Questions tagged [stock-market]

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

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Do (any) governments or central banks have an explicit or econometrically probable policy to “prop up” stock market prices?

This assumption (that governments [in the a broad sense of the term] prop up stock prices deliberately) has been taken as a given/assumption in another question here. Is there evidence that they ...
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Why doesn't the Federal government just let the stock market crash?

In a normal financial crisis the government tries to maintain the stock market prices to prevent a spike in unemployment as companies collapse and run layoffs. But given that we're in the midst on a ...
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What was the reason for a boom on Wallstreet in 1938?

What was the reason for a boom on Wallstreet in 1938? Our reporter in N.Y. said today that this 1. week of April 2020 was the best since 1938. What was the reason for this rebound in 1938?
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What is the economic sense in multiplying standard deviation by the root of the sample size?

I found an example when a so-called volatility index is calculated by multiplication of a sample standard deviation by the ...
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Why does Samuelson say common stocks are better than bonds and preferred stocks during inflation?

I’m reading the first edition of Paul Samuelson’s Economics (1948). In Chapter 6, “Business Organization and Income,” after describing bonds, preferred stocks, and common stocks, he writes: To test ...
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What mechanisms are at work when the market falls dramatically one day and then rises just as dramatically the next?

We've seen this scenario several times over the past few weeks: The major stock market indexes will plummet one day and then rise dramatically (though perhaps not to the previous days starting price) ...
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How does stock market drop affect the economy if it doesn't affect the corporations?

Sorry if it's a basic question. Suppose corporation ABC went through public offering many years ago. ABC retained 30% of the shares, and 70% are being traded. The very initial offering, ABC made ...
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Does each stock exchange only trade in one currency?

And if not, how are currency exchange rates accounted for?
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what would be an efficient investment when central banks have massive qe?

Recently the central bank said in a statement on its website. “Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift ...
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Do large- and mid-caps try to shun low share prices?

As NASDAQ and NYSE stocks must be priced at least $1 per share, it feels intuitive and doubtless that large- and mid-caps fancy their share prices to outstrip and remain well over \$1. But what ...
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Banks and Stock Market in Germany

My question is: ** Why does Germany have such a small stock market, but very large powerful banks? **
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Does the Federal Reserve buy and sell stocks?

Can the Fed buy and sell stock in publicly traded companies? Is there evidence of this and, wouldn't this behavior drive the price as opposed to actual market forces?
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How can I estimate the disconnect between book value and market capitalisation?

There are several questions on Stack Exchange as to what difference the stock price makes to a company after its IPO. Surely, management cares, it is important to be credible to trading partners, etc. ...
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Why does the US government not invest in the stock market?

We often talk about the huge public debt of the US government. Why does it not invest in the stock market (at least in index funds) instead of issuing debt? Can they not reduce the debt that way?
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Why does the stock market tend to grow over time

At its most basic, the value of a stock depends on how much people are willing to pay an entity that already owns the stock to transfer ownership. The question is, why does the amount people are ...
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Shouldn't national Stock Indices proportional to GDP of the country?

I was looking at Japan: Japan's GDP trajectory and Nikkei 225. It seems from 2011 - 2015 the GDP contracted but the Nikkei has gone up. Would there be a good explanation for this ?
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What does it mean for a firm to have a 0.95% dividend?

Here's an Apple's dividend: What does this 0.95% mean? Is it 0.95% of share capital? If not, what does it mean?
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List of stock and bond indexes for countries

I am doing some master`s degree research and looking for the list of stock/bond indexes for developed and developing countries. So the excel-file I should gather in the end will look like this: ...
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Bank Runs During the 1930s

Why were there numerous banks run right after the stock market crash of 1929? Why would a bank fail because the stock market crashes?
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What's the special notation?

I'm studying "ALGORITHMIC AND HIGH-FREQUENCY TRADING". Page 249 of it tries to find a formula for $h(t,q)$. First, it supposes $h(t,q) = \bar\kappa log \space\omega(q,t)$ then let $\omega(t)=[\omega(...
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Can “invisible” investing by the Chinese govt. create bubbles in the stock market?

In this link, they claim that the Chinese govt. secretly pumps money into the market as soon the market crashed due to Corona Virus. How is this different, in terms of long-term impact, from ...
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What happens to interest rates when they are already at (near) zero and the stock market crashes?

Let's say the global stock market crashes in the coming months (it's currently at an all time high in the western world). What happens to interest rates? "Usually", as I understand from my absolute ...
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ROI and stock rates

I'm an engineer with minimal to zero knowledge about economical topics, please be patient with me if the following question makes no sense or is too basic ... Currently I'm working through the "...
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How does denominator effect works?

People say that when overall market falls, Prices of real estate rise because of denominator effect. But what is the logic behind it ? My understanding of denominator effect is ---denominator is ...
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Did Johnson and Johnson really pay a 25% quarterly dividend in 1978?

I looked through some of the old Dow Jones stocks for a project I'm working on and found some inconsistency with JNJ stocks. Basicly for a share price of $1.66 they appeared to pay \$0.42 in quartely ...
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EMH: Difference between market price and fundamental value?

