STOCK VOLATILITY
Investors and their Perception
Market efficiency is a situation where market or security prices accurately represent all information available to participants (Hamilton & Booth, 2007). In an efficient market, all market participants have access to complete and perfect information about security prices such that market prices are unbiased estimates of securities true prices (Hamilton & Booth, 2007). Since everyone has access to the same information about prices, it is impossible for an investor to gain an edge over others by trading financial assets (Hamilton & Booth, 2007).
A serious limitation of the efficient markets hypothesis is it ignores the fact that investors value stocks differently. An investor may evaluate a stock based on its growth potential, while another may look at how it explores undervalued market opportunities. The two investors will not have the same assessment of the stocks fair value as suggested by the efficient market hypothesis (Hamilton & Booth, 2007). The differences in fair value assessment among investors make it impossible to effectively value a stock under the efficient market hypothesis. Further, history offers multiple cases where stock markets were affected by panic situations that made them irrational and allowed investors to...
…measure of volatility. First, the beta value keeps changing over time (Ross, 2012). For instance, a company may report a high rate of growth in its initial years but the rate may not be sustainable in the long-run and may begin to slow down. In this case, the beta value will be high initially and reduce as the company progresses. Secondly, the calculate beta depends on the data set used (Ross, 2012). Most financial websites may report different beta values for the same stock because they use different data sets to calculate the same. It may be impossible to determine which…
References
Hamilton, R. W., & Booth, R. A. (2007). Attorney’s guide to business and finance fundamentals. Wolters Kluwer.
Ross, M. (2012). The courageous investor: Investing for bulls, bears, and the regular folks. AuthorHouse.
Stock Price Trading Value and Stock Price relationship between trading volume and price In their 2005 article, Gunduz and Hatemi-J have explored the relationship between stock price and volume by using information from the major stock markets of Central and Eastern Europe. They have made use of the Toda-Yamamoto (1995) procedure to determine Granger causality among the variables. The findings of their study provide insight into the different ways stock price and volume
Microsoft Corporation 2. Toyota Motor Corp. 3. The Coca-Cola Company The data in the Table 2 reveals the Coca Cola has recorded a decline in its stock price within the last 3 months making investors to record a loss within the last three months. However, the company recorded a moderate increase in the stock returns between 1 and 5 years. Similarly, Microsoft Corporation records a decline in the stock price within the
In these scenarios, stock options provide a powerful tool in which to properly align the goals of management with those of the firm What exactly performance-oriented rewards are in regards stock options? To begin, options are not stock in its physical form but rather a claim to stock at a predetermined price. There are two key distinctions regarding this concept. First, stock options have an asymmetric payoff (see Chapter 2)
In many cases, there are misconceptions about their ability to provide superior results in different kinds of market conditions. Yet, there are times, when these tools have been successful in helping investment managers and professionals to exploit these disparities. In this case, more research is needed to show why so many investors believe. That hedging and derivatives are important tools in providing superior returns. However, Qiao (2012) found that hedging
Investor Satisfaction Case A Business Report INVESTOR SATISFACTION REPORT As requested, here are my findings on the investor satisfaction report as collated by our analysis department. Our investment brokerage firm is advised to follow up on the results to improve brokerage performance based on type of investment product purchased. 100 clients were randomly selected and asked a series of questions, the criteria being they must have purchased shares in any one of the funds.
Investor Soft Before starting a new business venture, it is important to take into account the both the potential benefits and possible drawbacks of the new venture. The opportunities and challenges should be in appropriate balance for the business venture to be viable in terms of the future. When considering the InvestorSoft opportunity, a number of things present both opportunities and challenges. InvestorSoft offers many benefits that can be set in
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now