Investment Analysis in Public Shares

Public Issue of Shares

• The proportion of a public issue of shares allocated to various categories of investors is decided by the Issuer.

Leveraged Investment in IPO

• Profits in a leveraged investment in an IPO depend upon the Issue price & listing price, Cost of borrowing and period of borrowing, Shares allotted and listing premium.

High Turnover in Stock

• High turnover in a stock is an indicator of higher liquidity, as investors are actively buying and selling.

Conservative Investor Investing in Equity

• PEG ratio lower than 1, Dividend yield lower than the risk-free rate of interest, PE ratio higher than peer average may make a stock unsuitable for a conservative investor.

• A PEG ratio lower than 1 classifies the company as undervalued.

• A high dividend yield may indicate low earnings growth and low capital appreciation.

Decrease in Interest Rates

• A decrease in interest rates is likely to have a greater impact on the price of a 15 year Government security, as long-term bonds are more sensitive to interest rate changes.

Nomination in Mutual Fund Folio

• A nomination in a mutual fund folio can be changed by the first holder in a jointly held account and can be changed by all the holders signing for the change.

Jointly Held Folio

• In a jointly held folio, the PAN and KYC process has to be complied with by all the joint holders.

NRI Returning to India

• An NRI returning to India and becoming a Resident Indian has to change the existing account status to resident with respect to holdings in a demat account.

Investments in Different Schemes by the Same Mutual Fund

• Investments in different schemes of the same mutual fund can be held in either the same folio or a different folio depending on the mutual fund policy.

Dematerialization of Securities

• A request for dematerialization of securities may be rejected if securities are not dematerialized within the period specified by SEBI or the Dematerialization request is not accompanied by R&T verification of signature.

Loan Against Mutual Fund Holdings

• To obtain a loan against mutual fund holdings, the investor can mark lien on the entire holdings, irrespective of the portion required.

Indicators of Indebtedness

• Leverage Ratio is an indication of indebtedness.

Current Cost to Future Cost

• Current cost is translated into a cost in the future using the formula: P X (1 + i)n, where P is the present value, i is the interest rate, and n is the number of periods.

Net Take Home Salary

• Mr. P's net take home salary is Rs 35,000 (Rs 50,000 - Rs 5,000 - Rs 5,000 - Rs 4,000 - Rs 1,000).

Monthly Surplus

• Mr. P's monthly surplus is Rs 5,000 (Rs 35,000 - Rs 7,000 - Rs 11,000 - Rs 15,000).