MEASURING AND ACCOUNTING FOR MARKET PRICE RISK TRADEOFFS AS REAL OPTIONS IN STOCK FOR STOCK EXCHANGES

2004 ◽  
pp. 191-218 ◽  
Author(s):  
Hemantha S.B. Herath ◽  
John S. Jahera
Keyword(s):  
Real Options ◽  
Market Price ◽  
Stock Exchanges ◽  
Price Risk ◽  
Risk Tradeoffs

scholarly journals Evaluation of Selected Fresh Vegetable Terminal Markets: A Stochastic Dominance Approach

1990 ◽  
Vol 22 (2) ◽  
pp. 39-48 ◽  
Author(s):  
Roger Hinson ◽  
Mooyul Huh ◽  
John G. Lee
Keyword(s):  
Stochastic Dominance ◽  
Market Price ◽  
Price Risk ◽  
Vegetable Production ◽  
Vegetable Crops ◽  
Market Selection ◽  
Price Variability ◽  
Cash Crop ◽  
Row Crops ◽  
Fresh Vegetable

Abstract Vegetable production can offer a high-valued cash crop alternative. While returns may be high, vegetables are perceived to have more risk than conventional row crops. This study used stochastic dominance analysis to evaluate terminal market price risk for four vegetable crops across five market locations. Results from the analysis identify differences in efficient market selection depending on the form which price risk follows. While vegetables as a whole are considered risky, substantial differences in the type of terminal market price variability existed between the commodities.

Competitiveness and cost behaviour: evidence from the retail industry

2019 ◽  
Vol 21 (1) ◽  
pp. 125-141
Author(s):  
Komang Ayu Krisnadewi ◽  
Noorlailie Soewarno
Keyword(s):  
Real Options ◽  
Corporate Strategy ◽  
Retail Industry ◽  
Stock Exchanges ◽  
Competitive Pressure ◽  
Content Type ◽  
Real Options Theory ◽  
Corporate Strategies ◽  
Cost Behaviour ◽  
Options Theory

Purpose With a particular emphasis on corporate strategies for innovation, the purpose of this paper is to examine how cost behaviour operates under conditions of strong competition in the retail industry. Design/methodology/approach Retail companies listed on the Indonesian, Singaporean and Malaysian capital markets are studied using the regression analysis method. Findings The findings of this study show the sticky behaviour of changes in the selling, general and administrative (SGA) costs when companies are under competitive pressure. When sales increase, SGA costs will increase; however, when sales decline, SGA costs evidently increase. This is especially true for retail companies which have suffered a decrease in their sales of less than 7 per cent, but experienced positive sales growth in the previous period. The suggestion would seem to be that competition leads to greater aggression and the contemporary real options theory bears this out. Research limitations/implications This study only uses data from retail companies listed on stock exchanges in Singapore, Indonesia and Malaysia. Practical implications The type of industry, the extent of the competition and the corporate strategy employed might influence the extent of cost stickiness. Therefore, the users of financial statements need to understand these factors. Originality/value While previous studies incorporated a variety of industries, this paper focuses on examining cost behaviour amid the competitive pressure from recent phenomena in the retail industry. The study provides empirical evidence for supporting the contemporary real options theory. When an industry experiences competition, investing in an uncertain situation will add value to a company, even if it causes sticky cost behaviour. This result contributes to the literature on cost behaviour and strategy management.

scholarly journals The Possibilities of Futures and Option Hedge in Price Risk Management for GrainProduction

2003 ◽  
pp. 72-80
Author(s):  
László Kozár
Keyword(s):  
Risk Management ◽  
Market Price ◽  
Price Risk ◽  
Market Prices ◽  
Additional Advantage ◽  
Market Strategy ◽  
Futures Contract ◽  
Real Market ◽  
Price Risk Management

The greataest risk tograin production is fluctuation in market prices, which is over 50% over the course of a year; and year by year, as well. There are real market circumstances in the grain market, instead of state guaranteed fix prices, which was the norm under the former political system.According to the general opinion of producers, losses come from their defencelessness against buyers. The real situation is that price risk can be managed by suitable market strategy, and loss production can be avoided.Hungary has a futures market (which is organized according to the CBOT system) in the grain sector, which is an unique institute in Europe. This organisation is suitable for hedge businesses and it has convenient technical and institutional background.There are two possibilities to make hedge business. One of them is the short hedge with futures contract when the producer sells his product for long term if an acceptable profit is included in market price. In this case seller can protect himself against low market prices.This technique can be considered as professional for price risk management, but possibly has financial cost because of the weak financial situation of Hungarian producers this solution seems expensive for them.There is an other possibility in the Commodity Exchange for manage price risk, that is the option technique. This solution is suitable for insure prices as well, and has an other additional advantage, namely: there is no financial costs in this case.

scholarly journals Утицај показатеља пословање компанија на цијене акција на берзама у Босни и Херцеговини // Impact of Business Performance Indicators on Share Prices on Stock Exchanges in Bosnia and Herzegovina

2013 ◽  
Vol 11 (18) ◽  
pp. 253
Author(s):  
Џафер Алибеговић
Keyword(s):  
Bosnia And Herzegovina ◽  
Performance Indicators ◽  
Stock Prices ◽  
Business Performance ◽  
Market Price ◽  
Developed Countries ◽  
Stock Exchanges ◽  
Investment Strategies ◽  
Share Prices ◽  
Long Run

