Green Investing
Investment activities that focus on companies or projects that are committed to the conservation of natural resources, the production and discovery of alternative energy sources, the implementation of clean air and water projects, and/or other environmentally conscious business practices.Pure play green investments are those that derive all or most of their revenues and profits from green activities. Green investments can also be made in companies that have other lines of business but are focusing on green-based initiativesor product lines.
Green investing can be accomplished through individual securities or through pooled investment vehicles such as mutual funds or exchange-traded funds. This style of investingis an off shoot of socially conscious investing, but neither type of investing implies investments that are safer than amarket index such as the S&P 500. In fact, investing in"green" companies can be riskier than other equity strategies, as many companies in this arena are in the development stage,with low revenues and high earnings valuations.
Monday, December 31, 2007
Sunday, December 30, 2007
Tuesday, December 11, 2007
Basic and Diluted EPS
Basic and Diluted EPS
EPS = Net Profit / No. of Equity Shares
Basic means that the actual number of common stock shares
in the hands of stockholders is used as the denominator (bottom
number) for calculating EPS. If a business were to issue
more shares, the denominator would become larger and EPS
would decrease. The larger number of shares would dilute
EPS. In fact many business corporations have entered into
contracts that oblige them to issue additional stock shares in
the future. These shares have not yet been issued, but the
business is legally committed to issue more shares in the
future. In other words, there is the potential that the number
of capital stock shares will be inflated and net income will
have to be divided over a larger number of stock shares.
Many public businesses award their high-level managers
stock options that give them the right to buy stock shares at
fixed prices. These fixed purchase prices generally are set
equal to the market price at the time the stock options are
granted. The idea is to give the managers an incentive to
improve the profit performance of the business, which should
drive up the market price of its stock shares. When (and if)
the market value of the stock shares rises, the managers exercise
their rights and buy stock shares at the lower prices fixed
in their option contracts. Managers can make millions of dollars
by exercising their stock options. There is a wealth transfer
from the nonmanagement stockholders to some of the
management stockholders because the market price per share
is lower than it would have been if shares had not been issued
to the managers.
The calculation of basic EPS does not recognize the additional
shares that may be issued when management stock
options are exercised in the future. Also, some businesses
issue convertible bonds and convertible preferred stock that at
the option of the security holders can be traded in for common
stock shares based on predetermined exchange rates.
Conversions of senior securities into shares of common stock
also cause dilution of EPS.
To alert investors to the potential effects of management
stock options and convertible securities, a second EPS is calculated
by public corporations, which is called the diluted
EPS. This lower EPS takes into account the effects on EPS that
would be caused by the issue of additional common stock
shares under terms of management stock option plans and
convertible securities (plus any other commitments a business
has entered into that requires it to issue additional stock
shares in the future). Both basic EPS and diluted EPS (if applicable)
are reported in the income statements of publicly
owned business corporations. The diluted EPS is a more conservative
figure on which to base market value.
EPS = Net Profit / No. of Equity Shares
Basic means that the actual number of common stock shares
in the hands of stockholders is used as the denominator (bottom
number) for calculating EPS. If a business were to issue
more shares, the denominator would become larger and EPS
would decrease. The larger number of shares would dilute
EPS. In fact many business corporations have entered into
contracts that oblige them to issue additional stock shares in
the future. These shares have not yet been issued, but the
business is legally committed to issue more shares in the
future. In other words, there is the potential that the number
of capital stock shares will be inflated and net income will
have to be divided over a larger number of stock shares.
Many public businesses award their high-level managers
stock options that give them the right to buy stock shares at
fixed prices. These fixed purchase prices generally are set
equal to the market price at the time the stock options are
granted. The idea is to give the managers an incentive to
improve the profit performance of the business, which should
drive up the market price of its stock shares. When (and if)
the market value of the stock shares rises, the managers exercise
their rights and buy stock shares at the lower prices fixed
in their option contracts. Managers can make millions of dollars
by exercising their stock options. There is a wealth transfer
from the nonmanagement stockholders to some of the
management stockholders because the market price per share
is lower than it would have been if shares had not been issued
to the managers.
The calculation of basic EPS does not recognize the additional
shares that may be issued when management stock
options are exercised in the future. Also, some businesses
issue convertible bonds and convertible preferred stock that at
the option of the security holders can be traded in for common
stock shares based on predetermined exchange rates.
Conversions of senior securities into shares of common stock
also cause dilution of EPS.
To alert investors to the potential effects of management
stock options and convertible securities, a second EPS is calculated
by public corporations, which is called the diluted
EPS. This lower EPS takes into account the effects on EPS that
would be caused by the issue of additional common stock
shares under terms of management stock option plans and
convertible securities (plus any other commitments a business
has entered into that requires it to issue additional stock
shares in the future). Both basic EPS and diluted EPS (if applicable)
are reported in the income statements of publicly
owned business corporations. The diluted EPS is a more conservative
figure on which to base market value.
Saturday, December 8, 2007
Bank Rate vs Repo Rate
Hello Friemds
Bank Rate:
It is rate at which RBI allows finance to commercial banks. The different types of refinance facilities given by RBI to banks are linked to the Bank Rate. It is a tool used by the RBI for short-term purposes. Any changes in this rate are followed by revision in deposit rates as well as Prime Lending Rate.
Repo Rate
This is one of the credit management tools used by the Reserve Bank to regulate liquidity in countery (customer spending). The bank borrows money from the Reserve Bank to cover its shortfall. The Reserve Bank only makes a certain amount of money available and this determines the repo rate. If the bank requires more money than what is available, this will increase the repo rate - and vice versa
Bank Rate:
It is rate at which RBI allows finance to commercial banks. The different types of refinance facilities given by RBI to banks are linked to the Bank Rate. It is a tool used by the RBI for short-term purposes. Any changes in this rate are followed by revision in deposit rates as well as Prime Lending Rate.
Repo Rate
This is one of the credit management tools used by the Reserve Bank to regulate liquidity in countery (customer spending). The bank borrows money from the Reserve Bank to cover its shortfall. The Reserve Bank only makes a certain amount of money available and this determines the repo rate. If the bank requires more money than what is available, this will increase the repo rate - and vice versa
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