What is a Merger? A merger involves the mutual decision of two companies to combine and become one entity. The combined business, through structural and operational advantages secured by the merger, can cut costs and increase profits, boosting shareholder values for both groups of shareholders. A…

What Is a Financial Market? A financial market is a market in which people and entities can trade financial securities, commodities and other financial assets at prices that are determined by pure supply and demand principles.  It also facilitates borrowing and lending by facilitating the sale by newly issued financial…

Definition: This is considered as the fair value of a stock assuming that an investor has all the information that is available in the market on the stock in terms of tangible and intangible factors. The discounted value of cash that can be taken out of business during its remaining…

Cash Dividend This is the most common form of dividend. It is derived from the net profit. The board of directors decide on the issuance of dividend during the Annual General Meeting (AGM). A shareholder will receive dividend depending on the shares they own. This can be shown as;…

Types Of Traders A reason for the success of the derivatives market is that they have attracted an array of different traders. The three broad categories of investors can be identified as: Hedgers – Hedgers use derivatives to reduce the risk that they face from potential future movements in a…

What is a derivatives Market? A derivative is a financial contract to exchange a certain underlying asset at a certain price in a specified future time. Derivatives can be traded through an exchange or over-the-counter. An exchange traded derivative is standardized, has no counterparty risk as the parties require to…

A portfolio is a collection of financial assets – such as shares, bonds and cash equivalents – held directly by an investor or managed by financial professionals. An investor should create a portfolio in accordance with his/her risk tolerance and investing objectives. The three asset classes…

What is a CDS account? This is a Central Depository System that allows an individual to electronically hold shares. They are unique to the shareholder. What makes the CDS different from the physical certificate? It allows immediate transfer of securities It eliminates risks associated with physical certificates such as bad…

A share buyback/ share repurchase is when a company buys back its own shares from the market and absorbs the shares hence reducing the number of shares outstanding in the market. It is often an indicator that a company’s management thinks its shares are undervalued. Share…

This is a warning issued by a listed company to investors that the profits will be lower than expected. It is done several weeks before the company’s actual announcement. It avoids earnings surprise to investors as it ensures that all information needed by investors is available in the market. It…