Quoted versus unquoted shares: riskiness and marketability
In order to obtain a listing, companies have to comply with the exchange’s regulations relating to financial
reporting and disclosure (which gives investors a measure of protection). Unlisted (or unquoted)
equities are not subject to the same degree of regulation … and, thus, are usually
considered to be a riskier investment. Also, listed (or quoted) shares will tend to be much more
marketable …
as a willing buyer has to be found for unquoted shares (whereas quoted shares can be
sold to the market maker).
Equity categorisation
One of the most commonly used categorisations is by industry. practicality + correlation of investment performance
The main reasons for such categorisations are practicality (i.e. it is not reasonable to expect an analyst to cover every company within a market)
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Because factors affecting one company within an industry are likely to be relevant to other companies in the same industry
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much of the information required for companies in the same industry will come from common sources
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no single analyst can expect to be an expert in all areas
and correlation of investment performance (i.e. companies within the same industry are often affected by the same external factors, and thus performance within an industry sector is often correlated).
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resources – companies in the same industry will use the same resources (e.g. labour, land, raw materials) and, thus, will have similar input costs
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markets – companies in the same sector supply the same markets and will be similarly affected by changes in demand
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structure – companies in the same sector often have similar financial structure and exposure to interest rate changes