Questions tagged [stock-market]
Markets in which ownership stakes of firms (e.g. stocks/shares) can be traded.
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General mechanism of bond price and real interest rate movements
Jeremy Siegel writes in "Stocks for the long run" that when better than expected economic data is released bond prices fall and real interest rates go up.
Why do bond prices fall with ...
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Can a security equity stock change its lising currency?
I am looking at the financial data structure at some DB and see that the candle price of security equity shares is identified via the compound key of a financial instrument of 3 parts. A custom ...
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Why is the Modigliani-Miller theorem logical?
Quoting this SE question, who put it nicely, the M&M theorem basically states that:
...in a no-frictions world, two identical firms have the same enterprise
value, regardless of their financial ...
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Finding data set for econometrics project
I'm thinking of doing my undergrad research project on investigating the impact of happiness on stock market participation in the US stock market. However, I am struggling to find a data set. Does ...
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Is there a type financial instrument that can realistically increase its value 100 fold
Is there a type of financial instrument with extreme volatility, which could realistically grow in value by 10 000% over less than a year? If there isn't one that's commonly traded, could I craft one ...
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How do bonds & shares relate to the money supply?
Non-eocnomist here. I'm trying to understand how money works, and what "money supply" means.
I understand about how banks take deposits and lend them out, turning short term loans (the ...
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How do companies raise funds by selling stocks
I have the following question I cannot seem to find the answer to online:
Publicly traded companies sell stocks to fund the business. So, let's say a firm is listed on a stock exchange with 100 shares,...
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Why do people buy high dividend stock?
Dividend payout from stock makes the stock price fall by the same value. It is just rearranging your money instead of getting real interest like in bonds. Then why do some people aim at high dividend ...
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When Cathie Wood says the Powell has 20x rates vs Volker 2x rates in 1981, is this the right way to look at it?
Cathie Wood regularly says the FED today gone too far with rate rises, saying they have raised rates 20 times from their 0.25% lows in 2020, where as in the early 1980 Volcker only doubled rates from ...
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Do market volatility and optimal trade confirmation strength correlate?
In this video, it is suggested that in high volatility markets, trading algorithms which wait for more confirmation to buy perform better than trading algorithms which buy more quickly, while in low ...
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company value, shares, NPV
Let's say we want to evaluate the value of a company. One way is to calculate the present value of the cash flows. I do not specify the cash flows and the discounting rates $r_i$ here. Then the ...
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Empirical relation between interest rate and stock market performance
Disclaimer: Originally I asked this question on the personal finance site (see here) where it was (rightfully) closed since it does not directly relate to personal finance but is rather a general ...
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Loss absorption via Common Stock
As a primer, I want to lay out my limited understanding of the topic:
Common stock:
is part of CET1 Capital of a bank
used to absorp losses earlier than e.g. preferred stock and other types
held by ...
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Why do stock buybacks raise the price of stocks?
The answer I've managed to find is that because ownership of the company is divided among fewer shares/people and thus the price of a share is higher.
The thing is that this explanation neglects the ...
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Why can't retail investors directly purchase from a stock exchange?
Instead investors must use a stock brokerage as a middleman. Why is the stock brokerage necessary?
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How to value of a stock that cannot be sold for a fixed time period?
Consider an employee (perhaps a CEO or another high-ranking employee) that has received compensation in the form of the firm's stock. The stock must be held for at least 3 years before selling. How to ...
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Are there terms to separate two different notions of percentage increase?
Say someone owns 30% of the shares of a company. Then suppose that they increase their number of shares by 50%. This last sentence is ambiguous. It could mean that they increase their number of ...
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Relationships between several economic concepts, and chatGPT's explanation [closed]
Sadly I have so little knowledge of economics that I can barely read the news these days. Answering my questions the old fashioned way (via Google) tends to confuse me more. So I asked chatGPT, but I ...
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When a company gives RSUs to employees, from where does it have those stocks?
I work at Apple Inc., as a part of my compensation agreement I was granted an X amount of RSUs. A portion vests each year and becomes an AAPL stock on the market in my ownership.
It leads me to wonder:...
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Stock Exchange role in expansion of firms
How can a Stock Exchange be proven important in developing/developed economies regarding the expansion of firms? Are there some constraints of the Stock Exchange in the development of firms?
user43401
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Short vs. long horizon event studies?
I am studying the impact of announcements by a Central Bank on a stock's returns. To measure these impacts, I employ an event study (where my event window is 10 days and my estimation window is 60 ...
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How to find the share price with respect to the type of share?
As someone coming from a mathematical background who has started reading into some basic finance, there are a few concepts that I am struggling to understand and would be grateful if I could check to ...
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Is the government putting a 20% tax on dividends equivalent to the government owning 20% of the company?
This question is about an answer user253751 wrote to one of my questions on Politics SE.
Consider a country where a government puts a 20% tax on oil and gas profits. Consider a different country ...
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Is it possible for the stock market to beat inflation forever?
Just a few thoughts on the possibility of markets beating inflation in the long, long term (say, hundreds of years). I am a theoretical physicist, not an economist, so please forgive my ignorance.
I ...
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Why is the Chinese stock market weak while its economy is strong?
China's economy has had a decent growth rate even post-2008 however, the stock market indices appear to be weak and stuck at more or less the same level since long time as shown below for Shanghai, ...
