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Articles on Trending Technologies
Technical articles with clear explanations and examples
What are the roles played by a Mutual Fund?
Mutual funds are formed to mobilize the savings of individuals by offering them a certain percentage of income. Mutual funds were introduced in India in 1964. It was Unit Trust of India (UTI). UTI enjoyed a monopoly in the Indian markets till 1987, and thereafter banks were allowed to offer mutual funds. Later on, various other financial institutions and insurance companies started offering mutual funds for individual clients.A Novel Way of InvestmentMutual funds are a novel way of investment because the firms offering them know about the market and can foresee the growing industries to some extent. In that sense, ...
Read MoreHow do Transaction Costs affect the Dividend Policy of a company?
One of the assumptions of the Modigliani-Miller model is that the internal financing (retained earnings) and the external financing (issue of new shares) are equivalent in nature. Therefore, when a company wants to raise funds, it can issue new shares to get the required funds. It is assumed that this issuance of new shares is free of cost for the shareholders. The issuance of shares does not impact the wealth of shareholders, as the transaction is free of cost. However, in practice, this is just the reverse of the process that takes place in a real-world market.What are Transaction Costs?The ...
Read MoreWhat are the three forms of Capital Market Efficiency?
Capital Market Efficiency indicates the degree to which the present stock prices accurately reflect the current information available in the marketplace. There are three basic forms of capital market efficiency: weak form, semi-strong form, and strong form.Weak Form of Capital Market EfficiencyIn a weak capital market, only the past information of security is available. That means the weak form of capital market efficiency offers a limited window to view the future trends of a share price. It is not possible for analysts to predict the future prices of a share by following the capital market indices. It happens due to the ...
Read MoreWhy do companies opt for Stock Split?
A share split is considered a way to make investments attractive, to signal future growth and profits, and to give higher dividends to the shareholders.Making Shareholding More AttractiveWhen a stock is split, the total outstanding number of shares goes up while the market price of each share goes down. This makes the shares look more attractive and affordable. While there is no change in the net income of wealthy shareholders, the stock split offers a way for smaller shareholders to afford the ownership of large shares that have been split.In a share split, the total value of outstanding shares remains ...
Read MoreWhat are the Functions of a Merchant Banker?
Merchant banks are the most important division of financial assistance to financial institutions in developed nations. They help in improving and running the capital markets smoothly. Merchant banks, also known as investment banks, offer a variety of support and consultation services to corporate firms.In Europe, merchant banks are allowed to engage in commercial banking. This is, however, not the case in the US. In the US, merchant banks are not allowed to carry on with commercial banking. Merchant banks help develop and nurture capital markets in developing countries.With deregulation and liberalization, merchant banks have now become an important institution of ...
Read MoreWhat are the limitations of Gordon's Growth Model?
Gordon’s Growth Model, also known as the Dividend Discount Model, is a popular method to consider the value of a firm via the dividend valuation of a firm. It shows the strength of an investment project to run without any external support.As no external funds are used and the projects are funded 100% on their own, Gordon’s model is only about an imaginative model which does not care about the day-to-day conditions of dividend payout and the internal funding of projects.Limitations of Gordon's ModelSome of the most prominent limitations of Gordon’s model include the following −No External FinancingLike Walter’s model, ...
Read MoreWhat is meant by Dematerialization of Shares?
Until 1998, the share markets in India were paper-based. The securities were made of paper and during buying and selling process, these papers were exchanged from one individual to another. In 1998, computer-based exchange was used, thereby, almost all shares were converted to electronic forms and electronic transfer of shares was initiated.In electronic form, the shares were kept in a depository. This form of the depository of shares was named Demat (from dematerialization) form and since then a very high proportion of companies started to use the electronic forms of shares. Nowadays, almost all the share transactions are electronic and ...
Read MoreWhat is Lintner's Dividend Behavior Model?
It is known that there can be two types of stability of dividends. One is the constant payout, while the other is the constant payout ratio. The latter usually results in fluctuating payments at different instances of payout. So, what do managers of companies think about paying the dividends in the constant payout ratio mode?Lintner's ModelIt was John Lintner, a professor from the Harvard Business School, who proposed a model in the year 1956 to help companies determine an optimal corporate dividend policy. His model stressed on the following two points −What should be a company's target payout ratio?And, the ...
Read MoreWhat are the differences between Backblaze B2 and ZumoDrive?
Let us understand the concepts of Backblaze B2 and ZumoDrive before learning the differences between them.Backblaze B2It is one of the cloud storage services used for storing files in the cloud. It was launched in the year 2015 by Backblaze Incorporation. The files that are available in Backblaze can be downloaded at any time, by using APIs or a browser-compatible URL.It is simple, reliable, affordable object storage. Every account gets 10 GB of free storage, unlimited free uploads, and 1 GB of free downloads every day. There are no hidden fees.FeaturesThe features of Backblaze B2 are as follows −Upload, download, ...
Read MoreWhat are the differences between Baidu Cloud and ZumoDrive?
Let us understand the concepts of Baidu Cloud and ZumoDrive before learning the differences between them.Baidu CloudBaidu is China's largest and most widely used search engine, just like Google in the U.S. It was launched in the year 2012 by Baidu Incorporation. It offers file management, resources sharing, cloud storage service, client software and third party integration.FeaturesThe features of Baidu Cloud are as follows −Needs AssessmentResource AllocationStayed within BudgetStatement of WorkBest PracticesTechnical ExpertiseAdvantagesThe advantages of Baidu Cloud are as follows −Search is user friendly.MonetizationExpansionIt offers many services.Baidu has its own browserIt uses Google playbook.DisadvantagesThe disadvantages of Baidu Cloud are as ...
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