ACTIVITY 8

Activity 8

Activity 8

Topic: The Continuum from Legitimacy to Fraud

Introduction

The EBIT to number of shares and the earnings to number of shares reflect the theoretical enrichment, a shareholder holding a share, in the course of a year. The benefit is in fact the net share accruing to the shareholders of the wealth created by the firm during that year. The earnings per share are subject to a very precise calculation, the analyst usually corrects net income group share published Exceptional operations.

Earnings per share, is one of the key financial indicators used to assess companies on the stock market, compared to the investment attractiveness of companies and their effectiveness. EPS is one of the few financial indicators, calculation rules are documented in a number of financial reporting standards (IAS, GAAP).

Ways of Earning Management

The simplest method of earning management is a money management to determine for themselves the rate (lot) and do not change it, that is, trade fixed lot . The size of this item the trader has to manage, according to the capabilities of your deposit. Here the most important - consistently put the same amount, or simply change the method of money management.

The method of diversifying capital, allows you to share your risk for several currency pairs. The theory of investment suggests that in this case the profit is greater, because you do not depend only on one contract. In one case you have a loss may occur, and in other income - now there is no loss in general. And if the trading system makes a profit on each contract, damages will always overlap, which means - you can manage your money.

It is common to use a fixed percentage of the capital to manage the account, to smooth the drawdown in a series of losses, as well as increasing profits in a series of profitable trades. Deposit in this case does not merge, because the losses always lead to lower risk in each transaction. This method is good money management systems, often there are several profitable trades in a row.

If you have accumulated a solid history of transactions on the market, it is worth trying this method of account management, as an alternation of profitable and unprofitable trades. After examining the data for several months, you can search for any dependence (for example - plus-two, and then minus a transaction). If present, investing more where expected profit with a good chance.

To maximize profits, there exists a method of money management as a method of optimal F. He described in detail in the book "Mathematics of Money Management" R.Vinsa. Its essence lies in the fact that by means of special formulas, we calculated by the data of the history of optimum percentage of capital transactions, which need to take risks (it can reach up to 15-20%). However, to use in the foreign exchange market, it is dangerous because of falling or unexpected happen intervention that can kill a deposit.

Another interesting method of money management ...