I am confused by the relation between stocks market prices and fundamental (or intrinsic) values stated by Efficient Market Hypothesis. How these deviates regarding to efficient market theory or are ...
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How to quantify tax liability of unrealized cap gains in mutual fund

Consider an S&P 500 mutual fund. At any moment the holdings of the fund include unrealized cap gains that should eventually generate tax liability. Thus, for a potential investor, the fair value ...
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At what rate can a multi-billionaire liquidate his assets without significantly affecting the stock price?

Let's consider three different billionaires: Jeff Bezos, Bill Gates and Warren Buffett. Now let's say the three of them (at different times) decided that they want to liquidate all their assets and ...
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Stock price and exchange rate is correlation, but VAR model order is zero

It is well known that Japanese stock price and exchange rate(USD/JPY) is correlation, So I built a VAR model in python about stock data(Tokyo stock price index) and exchange rate(USD/JPY) and I fitted ...
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what does historical volatility explain?

Let's assume we have close prices of one stock of period one year. As far as I understand historical volatility is standard deviation of log return, however I do not understand what this actually mean....
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How are the price signals of stocks in the stock market centralized?

We can look up the price of a stock, like that of Google, and it gives a particular figure. I would like to know how the price signal is "centralized". What I mean is: if the trades happen between ...
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Can the stock market grow faster than GDP indefinitely?

My understanding of conventional wisdom is that average long-term growth of advanced economies is expected to be significantly lower than the average long-term growth of the value of the largest firms ...
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Effects of Passive/Active market allocations on liquidity and Bid/Ask spread

In The Paradox of Active Management, the author argues that in the event of a shift from Active to Passive management, Bid/Ask spreads and market liquidity will be affected, In our scenario, the ...
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Get Annualized return from a time series of daily returns

I have a time series of data which has daily returns over 15-year time period. I understand that you get multi-period simple return using the following formula. $$1 + R_{t}(k) = \prod_{j=0}^{k-1}(1 +...
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Fall in share due to litigation

Recently, I read a news article stating Indiabulls Housing Finance shares plunges on reports of litigation against company Why do shares plunge when company finds itself in a litigation process? ...
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Volatility measure in Diebold-Yilmaz connectedness approach

I am trying to create Diebold-Yilmaz connectedness table for returns and volatilities. When I do it for returns everything works properly (I can reproduce their work actually) but for volatilities I ...
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List of important business and economic news events between 1850 and 1930?

I'm collecting data on important business and economic news dates in the late 19th to early 20th century. The only list I found is this: https://www.encyclopedia.com/history/news-wires-white-papers-...
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What would happen if a company bought back of all of its stock? Would it own 100% of itself?

Companies occasionally own some of their own stock. A company owning its own stock is actually pretty weird when you think about it. If I own 1% of a business's stock (and therefore own 1% of the ...
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Does stock picking work?

Does stock picking work? Why/why not? What does the research say about it? (I was expecting that this should already have been asked and looked quite extensively for such a question but couldn't find ...
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Which assets beat the injection of money and why?

Suppose a world in which every year $1.03 ^ Y$ liquidity is injected. Which assets could perform better than 3% per year? Growth forecasts for these?
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Why does equity have historically poor performance after rate cuts?

I am struggling to understand why equity markets seem to suffer shortly after fed rate cuts. Here is a rather telling chart: Question Assuming not some kind of spurious relationship, what's the ...
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How to convert daily returns to annual returns?

I have a task: to download daily stock quotations, create a portfolio and draw a CML-line. Risk-free rate was given: 6.5% of annual. I decided to convert daily returns to annual returns, using formula ...
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How to calculate cost of equity?

So i have this question on leverage and cost of capital: Leverage and the cost of capital Gamma Airlines has an asset beta of 1.5. The risk-free interest rate is 6%, and the market risk premium is 8%....
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What would happen if stock markets were open 24 hours?

Suppose you are a broker or a trader, and the stock markets will be open 24 hours a day. What would be the implication for you as a broker in this scenario? I mean: How will your strategies change? ...
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How to calculate standard deviation of a portfolio?

So i have this information: Suppose that 60% of your portfolio is invested in Johnson & Johnson (JNJ) and the remainder is invested in Ford. You expect that over the coming year JNJ will give a ...
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log returns in finance

Why are log returns used in finance? For example to calculate a stocks performance. There are a lot of articles on that topic yet I don't find them very helpful. Could somebody please explain step by ...
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Why will the holder of a broad-based index fund, by definition, achieve the average return for the market?

A Random Walk Down Wall Street (2015 11 ed, but an 2019 ed. is upcoming). pp. 271 Bottom – 272 Top.   All “smart beta” strategies represent active management rather than indexing. Capitalization-...
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Does my research prove market inefficiency?

The long story short, I have developed an index based on a certain distribution. Then I aligned NYSE stocks according to this index i.e. the stocks with the best fit are first and the worst are last. ...
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Was magnitude of concerns about market correction/crashes prior to previous crashes similar in magnitude to today's concerns?

I am still new to learning about stock markets, and I have more of a history question. Right now, I hear a lot of people express their concerns of a market slow down within the next 1-3 years, or ...
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Stock market's obsession with growth of all companies?

I understand the stock market is a useful place to gain capital which allows further growth of a company. But it seems to me that even companies that have been on the stock market a while, appear to ...