Showing posts with label policy. Show all posts
Showing posts with label policy. Show all posts

Monday, August 24, 2015

How to Sell Stock After the IPO (4 Steps)


Speak to the company's CFO or a finance executive about your current shares. The CFO or financial executive should be able to tell you what you have and the value of your stock in the company.
Determine when you are able to sell your shares. In some cases, you cannot sell your shares immediately following an IPO. This depends on the Securities and Exchange Commission (SEC) and your company's policy on individual shares. This delay is typically called a 'holdout period' or 'lockout period.'
Discuss the options you have to sell the stock with your company's financial manager. Do you need to go through a specific broker or firm? If so, contact that broker to sell your stock. Obtain your certificate for the amount of shares you own.
Bring your stock certificate to your bank and ask for the investment officer. Ask the investment officer to sell the stock at the current price. The value of the stock will be returned to you, usually within three days.

Sunday, August 16, 2015

How to Calculate Stock Risk (3 Steps)


Evaluate the market risk of the stock. Identify the industry the stock belongs to and read the industry forecast as well as the forecast for the stock market as a whole. If the you are in the middle of a bear market (stock prices are falling), the stock you are interested in is more likely to fall as well.
Measure the stock-specific risks. This risk depends primarily on the performance of the underlying company, namely on its market position, revenues, profits, orders and costs. The company's dividend policy (whether it reinvests its profits or pays them out to shareholders) also matters.A good way to measure stock-specific risks is to calculate the company's price-to-earnings (P/E) ratio. To do that, divide the corporation's market share price by the earnings per share. Alternatively, divide the company's market valuation by the profits it made during the previous year. High P/E ratios (e.g., 30 or above) may indicate that the stock is risky (the average P/E ratio is about 15).A good look at the company's break-up value is also important. The break-up value is basically the amount of money shareholders would get if the company was liquidated. It can be estimated as the company's assets minus its liabilities. The higher the break-up value of a company, the less risky its stock is (investors can recoup their investments even if the company is sold off).The risks to the company's performance may also come from competitors or innovation in the marketplace. Cheap Asian competitors are a particular concern in the 21st century.
Analyse the market and stock-specific risks and evaluate the overall stock risk. What are the chances that the stock price will go down or that the company will fail? Combine the evaluations from Steps 1 and 2 to measure the stock's risk.