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What happens to Deposits when purchasing stock shares or money market fund shares?
I'm trying to understand the flow of money into the shadow banking sector, e.g. what happens when deposits are transferred to either a brokerage, or a money market mutual fund (MMMF), and specifically ...
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Placing buy orders above the current market price in the stock market
Consider this hypothetical situation:
Let's say that microsoft stock is currently being traded for 200 dollars and via my broker I place a buy order of one stock for 1000 dollars. I imagine there is ...
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How are stock prices determined in the following cases?
I looked at this question already. I know there is an order book with bid and ask and that the price is updated when a match occurs. But I have two questions:
What happens when the bid is higher than ...
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Why do stock returns seem to be uncorrelated with interest rate?
Since expected return of stock is risk-free rate plus risk premium, intuitively they should be correlated. Of course the size of risk premium is not constant, but it's hard to imagine why risk premium ...
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How Did The Coronavirus Market Crash Cause Excessive Price Rises Of Luxury Goods?
The COVID-19 pandemic had caused the unemployment rate to rise quite significantly in many countries. Furthering this, most countries are facing economic crises, most notably, the United States with ...
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"Rate of exploitation" and savings growth
The normative implication in Marxian economics is that "exploitation of labour-power" is a bad thing. I'm hoping to understand quantitatively who are the winners and losers.
Definitions:
A &...
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Fundamental knowledge about invest, stock and economics for self learning [closed]
I am not expertised in the field of economics and stock so I do not know anything about invest. Would anyone please recommend any book/textbook for the initial leaner to get understanding of all these ...
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How can both floating and outstanding shares of a company increase?
A stock named 'HDFC Bank' listed on NSE (India's stock exchange) has shown an increase in shares outstanding and floating stock outstanding YoY. How?
Credits: TradingView
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Calculating profit from price and cost
For a given item, if we know that the equilibrium price is 400 and the cost of manufacturing quantity $x$ of the item is $2x^3+900$, then how can I find the profit?
My initial thoughts are that this ...
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Do stock indexes (S&P 500, DJ, ...) directly depend on inflation?
I can't understand what stock indexes really are. What they are representing?
As far as I know, they represent relative change (in points) in the prices of shares of a given set of companies. Is that ...
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Why aren't stock bubble crashes just zero sum exchanges of wealth?
(I'm not an economics student or anything of the sort)
Let's say the total valuation of a country's stocks rises from 1000 to 2000 during year 1, and then "crashes" from 2000 to 1000 in year ...
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Why are stock markets not open 24/7?
All of the stock markets have limited trading days and hours. Why there should be off day? Why are stock markets not run 24/7?
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Why Shiller P/E stopped being mean reverting?
It looks like Shiller's P/E stopped being mean reverting after the year 2000. I have read online that this could be due to some changes in the way companies started to account their earnings.
Is P/E ...
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How is the stock value of an index fund like VOO determined?
I understand that an Index Fund tracks an existing index (e.g., S&P500) by just buying the same stock in an equal proportion that the index has, and the fact that we can assume that the Index Fund ...
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US GDP vs S&P 500 market cap
I googled US GDP and it shows $20.9 Trillion.
Then I googled S&P 500 market cap and it shows $42.4 Trillion.
Can someone explain to me like I am a 5 year old what is going on?
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Why S&P 500 earning growth is so much higher than GDP growth?
From Q4 2019 to Q4 2022 US GDP (nominal) has grown from 21.694 trillion to 24 trillion. Which accounts to 10.5% growth in 3 years. Data from https://fred.stlouisfed.org/series/GDP
Whereas S&P500 ...
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Does dilution of company increase its networth?
Let's say a company has 1 million shares and its net worth is 10 million dollars. So each share has an intrinsic value of 10 USD.
Now lets say the company introduces 100 thousand shares and sells each ...
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How are retail investors served on the primary market?
When a company issues new shares on the primary market, is it possible or even obligatory to reserve a given amount for retail investors?
If it is possible: How often is this done? (From Wikipedia I ...
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Why is equity trading an active contribution to the development and growth of economy?
How can one explain in a few words why equity trading is an active contribution to the development and growth of economy?
At first sight it seems counter-intuitive (for the layman): Buying newly ...
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If GOOG shares confer no voting rights, where do their value comes from?
I recently found out that the difference between GOOG and GOOGL shares is that GOOG shares do not have voting rights. Then I read that the leadership is not planning to pay dividends anytime soon (...
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The nutshell of stock price
I don't know if this is the right place to ask this question, if not, please be so kind and refer me to the right place, much appreciated!
Say if a company releases a million share with 10 each, and a ...
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Are stocks prices included in GDP?
According to definition of GDP as total expenditure, GDP includes goods and services currently produced. So it does not include transactions involving items produced in the past. For example buying a ...
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How does a closed Stock Exchange stop people selling/buying
A question I've had since hearing of the Russian stock exchange being closed, and how this will likely cause a severe drop in their stock values once it opens again, is how does a closed stock ...
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How long can stock exchanges stay closed and with what consequences?
Sometimes, states deliberately close their stock exchanges and keep them closed for a long time (longer than the usual nights/weekends). As far as I understand, this a drastic measure, something done ...
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Differences between stocks and bonds
I just learned what bonds are. They seem similar to stocks, but different in key ways. I'd like to know all the ways. I'll list the differences that I currently believe they have. The only reason I'm ...
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