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Finance GlossaryDirect Public Offerings
Direct Public Offerings
Definition of Direct Public Offerings
A Direct Public Offering or DPO allows a company to issue shares directly to the public without an intermediary like investment banks. In the process, the company becomes publicly traded.
The cost of a DPO is known to be relatively low compared to an IPO.
Furthermore, the issuer of the DPO has control over the issue price while the paperwork and effort involved is also comparatively low. That said, the company must go through proper regulatory procedures during the process.
The cost of a DPO is known to be relatively low compared to an IPO.
Furthermore, the issuer of the DPO has control over the issue price while the paperwork and effort involved is also comparatively low. That said, the company must go through proper regulatory procedures during the process.
Related Terms
Time Value of Money (TVM)
Time Value of Money (TVM) is the concept that money available today is worth more than the same amount in the future due to its earning potential. It forms the foundation of financial decision-making and valuation. TVM is applied in investments, loans, discounting cash flows, and retirement planning.
P/E Growth Ratio (PEG)
The Price to Earnings Growth (PEG) Ratio is an extension of the traditional P/E ratio, which takes into account the expected earnings growth rate. It is popular in the Indian market for evaluating equity growth stocks. The formula is: PEG Ratio = P/E Ratio/Annual EPS Growth Rate. A PEG ratio of 1 or less is often seen as an indicator that a stock is fairly valued or undervalued relative to the expected growth rate of the stock. A lower PEG implies a better value proposition because investors are paying less for every unit of future earnings growth.
Convertible Arbitrage
A convertible arbitrage is a trading strategy that involves buying convertible securities - most commonly bonds and preferred stock - and a short option on the common stock of the same company.
Because of this combination of purchases, a convertible arbitrage strategy is known as a neutral strategy designed to profit from the supposed inefficiencies that lie in the pricing of convertible securities.
Because of this combination of purchases, a convertible arbitrage strategy is known as a neutral strategy designed to profit from the supposed inefficiencies that lie in the pricing of convertible securities.
Pennant Pattern
A Pennant is a continuation chart pattern used in technical analysis, and is shaped like a small, symmetrical triangle or a flag. It is formed following a sharp, significant move in price (either up or down) and represents a brief consolidation phase where volume is declining. The pennant pattern is characterised by two converging trend lines. Once the consolidation is over, a breakout from the pennant pattern (in the direction of the initial move) is anticipated, which indicates a continuation of the previous trend. Traders look for a large volume to accompany the breakout to confirm the move.
Futures
Futures are derivative contracts that serve as an agreement and obligation between two parties to buy or sell underlying securities at a pre-agreed price and date. Underlying securities in futures can be stocks, bonds, interest rates, currencies, and commodities.
Backtesting
Backtesting means simulating trading strategies and models using historical data to understand whether they are effective.
In many ways, backtesting is considered to be an important part of crafting trading strategies that work.
If backtesting leads to positive results, then the trading strategy or model may be viable.
In many ways, backtesting is considered to be an important part of crafting trading strategies that work.
If backtesting leads to positive results, then the trading strategy or model may be viable.
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