Compre The Investor's Quotient: The Psychology of Successful Investing in Commodities & Stocks (Wiley Finance) (English Edition) 2nd Edition, eBook Kindle. The Investor´s Quotient, its first edition () written long before the days of Daniel Kahneman winning the Nobel Prize, is at its core about. I thought then that it was by far the best book about investing ever written. Graham describes how to enhance your intelligence by harnessing your emotions and .. pubs/portal7.info, portal7.info, and www.
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The investor's quotient by Jacob Bernstein; 3 editions; First published in DAISY for print-disabled Download ebook for print-disabled (DAISY). Books» Commodities» Download The Investor's Quotient: The Psychology of Successful. Investing in Commodities & Stocks pdf by Jake Bernstein. The Investor's Quotient: The Psychology of Successful Investing in Commodities This thoroughgoing manual should help impulsive investors save money.
By Cory Mitchell Updated June 17, Trading is as much about psychology as it is about developing a solid strategy. Without the mental fortitude to stick to a strategy, the most effective strategy in the world won't do much good. A variety of books can help traders take steps toward mastering their psychology from an investment perspective. These traits often cause traders to act irrationally even when they know better. In simple language, the book explains why and how these issues occur, and what to do about it.
The programming aspect of investment planning is an important problem of planning in underdeveloped countries. In underdeveloped countries the investible resources are very much limited according to their increasing needs. Therefore, the planners have to decide regarding the distribution of resources between industry and agriculture, capital goods and consumer goods industries, public sector and private sector. The flow of investment resources in these different sector is influenced by political, social and economic factors.
Allocation of investment resources becomes a difficult task due to the existence of a number of development objectives. These objectives may be conflicting in the short run and hence there are no simple criteria for fixing up the investment priorities. According to Meier and Baldwin, it is difficult to establish a satisfactory criterion for best allocation of investment because alternative investment criterion will affect total output differently, a certain investment criterion may be more relevant for maximizing output over a different time period.
Things to Know 2. Objectives of Factor Allocation of Investment: The primary objective of a developing economy is to secure a greater and faster increase in its income from its available resources. Things to Know 4. Practical Application of Investment Criteria: Out of the various investment criteria discussed, it is difficult to suggest any one criterion of the allocation of investment resources in underdeveloped countries.
Since the problems facing these countries are manifold any one criterion can only have limited application. Hence the choice of a suitable criterion will very much depend upon the circumstances prevailing in a country and the problems with which it is faced. There may be various conflicting objectives and it may be difficult to choose the most desirable ones. It is doubtful whether a sound theory can be laid down in respect of the complicated problems of investment.
Despite all these difficulties the investment criteria have to serve an important purpose in programming resource allocation in underdeveloped countries including India. In the words of Prof. It is necessary to consider not only the existing amounts and quantity of factor supply but also various repercussions of the project-the effect on national income over different time periods.
Conditions of market demand, ability to realize economies of scale, length of gestation period, the effects on the distribution of income and level of per capita income and balance of requirements.
Types of Investment Criteria: 1. Social Marginal Productivity of Investment may be defined as the return to the private investor plus the net contribution of the investment to the national product. According to this criterion, the projects must be ranked according to their social value, determine the marginal project from the total funds and exclude all lower- ranking projects.
Therefore, r measures the average over-valuation of the domestic currency, at the existing rates of exchange. In underdeveloped countries r may be appreciably greater than zero because of the relative inelasticity of imports and exports.
Thus, the social marginal product is divided into three elements, viz. This form of equation shows that a decrease in the rate of capital turnover may be offset by a proportionate increase in the value margin and vice-versa. Limitations: 1 It presupposes the attainment of an optimal income distribution by purely fiscal means. It is less definite than the private profit criterion although it is more generally applicable.
According to him, the object should be to maximize the amount of capital per worker and improve the quality of labour force. Polak and N.
Buchanan have propounded this criterion. This criterion is based on capital-output ratio, i. In those countries where capital is scarce, funds should be invested in those projects which have the lowest capital intensity. This criterion is also used in its reverse form and then it is called capital—turnover criterion.
According to this criterion, those projects should be selected which have a high rate of capital turnover or low capital output ratio. Since capital is scarce in underdeveloped countries, those projects should be chosen which yield maximum output per unit of capital invested, i.
Quick yielding projects with low capital intensity are also desirable because they make it possible for the scarce capital resources to be released soon for investment in other projects. Such projects also generate more employment which may be very desirable in the context of underdeveloped countries. Criticism: This present criterion has been criticised on the following grounds: 1 The difficulty arises in estimating capital -output ratio in poor countries and comparing it with that of advanced countries due to lack of data.
Hence, any criterion based on capital output ratio is likely to create practical difficulties. A particular project may be less capital intensive in the short run but may turn out to be more capital intensive in the long run. The highest return for each level of beta used on the capital asset pricing model. To achieve the maximum diversification benefits, the investor should add an investment that has a correlation coefficient with the existing portfolio closest to a. You invest half your funds in Netcap and the other half in Jmart.
