Market Value of a right
The ‘market value' of a right is the difference between the ‘cum rights price’ and the ‘ex-
rights price’.
Capital Appreciation
The contribution made by capital appreciation to a share, sometimes, may be more than
the contribution of dividends to share.
Economics
The profitability of a firm will be influenced by the following factors.
a) Growth rate of the economy
b) Rate of inflation
c) Foreign exchange rates
d) Variations in demand and supply
e) Substitution effect
f) Changes in industrial policy by the Government
g) Labor relations
h) Creditability of brand
i) Technology
j) Quality of management etc.All these factors, apart from influencing the profitability, also influence a firm’s shares.
Most of these factors will have uncertainties both in the long-run and as well as in the
short run. The investors normally focus on the uncertainties of the factors in the short-
run. Therefore technical analysts argue that the movement in share prices will be
influenced by the psychological factors rather than the economic factors. The technical
analyst use a line chart, described below.
Line Chart
A Line Chart is prepared on the following points:-- Identify the closing price for each period
- Mark this as points on chart
- Join this points by a line
The Dow Theory developed by Prof. Charles Dow depends on averages, which will
reflect the following three kinds of trends:
- The primary trend