Question

1-Analize the type of stock market transactions.
A) Examine some of the factors that determine international equity returns

Answer 1

Answer(1): Stock market- It is an online market place where shares are bought and sold through brokers or broking firms. Stock market is very broad, many people invest into that.

Types of stock market transactions- Are as following:

Initial public offering- When company first time issues its shares to the general public to raise funds and first time gets listed on the exchange, it has to come up with IPO. It happens in primary market.

Secondary market- This is the normal market, investors buy and sell shares through online channel. Pay-in and pay-out of funds take place. investors and traders use many strategies to minimize the risk. Investing into shares and keeping them for more than one year is "Long term capital gain" and if investor sells the shares before 12 months then it is short term capital gain.

Stock repurchases- When company's share price is not performing well from past few years and not generating wealth to shareholders then for increasing the per share price of share, company buys back its own shares from the stock market to boost the share price.

Private placement- When company wants to raise more funds, it issues shares to some investors through private offering and not the public one.

Answer(2): Factors that determine international equity returns- Are as following-

1. Interest rates- When interest rates are lower, companies manufacture more good, people demand for more products and services and also invest into equities for better returns.
2. Government policies- If government policies are favorable for stock market and foreign investors, FIIs will invest into the equities.
3. Economic conditions- If economy is in boom, share market will go up and equity returns will be higher and vice versa.
4. Demand and supply- If demand of a particular stock or sector is higher, it will perform better and if lower then equity returns will be lower.