Guide to Analysing Companies

American Stock Exchange
The second largest stock exchange in the United States after
the new york stock exchange (nyse). Also based in New
York, the American Stock Exchange concentrates on the shares
of small and medium-sized companies unable to justify the
expense of a listing on the nyse. Amex, as it is commonly
known, traces its origins back to the trading of securities on
street corners during the 19th century, from which came its
other name, the Kerb Exchange, which was officially dropped
in the 1950s. Although it has tried to be innovative – for
example, in pioneering exchange-traded funds, for which
it is still a big market – Amex has been squeezed in recent years
by its main rivals. So much so that in 1998 it was taken over by
nasdaq, a competitor that specialises in technology-company
shares. However, Amex continues to be run as an independent
exchange and trades in a wide range of options, as well as in
equities and structured products.
American-style option
An option that can be exercised at any time between the date
it is purchased and the date it expires. It is the opposite of a
european-style option, which can only be exercised on the
date it expires. Most options in the United States are American-
style. Since they offer investors more flexibility than European-
A
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style options, the premium paid for them is at least equal to or
higher than the premium for a European-style contract.
Amex
See american stock exchange.
Analyst
A person who studies the progress of companies and industries
in order to make recommendations about the value of different
stocks and shares, or about the creditworthiness of different
debt instruments. Such analysts usually work for financial firms
like stockbrokers, investment banks, fund managers
and insurance companies, but they are also found in inde-
pendent firms of consultants. The boom and subsequent bust in
the shares of companies engaged in technology, media and
telecommunications raised questions about the impartiality of
the advice given by analysts working in investment banks. Al-
though publicly touting the merits of a particular new issue of
shares, for example, some analysts were found privately to be
dismissive about its quality and the (inflated) value at which the
shares were being offered. This is because analysts’ pay is af-
fected by the overall profitability of the investment bank, which
relies on a steady diet of new issues and initial public of-
ferings to make money. regulation fair disclosure, a
rule introduced in the United States in 2000 by the securities
and exchange commission, prohibits listed companies
from disclosing price-sensitive information to one analyst ahead
of the market as a whole, thus removing the temptation to use
privileged information for competitive advantage. Yet the ques-
tion of conflicts of interest among analysts remains a thorny one.
A piece of s..t.
How one analyst described an internet stock 
his firm was recommending people to buy