Back to Projects
JOIN WHATSAPP GROUP
Free PSC MCQ 4 Lakhs+
Please Write a Review
Current Affairs 2018 to 2022
PYQ 1200 Q/A Part - 1
PYQ 1200 Q/A Part - 2
PYQ 1200 Q/A Part - 3
PYQ 1200 Q/A Part - 4
PYQ 1200 Q/A Part - 5
Kerala PSC Indian Economy Book Study Materials Page 607
Book's First Pageonomi on epts and erminolo ies 22.41 But that might not happen due to many factors q theory like the fluctuations in inflation; level of money supply; follow-up to the exchange rate regimes As investment theory for firms proposed by the (fixed, floating, etc.), and other. Nobel prize winning (1981) economist James For the calculation of the PPP, a comparable Tobin (1918–2002). He theorised that firms basket of goods and services is selected (a very would continue to invest as long as the value of difficult task) of the identical qualities and their shares exceeded the replacement cost of their quantities. The other difficulty in computing PPP assets–the ratio of the market value of a firm to the arises out of the flaw in the ‘one price theory’ i.e., net replacement cost of the firm’s assets is known due to transportation cost, local taxes, level of as ‘Tobin Q’. If Q is greater than 1, then it should production, etc. The prices of goods and services expand the firm by investment as the profit it cannot be the same in different markets (This is should expect to make from its assets (reflected by correct in theory only, not possible in practice.) share price) exceeds the cost of the assets. If Q is less than 1, the firm would be better purchAse tAx off by selling its assets which are worth more than shareholders currently expect the firm to earn in A tax collected by states in India on goods. This profit by retaining them. is imposed on the purchases done by traders/ manufacturers—basically collected by the seller rAnDom wAlk and given to the concerned states). This is deducted once the traders/manufacturers pay value added When it is impossible to predict the next step. tax (VAT) to the states—as VAT is paid on the As per the Efficient Market Theory the prices of differential value of the traded/manufactured financial assets (such as shares) follow a random goods. This tax is among the 8 taxes to be merged walk–there is no way of knowing the next change into the upcoming indirect tax, the GST. in the price. The reason this theory provides is that in an efficient market, all the information qip that would allow an investor to predict the next price move is already reflected in the current price. Qualified Institutional Placement (QIP) is a Such belief has led some economists to conclude policy associated with the Indian stock market that investors cannot outperform the market for raising capital by issuing equity shares. The consistently. companies listed on the BSE and the NSE are As opposed to this, some economists argue allowed (since May 2006) to raise capital by that asset prices are predictable and that markets issuing equity shares, or any securities other are not efficient–they follow a non-random walk than warrants, which are convertible into or perspective. exchangeable with equity shares. The attractive part of the new QIP is that the issuing company reDlining does not have to undergo elaborate procedural requirements to raise this capital. These securities The act of not lending to people in certain poor or have to be issued to Qualified Institutional Buyers troubled neighbourhoods shown on the map with on a discretionary basis, with just a 10 per cent a ‘red line’. Even if their credit-worthiness has reservation for mutual funds. been judged on the basis of other criteria, they are