Your Questions About Stock Market Analysis Methods

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Charles asks…

economic help needed badly! market rate, divident yield, etc?

16. Equipment with an original cost of $50,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000. As a result of this transaction, cash would
a.increase by $23,000
b.decrease by $7,000
c.increase by $43,000
d.decrease by $30,000

17. Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?
a.depreciation expense
b.an increase in inventory
c.a gain on the sale of equipment
d.dividends declared and paid

18. Which of the following is a measure of the liquid position of a corporation?
a.earnings per share
b.inventory turnover
c.current ratio
d.number of times interest charges earned

19. If the market rate of interest is 8%, the price of 6% bonds paying interest semiannually with a face value of $100,000 will be
a.Equal to $100,000
b.Greater than $100,000
c.Less than $100,000
d.Greater than or less than $100,000, depending on the maturity date of the bonds

20. The following information is available for Duncan Co.:
2007
Dividends per share of common stock$ 1.40
Market price per share of common stock17.50

Which of the following statements is correct?
a.The dividend yield is 8.0%, which is of interest to investors seeking an increase in market price of their stocks.
b.The dividend yield is 8.0%, which is of special interest to investors seeking current returns on their investments.
c.The dividend yield is 12.5%, which is of interest to bondholders.
d.The dividend yield is 8.0 times the market price, which is important in solvency analysis.

21.
The percent of fixed assets to total assets is an example of
a.vertical analysis
b.solvency analysis
c.profitability analysis
d.horizontal analysis

22. The current ratio is
a.used to evaluate a company’s liquidity and short-term debt paying ability.
b.is a solvency measure that indicated the margin of safety of a noteholder or bondholder.
c.calculated by dividing current liabilities by current assets.
d.calculated by subtracting current liabilities from current assets.

financi4 answers:

16 : (a) First find the written down value(wdv) of the asset which is original cost less accumulated depreciation. That gives you 30000. Since the asset is sold at a loss of 7000 it means that you recovered a selling price 7000 less than the wdv. Thus, cash received, ie, increase is 23000.
17 : (a) While calculating net income depreciation had been deducted. However this is not a cash expense, it is just the value of the asset written off each year. Thus to get the cash flow you need to add this amount back to the net income.
18 : (c) Current Ratio= (Current Assets/Current Liabilities) This ratio shows the current assets available times the current liabilities, ie higher the ratio, higher the availability of assets to pay off short term debts. This is a measure of the firm’s liquidity.
19 : (c) The interest received on the bonds is less than the market rate of interest. Ideally anyone would prefer the higher market rate of interest to the bonds interest. So, you would pay a price lesser than the face value for such a bond.
20 : (b) Dividend yield = (Dividend/Market price of share)
It is a way to measure how much cash flow you are getting for each dollar invested in an equity position
21 : (a) In vertical analysis each asset is represented as a proportion of the total assets. This helps in comparing balance sheets of businesses of different sizes.
22 : (a) As explained in answer to the 18th one.

Michael asks…

how do use technical analysis for future price of stocks and index?

any software or any formula(method) available

In share market.

Pls help me.

financi4 answers:

Its actually a pretty straight forward method compared to Fundamental analysis and its infact a very versatile. Although its not easy, but u dont need to be a CFA or an Economic geek to understand it. Follwoing steps might help u: (this is a macro approach)
1. Analyze index composites of eg: NYSE, Dow etc
2. Identify strong and weak grp in that particular sector
3.Individual stock analysis to indentify the ones with highest growth and vice versa.

The essence of all the 3 above analysis is : Current Price and Historical Price

This is one of the most st fwd technical anaysis. Howeveru can further extend this analysis and present it like a chart, or understand volatality, resistence etc. ( can find formulas in any good book) BUT JUST FOCUS ON PRICE!!!

Paul asks…

What’s the Best Investing Advice?

