The exchange rate may be quoted in two ways. Direct quotation or home currency quotation and Indirect quotation or foreign currency quotation. For instance, a fruit vendor may express the price of apples in either of the following two ways:
One apple costs Rs.10
For Rs.100, 10 apples
In both the case the value of apple or the rupee is the same though expressed differently .In method I, the price per apple is quoted in rupees. In method II, the unit of rupees kept constant at 100, and the quantity of fruits is varied to reflect their prices.
The same is also true for foreign currency. In foreign exchange also the rate of exchange can be quoted in two ways:
USD 1= Rs.43.20 or USD 1=43.30
Rs.100 = USD 2.3409 or Rs.100 = 2.3200
The quotation under Method I, in which exchange rate is expressed as the price per unit of one US dollar in terms of the home currency is known as ‘Home Currency Quotation’ or ‘Direct Quotation’. It may be noted that under direct quotation the number of units of foreign currency is kept constant and any change in the US dollar quoted at under different values of rupees.
Under Method II, the unit of home currency is kept constant and the exchange rate is expressed as so many units of foreign currency for a fixed unit of home currency is known as ‘Foreign Currency Quotation’ or ‘Indirect Quotation’. Under indirect quotation, any change in exchange rate will be effected by changing the number of units of foreign currency. For instance, the rate Rs.100=USD 2, 3400 may become in due course USD 2.2450 or USD 2.3785, and so on.
The indirect quotation is used in London foreign exchange market. In New York and other foreign exchange markets mostly the direct method is in vogue. In India, earlier we had used indirect method. However, from August 2, 1993, India has switched over to direct method of quotation. The change has been introduced in order to simplify and establish transparency in exchange rates in India.
Although foreigners may now invest in A-shares, there is a monthly 20 percent limit on repatriation of funds to foreign countries.
Performance of A-shares.
Since its inception in 1990, including a major reform in 2002, the index has seen great fluctuations. Overall, however, it has grown along with the Chinese economy. The years 2015 to 2016 were a particularly difficult period, with a 52-week performance of -21.55 percent as of July 20, 2016.
As China grows from an emerging market to an advanced economy, there is substantial demand for Chinese equity. Stock exchange regulators continue efforts to make A-shares more broadly available to foreign investors and have them recognized by the global investing community.
In June 2017, the MSCI Emerging Markets Index announced a long-awaited decision it would add stocks to its index. According to CNBC, MSCI will add 222 China A Large Cap stocks to its benchmark emerging markets index gradually beginning in 2018. The MSCI website reveals the stocks it will list include the Bank of China, China Merchants Bank, Guotai Junan, Ping An Insurance, according to a document on Tsingtao Brewery, SAIC Motor, Suning Commerce and Spring Airlines.
Current Dividend Preference.
Participating Preferred Stock.
Convertible Preferred Stock.
Cumulative preferred stock includes a provision that requires the company to pay preferred shareholders all dividends, including those that were omitted in the past, before the common shareholders are able to receive their dividend payments.
Non-cumulative preferred stock does not issue any omitted or unpaid dividends. If the company chooses not to pay dividends in any given year, the shareholders of the non-cumulative preferred stock have no right or power to claim such forgone dividends at any time in the future.
Participating preferred stock provides its shareholders with the right to be paid dividends in an amount equal to the generally specified rate of preferred dividends, plus an additional dividend based on a predetermined condition. This additional dividend is typically designed to be paid out only if the amount of dividends received by common shareholders is greater than a predetermined per-share amount. If the company is liquidated, participating preferred shareholders may also have the right to be paid back the purchasing price of the stock as well as a pro-rata share of remaining proceeds received by common shareholders.
Significance to Investors.