What are the expectations of the capital market?

Capital market expectations define that investment analysts of the conclusion are potential risks and revenues of the entire investment class, unlike specific investments. If investors or investment managers need to develop an investment strategy, part of this strategic development will include the determination of the correct investment ratio that exports the expected risks and sought -after returns. With regard to the expectations of the capital market, it is a decisive enterprise. Most analysts, investors and investment managers will therefore use a consistent framework for analysis and assigning these expectations to different investment classes. Despite the development of such a framework, however, derived data and conclusions are sometimes very subjective and this process requires expertise to bring brief conclusions closer.

The development or use of the existing framework is the first step to determine and allocate the expectations of the capital market. So usual involves identifying to which expectations need to be answered and during anyH Time periods apply to these expectations. Then the framework will be responsible for the historical analysis of investment classes, determine the methods, tools and models for further analysis and find out what information is required and where to ensure this information. The analyst uses expertise and inference, draws conclusions based on the derived data, documented these conclusions and assign them expectations in relation to the investment class. In addition, the analyst will constantly monitor the performance of the investment class to improve expectations and to ensure the results of the investment class as closed.

At first glance, the framework to achieve the expectations of the capital market seems to be somewhat simple, but there are potential problems for which they must charge. Time sensitivity is one key determinant that can move the expectations of the capital market due to its own inclination to change data in response to a wide rangelu factors. Analysts must be responsible for the fact that the economic data analyzed almost always include limitation of usefulness. In addition, the analyst must recognize the restrictions that every analyzed information. Other restrictions directly related to the framework include distortion of the data collected, errors in the data collected, the frequency of measured data that historical data is often constructed by the circumstances that must be taken into account, and the bias in information that analysts choose to interpret.

While the frame used to determine the expectations of the capital market is filled with potential pitfalls, tools are available to accelerate the process and achieve adequate conclusions. The tools used include models such as cash flow models, risk bonuses and equilibrium models. Surveys to CB use to consolidate the opinions of experts, in addition to the inclusion of the judgment of specific economic experts. Other tools used include business cycles and billing factors that affect them, analThey are the national economies for risks, by means of economic forecasting and accounting for important differences between development and developed economies in data analysis.