Maybe Not the Conventional Method….
By PAUL SULLIVAN
Published: October 28, 2011

WITH the stock market so volatile lately, investors have been asking how to ride out the swoons and maybe even outperform the major indexes. The answers — at least according to an analysis by one firm — do not necessarily conform to accepted wisdom….. New York Times

http://www.nytimes.com/2011/10/29/your-money/the-best-investing-advice-maybe-not-the-conventional-method.html
“One reason star managers fail over the long term is that they become known for a particular style of investing that may go in and out of favor. DAL’s research found that no one style was dominant for the whole period. But funds focused on small- and midcap stocks did perform the best over this period. (Ms. Brown cautioned against reading anything into this for the future.) “….
For 10 years the S+P is zero return,..Before that 10 years the Market was very stable..A 8-12% return was doable,…Certain sectors could manage 20%(late 70’s),..Health-care for 5 years and more..
I can’t see “Buy and Hold”,..Working anymore,..Unless you considered Gold, which would provide that average return?..I Guess?…I’ve never held Gold….I’d rather take my chances adapting to ever changing circumstances.
I’ve beat Index funds,..With funds like at one time or another…Twentieth Century Ultra..Mutual Shares..Contra fund..Yackman Fund..Windsor Fund

financi4 answers:

For me, the best investing advice is to hold what I have and when the markets
take a dive, I just buy more on those dips. This strategy takes a lot of nerve and
a lot of luck. I am also well diversified which tends to lessen my losses.

Ken asks…

Trading seems a little too easy to make money? What am I missing?

I’ve begun trading in the stock market and my strategy is to pick a stock each night that will go up 8% the next day.
And then sell it the next day once it’s gone over 8%, no matter how promising it looks to go higher.

With this strategy if I pick correctly for exactly 100 TRADING DAYS [about 5 months] then I estimate to have over $1 million when the 5 months are up. [Starting with €500].

Now, as a beginner I’m sure you’re all doubting that I can make 8% profit per day [I would too], but the thing is that I use newsletters, websites, forums, etc., etc. to pick my stocks for the following day.
I find one that lots of people support and has plenty of research behind it, I do some research and Tech. Analysis myself [as much as I can do], and if it seems promising, I get it.
So I’m not boasting that I have some great stock-picking gift, it’s just that I take the picks from other experienced people.

So far this method has worked out for me for just about 3 weeks now, and every time I’ve made a profit of at least 8% every time.

What is it that I am missing here?

Is there something that when I get into higher money then I won’t be able to invest in the more volatile stocks that have been giving me 8%+ profit?

I’ve seem some large stocks that move just as much, though.

And help is greatly appreciated.

Thank you.

financi4 answers:

With all due respects, your chances of success with this system are very low. If it were possible to never pick a stock that wasn’t going to go up then there would be a billion billionaires.

If it is working for you, then keep at it and become rich and retire early. Good luck!

John asks…

Can someone summarize this in simpler English?

Evolutionary biologists can reveal the genetic structure of populations and species by statistical analysis of genetic markers. These methods have many applications. They enable researchers, for instance, to distinguish among stocks of fish species that migrate from different spawning grounds. Such distinctions have important management and political implications in cases such as the salmon industry, since both the political units that include spawning locations and those where the fish are harvested have an economic interest in the stocks. In forestry, nurseries where commercial stocks of conifers are developed and grown are subject to genetic “contamination” by airborne pollen from wild trees. Methods developed by population geneticists are useful for determining the distance that pollen travels and for measuring levels of contamination, which affect the seed’s market value. Evolutionary geneticists have also been active in analyzing the genetic basis of desirable traits, such as growth rate and insect resistance, in conifers. Such knowledge contributes to hybrid breeding and genetic engineering programs.

financi4 answers:

Basically, scientists (the evolutionary biologists) can look at the genetic makeup of something, and tell things like what species they are related to, and how they differ from similar species. Scientists can also genetically engineer organisms to contain the best traits and genes of their parents.

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