What is the risk premium for your portfolio? What is the return standard deviation for your portfolio? You invest half your funds. What is the minimum attainable return variance for a portfolio of Netcap and Jmart? The following shows the correlations between returns on these stocks: Stock A. Given these correlations, which of the following portfolios constructed from these stocks would have the lowest risk? One equally invested in stocks A and B.
One equally invested in stocks A and C. One equally invested in stocks B and C. One totally invested in stock C. Leverage LO3. Leverage LO4. Which of the following is the largest value for your stock holdings for which you will still receive a margin call? What is your account margin in percent? Your broker requires a maintenance What is the percentage return on your investment ignore interest paid? What is your account margin in dollars? Tax factors and legal and regulatory constraints.
Creates a standard by which to establish an appropriate investment horizon. Capital market expectations. Asset Allocation LO1. The asset allocation decision: Liquidity needs and time horizon. What is the percentage return on your investment?
Account Margin LO3. Risk and return. Investment Objectives LO1.
Tax strategy Security selection d. Investment Constraints LO1. Asset allocation c.
Political environment d. Market timing b. Tax status Which of the following is the lowest value for the stocks you are holding short for which you will still receive a margin call? Investment Decisions LO1. A short position may be hedged by downloading put options. At contract maturity. Fixed-Income Securities LO1. Sold on a discount basis. Short sellers may be subject to margin calls if the stock price increases. Mature in less than one year. Most important risk is default risk. Options LO4. Money Market Securities LO1.
Stocks that pay large dividends should be sold short before the ex-dividend date and bought afterward to take advantage of the large price declines in a short time period. Anytime up to and including the expiration date. At option expiration. Only after American options. Futures Contracts LO3.
At the discretion of shareholders. All of the above are characteristics. What is your net profit on the transaction? Bank certificates of deposit. How much money did she receive from this coupon payment? A short position may be hedged by writing call options. Only on the day before the expiration date. Common Stock LO2. Treasury bills. Only on a European exchange. At the discretion of management. Corporate money market debt. What is your profit 1 or loss 2 on the transaction?
Municipality money market debt. An investment advisory firm c. Lower management fees d. An investment company receives an annual management fee ranging from 3 to 5 percent of the total value of the fund. Shares of both closed-end funds and ETFs trade in the secondary market. Shareholder transactions expenses b. Style investment strategies b. Improved diversification of assets b. Sector investment strategies c. An investment company invests a pool of funds belonging to many investors in a portfolio of individual investments.
Fund shares outstanding vary with downloads and redemptions by shareholders. Convenience d. Fund shares outstanding are fixed at the issue date. An investment company b. ETF investors own shares of the underlying fund sponsor. ETF shares can be sold short. A hypothetical example of expenses 3.
Shareholder demographic profile c. An investment company adopts a corporate form of organization. Closed-End Funds LO2. Its shareholders 5. Closed-End Funds LO1. Investment Companies LO2. Index investment strategies d. The board of directors of an investment company hires a separate investment management company to manage the portfolio of securities and handle other administrative duties.
Mutual fund returns are normally higher than market average returns 4. Open-End Funds LO2. Mutual Fund Investing LO2. Higher volatility of returns Neither ETF nor closed-end fund managers receive a management fee. ETF shares can be bought on margin. Higher expected returns c. Annual operating expenses d. ETFs are funds that can be traded on a stock market. Diversification b. Professional management c.
Both closed-end funds and ETFs stand ready to redeem shares. Mutual Fund Investing LO1. Trading costs Growth fund Index fund b. Mutual Fund Fees LO2. Income fund d.
Municipal bond fund c. Small-cap growth fund Money market mutual fund d. Back-end load d. Fund Types LO1. Special fees b. Special fees c. Contingent deferred sales charge CDSC Large-cap index fund b. Front-end load c. Insured municipal bond fund c.
Management fees d. By adjusting the numerator. Fourth market c. Acting as dealers for their own accounts. The one having the greatest amount of equity in its capital structure. High-water-mark b. The ending value-weighted index base index 5 is closest to: By adjusting the divisor. Private Equity LO1. Block market Stock Indexes LO4. An over-the-counter market. Third market b. Clawback c. Year 1 Stock 6. Index 4.
The one having the lowest volatility. Cannot tell from the information given. Is removed and replaced. Dow Jones Index LO4. Stock Markets LO1.
Monitoring and executing unfilled limit orders. Has a stock split. Providing liquidity to the market. A primary market. December Venture capital b. Value-Weighted Index LO4. Stop-Loss Order LO2. Pays a cash dividend. Has a reverse split. An institutional market. A secondary market. After-market d. The one whose total equity has the highest market value. Leveraged downloadouts d. Middle market c. Monitoring compliance with margin requirements.
Zenith d. Stock Indexes LO4. Distressed assets 3. The one whose stock trades at the highest dollar price per share. Meet SEC regulations for such investments.
