SAPM LECTURE 3 primary market: for raising capital functions: Origination: investigate, analyse & review company, issue

sue details Underwriting: Distribution: subscription

Role of 1. investment banker 2. Registrar to issue 3. underwriter 4. banker 5. advertising agents 6. regulatory bodies: SEBI, RoC, RBI, SE, licensing, PCA 7. Collection centres how 1. public issue 2. offer for sale: not directly but through issuing houses, stock brokers, firms 3. QIP, SE placing 4. Bonus: convert exisiting R&S into share capital 5. book building 6. stock option (ESOP) limitations of prospectus issue: Cost 1. floatation 2. admin 3. publicity 4. legal Pricing: was under controller of capital issues act

what to think about 1. rigging 2. free pricing 3. no transparency 4. indifferent use of funds 5. vanishing companies 6. equity is cheap secondary market: provides liquidity for securities issued in the primary market efficient market theory 3 forms of this theory are 1. weak form: says that the current prices of the stocks already fully reflect all the information that is contained in the historical sequence of prices. This knocks down technical analysis which involves studying past prices and changes in prices 2. semi strong form: The current prices of the stocks reflect not only the information of the historical sequence of prices but also all the information publicly available about the corporates being studied. Thus, it says that as soon as the information is available, it is absorbed and reflected in the stock prices 3. strong form: It says that not only public information, but all information is useless. I.e. no information, public or inside is useful for earning consistently superior investment returns. types of risk 1. systematic: market risk, cannot be zero, is default risk 2. unsystematic: non market risk, can be zero indicators 1. leading: a. production hours b. stock prices c. consumer expectations index 2. lagging a. unemployment

b. avg prime bank rates 3. coincident a. industrial pdtn b. manufacturing & trade sales c. PI- transfer payments Industrial analysis types of companies 1. growth 2. cyclical 3. defensive consider 1. past sales & earnings 2. permanence 3. govt attitude 4. labor 5. competitive conditions