Tax Neutral InvestorsIn the share market, there are always three types of investors −The first type of investor considers dividends to be always good.The second type thinks dividends are always bad.And the third type does not have any opinion about dividends.The high-payout investors prefer the first option because they can ... Read More

What is Bird-in-the-Hand Theory?The bird-in-the-hand argument of dividend means that the near-future dividends are worth more than a distant-future dividend of equal amount. It considers that investors are always risk averse and so, they will discount distant future gains (capital gains) more heavily than the near future ones. That is, ... Read More

Miller and Modigliani’s dividend irrelevance model is one of the most used principles of dividend valuation. It states that a firm’s dividend payout is not relevant to the valuation of a firm. The value of a firm will remain the same even when the dividends are paid or held by ... Read More

Rolling settlement is a norm under which the settlement of claims in the market is done within 1 day. With effect from April 1, 2003, all obligations in a market shall be settled and netted on a T + 2 system or by the next day. Therefore, in a rolling ... Read More

What are Index Funds?The funds created depending on the stock market indices are known as index funds. Sector-specific funds are index funds because they invest depending on a stock market or specific sector indices. The most common two examples of stock market indices are BSE Sensex and NSE Nifty. These ... Read More

People often get confused with the terms "book value" and "market value" of shares. While there are undoubtedly some good reasons to confuse one for the other, the book value and market value of shares are two distinct terms with different meanings. However, one can be related to the other ... Read More

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 ... Read More

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 ... Read More

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 ... Read More

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 ... Read More