FINAL REVIEW Flashcards
(24 cards)
What is INDEVAL and its role in the Mexican market?
INDEVAL is the Central Securities Depository in Mexico responsible for safekeeping, settlement, and transfer of securities. Institucion para el Deposito de Valores
What are the core functions of INDEVAL?
Custody of securities, trade settlement, corporate actions management, ownership records, and international custody.
What is Delivery versus Payment (DvP)?
A settlement method that ensures securities and payment are exchanged simultaneously to reduce settlement risk.
What is the RNV and its purpose?
The Registro Nacional de Valores is a public registry managed by CNBV to register issuers, securities, and financial intermediaries.
What are the core functions of the RNV?
Register issuers and securities, ensure disclosure and transparency, and support investor protection.
Comparison between INDEVAL and RNV?
INDEVAL is operational and handles circulating securities; RNV is regulatory and manages securities before they are traded.
What is the Sistema Internacional de Cotizaciones (SIC)?
A system allowing Mexican investors to trade foreign securities in pesos through local brokers using INDEVAL for settlement.
What are the key characteristics of SIC?
Traded in pesos, reflects foreign prices, settled via global custodians, investors receive dividends and capital gains.
Which institutions are involved in SIC?
CNBV, RNV, BMV/BIVA, INDEVAL, and brokerage firms.
What is an American Depositary Receipt (ADR)?
A U.S. bank-issued certificate representing foreign company shares, allowing U.S. investors to trade them in USD.
How do ADRs work?
A U.S. depositary bank holds foreign shares and issues ADRs in the U.S. market, traded like U.S. stocks in USD.
What are the types of ADRs?
Sponsored ADRs are created with the company’s involvement and are listed; Unsponsored ADRs are OTC and without the company’s cooperation.
What is arbitrage?
A strategy to profit from price differences of the same asset in different markets by buying low and selling high simultaneously.
What are the characteristics of arbitrage?
Eliminates price inefficiencies, uses identical assets, low timing gap, carries no market risk.
What are barriers to arbitrage?
Requires access to both markets, accounts in both countries, brokerage and currency conversion fees.
What is a stock market index?
A statistical indicator that summarizes the performance of a specific group of stocks in a single value.
What are the main indices in Mexico?
S&P/BMV IPC, INMEX (Indice Mexico), IMC30 (Indice mediana cap), IRT (rendi total), and FTSE BIVA (financial times stock exch).
What is valuation by multiples?
A method comparing a company’s value to peers using standardized financial ratios, assuming similar firms should trade at similar multiples.
What are enterprise value multiples?
They value the entire business and are used to compare companies regardless of capital structure.
What are equity value multiples?
They focus on shareholders’ equity and are used to evaluate returns from the shareholder’s perspective.
What does the P/E ratio tell us?
It shows how much investors are willing to pay per dollar of net income, indicating market expectations or perceived risk.
What is technical analysis?
It involves studying historical price and volume data to predict future market movements based on trends and patterns.
What are the assumptions of technical analysis?
The market discounts everything, prices move in trends, and history repeats due to human behavior and psychology.
What indicators are used in technical analysis?
Trend: SMA, EMA, MACD; Momentum: RSI, Stochastic; Volatility: Bollinger Bands.
