TTC 101: Equity Markets and Stock Indices
Cash equity markets are a major component of global financial markets. Module 5 describes what they are, how they work and how professional traders trade them. We look at cash equities (Stocks), what a “stock‟ is and how many different types of stock there are, the reasons that companies issue stock, various corporate events including dividends, stock splits, scrips and rights issues. We also look at ways to assess and ‘value’ a stock including traditional measures like EPS, PE Ratios and Dividend cover and management statistics including Return on Capital and Return on Equity and Assets.
Our objective is to:
• Describe how to assess or value a stock
• Provide information on the range of stock and stock index products that are available
• Describe the different trading strategies that can be used
• Describe corporate events such as dividends, rights issues, scrips and stock splits, AGMs and others and how they influence the prices of stocks
Part 1: How do we asses and ‘value’ a stock? • What are Stocks and how do we assess and value them? • Earnings per share, PE ratios and Dividends • Management statistics • Return on Capital, Equity and Assets
Part 2: Trading stocks and Stock Indices • What are Stock indices and how are they created? • How can we observe a stocks’ weighting within an index? • How does stock/index arbitrage work? • How do professional equity traders trade stock indices using futures?
Part 3: Corporate events • Why are corporate events important and what different types are there? •Stock splits, scrips and Rights issues • Dividends and stock buy-backs • AGMs, extraordinary meetings and company wind-ups
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