Important Points for IC 99 - Asset Management Exam
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Controllable, internal factors which are peculiar to a particular industry or firm(s) are known as unsystematic risk. Unsystematic risk is the portion of the total risk that is unique to a firm or industry.
Marketability of investment is one of the major considerations for evaluation of the quality of investment. Marketability may be either high or low depending upon its degree of liquidity.
Tax benefits make the investments more attractive and gainful. Tax Benefits are of three types - Initial tax benefit, Continuing Tax benefits and Terminal Tax Benefits.
Fundamental approach says that every stock has an intrinsic value. Intrinsic worth of a stock is estimated by considering the earnings potential of firm which depends upon : i) investment environment and market conditions (demand & supply) relating to specific industry, ii) competitiveness, iii) quality of management, iv) operational efficiency, v) profitability, vi) capital structure and vii) dividend policy.
Through technical analysis, portfolio managers try to predict future price levels of stocks by examining series of past data obtained from the market itself.
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