The Wilshire Index. The DJIA is affected equally by percentage changes in low. The DJIA contains 30 well-known large-company stocks. The DJIA is affected equally by dollar changes in low. The DJIA divisor must be adjusted for stock splits. The Nasdaq Composite Index. Increase the risk of the transaction. Distressed assets Shorten the life of the investment. These types of securities are used because they a.
The Value Line Composite Index. Allow upside potential associated with a successful venture. The risk-free rate is 7 percent and the risk premium for this stock is 4 percent. The dividend growth rate continues indefinitely.
Above the required rate of return. Sustainable Growth LO1. Dividend Discount Model LO1. If you require a 12 percent return on the stock. Above its historical average. Below the required rate of return. If the required rate of return is 12 percent. Remain unchanged. After that. The required rate of return is less than the dividend growth rate. Rapidly growing company. Company with valuable assets not yet generating profits.
New venture expected to retain all earnings for several years. Moderate growth. Dividends grow at a constant rate.
I only b. Below its historical average. III only c. Decrease or increase. I and II only d. Free Cash Flow LO3. The difference between earnings and dividends equals the change in book value. Company A uses accelerated depreciation while Company B uses straight-line depreciation.
The actual earnings less expected earnings. The appropriate discount rate is 12 percent. The difference between earnings and dividends equals the change in surplus inventory. The current book value and the present value of future earnings.
Residual Income LO4. In the first year that the assets are depreciated. Risk-free rate. Price Ratios LO4. According to the constant dividend growth model. The value of the stock market series is closest to a. The value of earnings per share and the value of cash flow per share. Market risk premium. Earnings retention ratio. The value of profitable investment projects. The time value of money and the value of bearing risk.
In addition. The dividend payout ratio for the series is 65 percent. What are these two components? Residual Income Model LO4. Dividends minus earnings equals one minus the payout ratio. The value added by economical use of assets. The FCF is expected to grow at 3 percent per year into perpetuity. Required rate of return: Any increase in the value of the firm. Clean Surplus Relation LO4. In the context of a dividend discount model.
Efficient Markets Hypothesis LO4. Security prices adjust rapidly to reflect new information. Eliminate program trading. Efficient Markets Hypothesis LO1. Beating the Market LO3. Semistrong c. The risk-free rate exists. Dumb luck problem d. Slow a market decline. The timing of one news announcement is independent of other news announcements.
Semistrong form c. Technical d. Price behaviour that differs from the behaviour predicted by the efficient markets hypothesis. The best investment strategy is to a. Relevant information problem c. Data snooping problem 4. Economic form 5. Reduce the effect of technical trading. Market Efficiency Implications LO2. Many profit-maximizing participants. January b. I and III only d.
Weak b. Efficient Markets Hypothesis LO2. A trading or pricing structure that interferes with efficient downloading or selling of securities. March c. Data measurement problem d. Which of the following problems makes it difficult to conclude that this is an example of market inefficiency? Examine the past prices of a stock to determine the trend. Data snooping problem Calendar Anomalies LO4. I and II only c. Reduce the January effect. Strong form b. Institutional window dressing II. A price or volume event that is inconsistent with historical price or volume trends.
Risk-adjustment problem b. Tax-loss selling a. An exogenous shock to the market that is sharp but not persistent. Weak form d. Bonus demand III. June d. Examine the financial statements for a company to find stocks that are not selling at intrinsic value. Could not. If the market is semistrong-form efficient. Which of the following statements is true? The efficient markets hypothesis deals only with the stock market.
Markets that are less organized are not as likely to be efficient. This is a violation of all forms of market efficiency. One year later.
Prices in an efficient market are fair on average. Markets with wide fluctuations in prices cannot be efficient. This is a violation of semistrong-form efficiency c. This is not a violation of market efficiency. This is a violation of weak-form efficiency. If the market is weak-form efficient. Invest in an actively managed mutual fund whose manager searches for underpriced stocks. Invest in an index fund.
If this is true. A heuristic Measure psychological barriers. The number of declining stocks to the number of advancing stocks. Technical Analysis LO4. Frame dependence d. Watching more financial news programs. Average trading volume in declining stocks to advancing stocks. The house money effect c.
A primary direction or trend d. Circuit breakers d. Behavioural Finance Concepts LO1. A secondary reaction or trend c. A daily history of the ratio of advancing stocks over declining stocks. Economic barriers b. Which of the following is not one of these Dow theory forces? Company earnings and cash flow growth. Learning about the biases.
A heuristic 8. A day moving average of trading volume. Assess bull market sentiment. Security prices move in patterns. Representativeness b.
Aggregate supply and demand for goods and services are key determinants of stock value. A heuristic 9.
Technical Indicators LO4. Psychological barriers c. View source version on businesswire. Investor Relations Contact: Stacie Clements, ir quotient. Tessa Chen, press quotient. Client Login Contact Us. Back to all Press Releases. Quotient Completes Acquisition of Crisp Media.