Резиме: Показатељи пословањa компаније који се добију прорачуном коефицијената рацио анализе, једна су од кључних референтних тачака инвестиционе анализе на тржиштима капитала како развијених земаља, тако и земаља са тржиштем капитала у развоју. Директна и позитивна релација показатеља пословања компанија и цијена њихових акција на берзама у овим земљама је доказана, као што је доказана и могућност употребе показатеља пословања за процјену будућег кретања цијена акција и будућих приноса на инвестицију. Насупрот, на берзама у Босни и Херцеговини директне релације између показатеља пословања компанија и тржишних цијена акција нема, те стога показатељи пословања не могу бити кориштени у процјени инвестиција на тржишту капитала, осим у посебним стратегијама и на дуги рок.Summary: Business performance indicators resulting from ratio analysis are one of the key benchmarks of investment analysis on capital markets, both developed countries and countries with emerging markets. Direct and positive relations between business performance and share prices on the stock exchanges of these countries has been demonstrated, along with the possibility of using performance indicators to predict future trends in stock prices and future returns on investment. In contrast, direct relationship between business performance and market price of the shares in the stock market in Bosnia and Herzegovina does not exists, therefore, business performance indicators cannot be used in an appraisal of the investment in the capital market instruments, except in special investment strategies and on the long run.

scholarly journals Comparison of Management Techniques for Broccoli Production Using a Systems Approach

HortScience ◽  
1991 ◽  
Vol 26 (5) ◽  
pp. 599-602 ◽  
Author(s):  
S.B. Sterrett ◽  
C.W. Coale ◽  
C.P. Savage
Keyword(s):  
Systems Approach ◽  
Market Price ◽  
Direct Seeding ◽  
Price Risk ◽  
Economic Aspects ◽  
Plant Establishment ◽  
Target Populations ◽  
Yield Risk ◽  
Management Techniques ◽  
Early Harvest

A systems approach that included production and economic aspects was used to assess broccoli potential as an alternate enterprise for eastern Virginia. Broccoli yield and head quality were improved with 96,400 plants/ha compared to 64,500 plants/ ha. While target populations for the early harvest were achieved with either transplants or direct seeding, plant establishment was significantly reduced for direct-seeding in the main-season harvest (85% vs. 95% for transplants). Increased cost of production with transplants resulted in reduced enterprise profit (before taxes) in the early harvest, while improved plant establishment and increased yield with transplants resulted in increased enterprise profit in the main-season harvest. The systems approach assessed market price risk through estimated revenue and yield risk, providing the information needed by growers for risk management decisions associated with broccoli as an alternate enterprise.

scholarly journals The timing of rights issues on the Johannesburg Stock Exchange

1988 ◽  
Vol 19 (3) ◽  
pp. 90-95
Author(s):  
N. Bhana
Keyword(s):  
Empirical Evidence ◽  
Stock Exchange ◽  
Market Price ◽  
Trading Strategy ◽  
Stock Exchanges ◽  
Johannesburg Stock Exchange ◽  
Maximum Price ◽  
Trading Period ◽  
Highly Correlated ◽  
Rights Issues

Although a great deal of trading in rights transactions takes place on the various stock exchanges of the world there is a dearth of empirical evidence which might determine an observable trading strategy related to such transactions. The traditional view is that subscription rights to additional issues of securities will reach their maximum price shortly after the start of trading and then decrease until the end of the subscription period. The results of this investigation into rights issues of companies listed on the JSE clearly rejects the 'sell the rights early' trading strategy. It is observed that there is a considerable number of rights which reach their peak price in the middle and in the final trading period. Empirical evidence presented in this paper reveals three factors that could be used to predict the market price of rights listed on the JSE. All three factors are highly correlated with the market price of rights. Therefore, an evaluation of an observable trend in these factors could be used to advantage by investors engaged in rights transactions.

Characteristics of real backdaters

2017 ◽  
Vol 24 (4) ◽  
pp. 541-551
Author(s):  
Kienpin Tee ◽  
Marilyn Wiley
Keyword(s):  
Stock Price ◽  
Market Price ◽  
Stock Option ◽  
Shareholder Wealth ◽  
Operating Efficiency ◽  
Price Risk ◽  
Bankruptcy Risk ◽  
Content Type ◽  
Non Profit ◽  
Sarbanes Oxley

Purpose Recent findings show that CEOs tend to backdate their stock option grants so that a past date on which the stock price was particularly low is picked to be the grant date. Using cases now settled concerning a group of firms that were caught backdating, this paper aims to examine further whether backdating firms have higher levels of operating efficiency and corporate governance, lower levels of bankruptcy risk, more ability to increase shareholder wealth, and lower levels of market price risk. This paper also compares the characteristics of backdating firms during the pre-Sarbanes-Oxley Act of 2002 (SOX) and post-SOX periods. Design/methodology/approach This sample of backdater firms comprises those caught backdating who have settled their cases, according to data provided by Risk Metrics Group, a non-profit organization that keeps track of most securities class actions. A matched sample of 28 non-backdating, comparison-group firms was constructed to perform univariate and multivariate comparisons. Findings This study found that backdating firms on average have a higher price risk than non-backdating firms, and that increasing the percentage of shares owned by the major shareholders reduces the possibility of management conducting backdating activities. Originality/value No previous studies have used a sample of real backdating culprits. Previous studies have usually used likely backdating traits to identify a group of suspected backdaters. In contrast, the current study, by using a group of firms whose deliberate backdating behavior had led to lawsuits that have been settled in court, investigated the characteristics of known backdaters.

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