Risk and Return Analysis

Introduction to the Financial System Financial Instruments Financial instruments can be: • Equity This is usually through the selling of common shares and/or common stock. It gives the buyer some ownership of the firm and thus, voting power when it comes to electing the board of directors. Debt This is money that is borrowed from someone else. Debt must be repaid at set intervals. Debt can be divided into short and long-term debt. This should follow the matching principle where short-term assets should be funded with short-term debt.

India’s economy is booming! With large decreases in poverty, increases in literacy and GDP, India is continuing to make its way out of the third world and into the first. India is predicted to surpass even China in growth by 2050. A competitive private capital market has instilled Indians with a low cost high quality mentality and has resulted in some of the highest return rates for any country. India has been averaging 6% growth compared to China’s 9.5% with half the investments. India capital efficiency is one of its strongest economic benefits.

The Indian economy following the 1991 crisis swiftly moved away from central planning economy towards market-based economy with the government having less intervention and control. As a result, companies were operating in what is called emerging

The idea of “risk” is used in many fields and industries. There has been large efforts made towards the understanding of risk. Since, risk varies so much depending on the field of study, the need for learning about it is warranted. As can be imagined, the importance of risk in a market economy is crucial. In the 1990s, JP Morgan made the Value at Risk (VaR) a central component of its work efforts (Cecilia-Nicoleta, Anne-Marie, & Carmen-Maria, 2011).

The 1933 Securities Act governs the assurance of securities by organizations. When pertaining to securities it is talking about notes, stocks, bonds, debentures, warrants, subscriptions, voting trust certificates, rights to oil, and limited partnerships (Jennings, 2012). With so much destruction regarding securities in the communities, the Security Act of 1933 was the first document established to get a control of securities.

Every investment contract that gives the owner evidence of indebtedness or business participation is a security. The Securities Act of 1933 was the first federal law in the United States to regulate the sale of company shares, bonds, and other investment interests. Through meticulous research and reading, this essay will discuss the pertinent aspects of the 1933 Securities Act and specifically discuss the topics of exempt securities and transactions, while also examining the offerings of securities to which each exemption may apply.

India the world's seventh largest country and the second most populace nation has been a destination of unrealized potential. In the recent past it has seen as stir of economic activity changing the prim face of the nation. The country has had breath taking reforms bringing in foreign direct investments and foreign institutional investments into the country at a brisk pace. Today India is one of the most exciting emerging markets in the world to be in. A new

The purpose of the Securities and Exchange Commission (SEC) is to protect investors, support efficient markets and increase the growth of capital. Investors benefit from fairly presented financial reports which help assess the risk of investing in a particular security. Public confidence in the stock market makes the economy stronger; capital for growth and innovation becomes more easily available.

During the 19th century, most of the things traded in the Stock Exchange were government bonds. Few corporations were in existence during this time but they were primarily banks that people could buy and sell stocks. Over the centuries more companies joined the exchange with the railroad industry dominating the market through the 20th century. The invention of the telegraph allowed for easier trading and membership expansion. The current membership is limited to 1,300. The organization is a nonprofit organization that minimizes fraudulent offers and providing a safe investing environment. The market works by investors buying and selling shares of a company. The value of the shares depends on the value of the company and its

Securities Laws: Securities laws are vital to establishing checks and balances in corporate governance. They require that investors receive financial and other significant information concerning securities being offered for sale and prohibit misrepresentations, deceit and other fraudulent activity concerning the sale of securities. Below are several major securities laws and the roles they play in checks and balances.

Randolph Corporation is a multidivisional company. Due to frictions among the divisions, Randolph’s stock has not performed according to expectations. In order to improve Randolph’s financial situation and position among its competitors, a number of questions need to be answered. We will discuss these questions separately below.

In general, stock markets provide two basic functions. They serve as a primary market and as a secondary market. It is worth keeping in mind that stock markets could not serve as a primary market if they did not serve as a secondary market. The primary market function refers to a market where investors first have the opportunity to acquire a security. A company that goes public for the first time during its initial public offering (IPO) is selling on the primary market, meaning that the buyers are the first buyers of those particular shares (Investopedia, 2012). On the primary market, stocks are sold by the company to investors, usually through an intermediary like an investment bank.

In the financial markets, the most common forms of marketable securities are stocks and bonds. Though they have some similarities to each other, they differ greatly in many aspects. Broadly speaking, both financial instruments enable one to invest in corporations, public and/or private, with possible profitable returns in the future.

Concept of risk, risk assessment, risk management and how uncertainty affects the process will be discussed.

In their research study, Souder & Myles (2010) identify that risk is chiefly fundamental to investing. Böhringer & Löschel (2008) further add that there is no discussion of returns or performance that is deemed meaningful in the absence of at least some mention of the involved risk. However, the trouble for investors, who have just entered into the marketplace, involves the process of figuring where risk really lies, as well as what the difference between the various levels of risks. Relating to the manner, in which risk is fundamental to investments, a significant number of new