding to downward momentum.