Article review

Exploring the herds behavior of investors a comparative study of Indian and US

stock market
Aims and scope:
This article says about the herds behavior of investors which means at the time of the
investment what is the thinking process of an investors

Abstract :
The stock market returns and their driving force have been the key area for research finance
there are two different thougth one is traditional finance and the other one is EMH(efficient
market hypothesis which means the rational behavior of an investors in behavioral finance
there are 4 major types of investment decision there are mental accounting herd behavior
anchoring and high self rating.now in the present paper it mainly focus on herds behavior in
Indian and US stock market herding means it simply follows the crowds in india singh in
2011 he found that the level of herding is depend upon the market conditions the US level of
herding depends upon the both upward and downward of the market which was confirmed by
US fund manager they further revel that US fund manager strongly believe that herding
behaviour depends upon the decrease in the market this was the confirmation of existing the
herd behavior
Rejection of the herds behavior
Now there are people rejected the herds behavior in 2016 ganesh divided the nifty 50 index
into 14 industrial sectors and studies herd behavior and found out there is no significant level
of herding in india in 2017 kumar and bharthi they found out that there is no conclusive
evidence in IT sector stock and deeper analysis was made there was absence of herding
behavior they have proved by hypothese

Methodology and tools:

There are some methods and tools that are used to prove that there is a existence of herds
behavior in Indian and US stock market
1 data collection
2 descriptive statistics
3 regression
4 CSAD
5 CSSD
6 CAMP
The data was collected on the scope of limited to Indian and US stock market for Indian stock
market S&P and CNX nifty 50 has been considered and for the US stock market dow jones
industrial average has been considered daily closing price were collected from the period of
five years from the official website yahoo finance. They used some of the formulas for the
collected data the return of individual stock now for the investigation of the herds behavior in
the stock market they used chiang and zheng approach in 2000 then in 2010 the approach was
modified in 2010 they used CSAD measuring the dispersion between these two returns in
1995 cross sectional standard deviation which mau affected by outliers for herding to be true
and for the existance of herd behavior descriptive statistics is used for comparing the return
of casd nifty and djia nifty for returns after the returns they used regression for separately
nifty and djia now forv the herding role in US stock market the US stock markets and Indian
stock market and equation is made and the results disclosed the returns were doubled

Conclusion
By this study we can conclude that herd behavior exist and the most of the investors has herd
behavior in both Indian and US market and what is the impact of herd behavior in Indian and
US stock market

References
Banerjee R V (1992) a simple model of herd behavior the quarterly journal of economics vol
108 no3 p797
Chang EC chang J W and Khorana A (2000) an examination of herd behavior in equity
markets an international perspective journal of banking and finance vol24 no10 pp1651-1679
Chang TC and zheng D (2010) an empirical analysis of herd behavior in global stock market
journal of banking and finance vol34 no8 pp 1911-1921
Ganesh R naresh G and thiyajarajan S (2016) industry herding behavior in Indian stock
market American journal of finance and accounting vol4 no 3&4 pp 284-308
Jose babu Varghese james and surendran anoja(2018) investors herding in Indian stock
market and imperical analysis vol20 no1 pp76-86
Kumar ashish and bharthi M (2017) herding in Indian stock markets an evidence from
information technology sector ppe1-7 avaliable at http://www.iosr journals.org/iosr-
jef/papers/(SIFICO)-2017/vol-1/1.%2001-07.pdf

The analysis of stock intrinsic value of logistics listed companies based on the
dividend discount model
Abstract:
This analysis is done to know the logistics listed companies the intrinsic value of
the share before this analysis there a problem in analysing the real value in the
logistics companies which are listed in stock market
Methodology
The method which used to calculate the intrinsic value is DDM(dividend discounting model)
now this method uses income capitalization pricing method to determine the intrinsic value to
know the future value to calculate DDM there are several formulas which helps to calculate
the future value and the risk free value they have taken a sample of the listed logistics
company called as Shenzhen shekou anda industry co this company is A listed company in
china due to its good performance in the competitive situation they have calculated by using
the formula first they calculated the assests growth rate and dividend per share then they
calculated the normal P/E ratio of the logistics company of 5 years and found out the mean
and then mean dividend payout ratio and they calculated the intrinsic value

conclusion
By this we can conclude by using the DDM method we can calculate the intrinsic value of
share of the listed logistics companies

References
Chuan wang (2013) investigate about risk free rate
Finoulla M nigel meade(2006) the utility of cash flow forcasts the management of corporate
the cash balance uropean journal of operational research
George pennacchi (2009)theory of assests pricing dongbei university of finance and
economic prress55-60

Comparing the two financial instruments Michael milken junk bond vs lewis
ranieris mortgage backed securities
Abstract:
In this article we are comparing the two financial instrument junk bond and mortgage backed
securities both are similar in nature this instruments are used to raise the capital in a small
period of time junk bond is also called as the high yield bonds with the high interest rate and
high risk this junk bond was introduced in 1970 and 1980 due economy slow down in the
country it is highly speculative low rated bonds they did not invent the junk bond the poors
non investment grade was already which was already exists in financial market called as
fallen angels the junk bond allowed noninvestment grade company to raise the capital
through debt capital market
Mortgage backed securities it is a financial instrument it is the combination of the home loans
that give the perodic payments to the investors it has played a vital role in providing the home
loans in America the problem was the life of the mortgage bond could not be predicted as a
result yield cannot be calculated in the secondary market so this instrument was introduced
Methodology
Junk bond investment is calculated according to the two agencies they are standard’s and
poor’s the rate is calculated baa, ba ,b,ccc,caa down to c in the junk bond market in 1970s
1980s the corporate debt issued annually in US from 22.4$ billion in1978 over 101$ billion
with the excess amount of new capital they initiated new investment strategies the junk bond
were put to use for vehicle take over and leveraged buyouts
The companies also used increased leverage from junk bond to grow internal operation to
increase sales production etc
Mortgage backed securities housing is at the core in America almost 67% are home owners
residential real estate is the largest investment the mortgage market grew and americans
enjoyed the low rates in 1960 inflation the lending and interest rate increased the innovation
in the market was the CMO (collateralized mortgage obligation) it was invented in 1983 it
help to solve the problem of repayment uncertainity due to CMO the pension fund controlled
about 600 billion dollars in 1986 it grew faster it also expanded international investors

Conclusion
These two financial instrument help the debt to raise the capital but mortgage backed security
follows thew financial innovation provide more capital then junk bond and in todays modern
society the investment strategies of junk bond led to impact over all the world

References
Altman E L and nammacher S A(1987) investing in high yield debt. inside high yield debt
Bleakly F R 14 april (1985) the power and the perils of junk bonds new York times
Atkinson T R (1967) trends in corporate bond quality new York national bureau of economic
research
Goldstein A fligstein (2014) the transformation of mortgage finance and the industrial roots
Kelman A (2002) mortgaged backed securities and collateralized mortgage obligation
prudent CRA
Gerardi K S,H S rosen and willen P S (2010) the impact of deregulation and financial
innovation on consumer the journal of finance 65(1) 333-360