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Questions tagged [stock-market]

Markets in which ownership stakes of firms (e.g. stocks/shares) can be traded.

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True Market Capitalization

Market capitalization just extrapolates a price from the current share price and number of outstanding shares. While this reflects a theoretical value for the companies/stock market in question, it ...
Lawnmower Man's user avatar
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Does billionaires take loan secured by stocks to reinvest in their company?

Can billionaire use his company stocks to get loan, then invest it in his company, and get even bigger loan secured by stocks? And repeat this forever. I guess this wouldn't work, but why?
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Difference in difference on election impact on asset prices?

I am looking to research the impact of Brexit on the FTSE100 index. FTSE100 is an stock index of the 100 largest UK companies. The UK also has FTSE250 which is an index of 250 mid-cap companies (not ...
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Value of a forecast

I am looking for quantitative measures for the value of a forecast. A forecast is more valuable to me if it tells me things that are not already implied by the conventional knowledge todate, and the ...
Shaibal Roy's user avatar
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Why is the portfolio weight of the risk-free asset capped at 1?

I am reading Investment Science by David Luenberger, and in it he creates a portfolio with a risk-free asset and a risky asset. α is the weight of the risk-free asset, and he sets α ≤ 1. Why is that? ...
wwjwjwjwj's user avatar
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Does the discounted dividend model assume a stock underperforms the risk-free rate?

I'm trying to understand intuitively why the stock market as a whole has outperforms the risk-free rate over time. I started by looking at the discounted dividend model which is one of the few things ...
yyy's user avatar
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Why do accumulating ETFs grow linearly instead of exponentially?

I am learning about investments and I often read that accumulating ETFs re-invest the dividends by buying more stocks of the underling assets. The advantage of this is that by doing so they take ...
Federico Gentile's user avatar
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1 answer
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Stock market existence and saving money

I have a generic question that perhaps has more to do with psychology than with anything else. The question is, how effective is the stock market's existence in being effective in making people save ...
Joselin Jocklingson's user avatar
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Why do statista and other sources not list Bombay Stock Exchange despite its large market cap?

The wikipedia list of stock exchanges claims that both the National Stock Exchange (NSE) and the Bombay Stock Exchange(BSE) have a market cap of over 3 Trillion $. Meanwhile sources such as statista ...
whoisit's user avatar
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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 ...
mhsnk's user avatar
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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 ...
misanthrope's user avatar
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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 ...
snatchysquid's user avatar
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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 ...
Jake's user avatar
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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 ...
Francis L.'s user avatar
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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 ...
Paul Johnson's user avatar
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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,...
numpy's user avatar
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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 ...
MicroscooterMan's user avatar
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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 ...
callculus42's user avatar
2 votes
1 answer
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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 ...
simplemind's user avatar
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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 ...
Marcellvs's user avatar
3 votes
2 answers
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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 ...
Hao S's user avatar
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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?
JobHunter69's user avatar
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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 ...
Richard Hardy's user avatar
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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 ...
Eoin's user avatar
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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 ...
user90664's user avatar
6 votes
2 answers
193 views

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:...
Fireworks1's user avatar
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1 answer
28 views

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?
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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 ...
angelavtc's user avatar
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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 ...
Allure's user avatar
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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 ...
maybe try codidact instead's user avatar
5 votes
1 answer
134 views

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 ...
Keep_On_Cruising's user avatar
2 votes
1 answer
80 views

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 ...
timtam's user avatar
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3 votes
3 answers
170 views

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 ...
ssamtkwon's user avatar
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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 ...
Jamo's user avatar
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-1 votes
1 answer
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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 &...
llllvvuu's user avatar
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0 answers
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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
Arpan's user avatar
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1 answer
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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 ...
FD_bfa's user avatar
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1 answer
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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 ...
sshd's user avatar
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3 votes
1 answer
201 views

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 ...
755's user avatar
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7 votes
2 answers
2k views

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?
Hadman's user avatar
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2 votes
1 answer
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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 ...
spacemonkey's user avatar
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1 answer
112 views

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 ...
3af2's user avatar
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0 votes
1 answer
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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?
ArmenB's user avatar
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2 votes
2 answers
550 views

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 ...
Alexander's user avatar

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