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Chapter: Business Science - Banking Financial Services Management - Mergers, Diversification and Performance Evaluation

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Diversification of banks

A portfolio strategy designed to reduce exposure to risk by combining a variety of investments, such as stocks, bonds, and real estate, which are unlikely to all move in the same direction. The goal of diversification is to reduce the risk in a portfolio.

Diversification of banks

 

A portfolio strategy designed to reduce exposure to risk by combining a variety of investments, such as stocks, bonds, and real estate, which are unlikely to all move in the same direction. The goal of diversification is to reduce the risk in a portfolio. Volatility is limited by the fact that not all asset classes or industries or individual companies move up and down in value at the same time or at the same rate. Diversification reduces both the upside and downside potential and allows for more consistent performance under a wide range of economic conditions.

 

Benefits of diversification

    Lower cost of capital

 

    Economic gain

 

    Increases managerial efficiency

 

    Increase in market power

 

    Reduce earnings volatility

 

3.1Securities market/capital market

 

According to khan it is a market for a long term funds.it focus is on financing of fixed investments in contrast to money market which is the institutional source of working capital finance.

    NSE

 

    BSE

 

    SEBI

 

Regulators

   Department of economic affair(DEA)

 

   Department of company affair(DCA)

 

   RBI

 

   SEBI

 

TYPES OF SECURITIES MARKET

    Primary market/new issue market

 

 Secondary market/ Stock exchange Functions of SE

 

Trading procedure in stock exchanges

 

    Finding a broker

 

provide information

 

Supply investment literature

 

Availability of competent representatives

    Opening a n account with broker

 

    Placing the order

 

    Mkt order

 

 

    Limit order

 

    Stop loss order

 

    Stop order

 

    Cancel order/immediate order

 

    Discretionary order

 

    Open order

 

    Fixed price order

 

Other order

     Day order

 

    Good till cancelled (gtc)

 

    Not held order

 

    Participate but do not initiate(PNI)

 

    All or none order(AON)

 

    Fill or kill order(FOK)

 

 Immediate or cancel order(IOC) Making the contract

 

Preparing contract note Settlement of transactions

    Ready delivery contracts

 

    for ward delivery contracts

 

Other order

     Day order

 

    Good till cancelled (gtc)

 

    Not held order

 

    Participate but do not initiate(PNI)

 

    All or none order(AON)

 

    Fill or kill order(FOK)

 

 Immediate or cancel order(IOC) Making the contract

 

Preparing contract note

 

Settlement of transactions

    Ready delivery contracts

 

    for ward delivery contracts

 

Study Material, Lecturing Notes, Assignment, Reference, Wiki description explanation, brief detail


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