MARKET EFFICIENCY:

When money is put into the stock market, it is done with the aim of
generating a return on the capital invested. Many investors try not only
to make a profitable return, but also to outperform, or beat, the
market.
The simplest definition of market efficiency is that the price already
reflects the available information and thus buying or selling the stock
should, on average, return you only a "fair" measure of return (after
transaction costs) for the associated risk.

MEASURE OF BETA

• The beta (β) of a stock or portfolio is a number describing the

relation of its returns with that of the financial market as a
whole. The beta coefficient is a key parameter in the capital
asset pricing model (CAPM).
• It measures the part of the asset's statistical variance that
cannot be mitigated by the diversification provided by the
portfolio of many risky assets, because it is correlated with the
return of the other assets that are in the portfolio.
• An asset with a beta of 0 means that its price is not at all
correlated with the market; that asset is independent.
• A positive beta means that the asset generally follows the
market.
• A negative beta shows that the asset inversely follows the
market; the asset generally decreases in value if the market
goes up and vice versa.
• Beta can be estimated for individual companies using regression
analysis against a stock market index.

FORENSIC ACCOUNTING

• Forensic accounting is the specialty practice area of accountancy

that describes engagements that result from actual or
anticipated disputes or litigation. "Forensic" means "suitable for
use in a court of law", and it is to that standard and potential
outcome that forensic accountants generally have to work.
• Forensic accountants, also referred to as forensic auditors or
investigative auditors, often have to give expert evidence at the
eventual trial. All of the larger accounting firms, as well as many
medium-sized and boutique firms have specialist forensic
accounting departments. Within these groups, there may be
further sub-specializations: some forensic accountants may, for
 example, just specialize in insurance claims, personal injury
claims, and fraud, construction, or royalty audits.
• Forensic accountant takes a more proactive, skeptical approach
in examining the books of Accounting. They make no assumption
of management integrity (if they can assume so then there is no
need for their appointment) show less concerns for the
arithmetical accuracy have nothing to do with the Accounting or
Assurance standards but are keen in exposing any possibility of
fraud.
• Forensic accounting is the application of a specialized knowledge
and specific skills to stumble upon the evidence of economic
transactions. The job demands reporting, where the
accountability of the fraud is established and the report is
considered as evidence in the court of law or in the
administrative proceeding.
CAPITAL ASSET PRICING MODEL

The capital asset pricing model (CAPM) is used to determine a

theoretically appropriate required rate of return of an asset, if that asset
is to be added to an already well-diversified portfolio, given that assets
non-diversifiable risk. The model takes into account the asset's sensitivity
to non-diversifiable risk (also known as systematic risk or market risk),
often represented by the quantity beta (β) in the financial industry, as
well as the expected return of the market and the expected return of a
theoretical risk-free asset.
A model that describes the relationship between risk and expected
return and that is used in the pricing of risky securities.

The general idea behind CAPM is that investors need to be compensated in two ways: time
value of money and risk. The time value of money is represented by the risk-free (rf) rate in
the formula and compensates the investors for placing money in any investment over a period
of time. The other half of the formula represents risk and calculates the amount of
compensation the investor needs for taking on additional risk. This is calculated by taking a
risk measure (beta) that compares the returns of the asset to the market over a period of time
and to the market premium (Rm-rf).
(*REFER THE PDF)

SOLVENCY AND LIQUIDITY

Solvency is the ability of an entity to pay its debts. Solvency can also
be described as the ability of a corporation to meet its long-term fixed
expenses and to accomplish long-term expansion and growth. The
better a company's solvency, the better it is financially. When a
company is insolvent, it means that it can no longer operate and is
undergoing bankruptcy.
Solvency is a different concept from profitability, which refers to the
ability to earn a profit. Businesses can be profitable without being
solvent (e.g. when they are expanding rapidly). Businesses can be
solvent even while losing money (e.g. when they cannibalize future
cash flows, like selling accounts receivable). A business is bankrupt
when it is unprofitable and insolvent.