Questions tagged [stock-market]

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

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79 views

Why can per share earnings growth only keep up with GDP growth, if no new shares are issued?

I transcribe Ben Felix's speech (BSc Mechanical Engineering (Northeastern University), MBA Finance (Carleton University), CFA, CFP, CIM) starting from 8:33. I just screen shot his animation, rather ...
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12 views

How can I tell who are major investors in an asset management group and their associated funds?

I am trying to determine which individuals/organizations are the largest investors in Netflix, but when I look at the list of top shareholders, they are all investment management groups. Investment ...
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1answer
45 views

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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174 views

How does the stock market correlate with the economy?

What's the Correlation Coefficient between the Canadian and US stock and economy? Don't hesitate to discuss other stock exchanges. On Apr 30 2020, Paul Krugman wrote Opinion | Crashing Economy, ...
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Calculation of theoretical futures value

we form a stock index by using only two stocks in the index. One of the stocks is the Stock-A. The current selling price of the stock-A is 103 dollars and the second stock is the stock-B. The current ...
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561 views

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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25 views

Is there a difference between settlement price vs market delivery price or are they the same thing?

I've been learning about Futures Contracts on Khan Academy (The finance related forum on there is quite old and no one has replied to my questions in the past) and the instructor has used the term "...
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48 views

Banks and Stock Market in Germany

Why does Germany have such a small stock market, but very large powerful banks?
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1answer
46 views

By buying stocks, am I as an individual measurably affecting the economy?

I know that participating in an IPO is directly helping the company, because my money is going straight into their bank account. I know that the stock market as a whole has an effect on the economy. ...
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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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26 views

CDO and Nonpositive Equity Questions

I have two questions about statements made in this video: https://www.khanacademy.org/economics-finance-domain/core-finance/money-and-banking/bank-bailout/v/bailout-2-book-value At 6:25, the video ...
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71 views

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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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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66 views

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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55 views

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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119 views

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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49 views

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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3k views

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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170 views

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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21 views

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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34 views

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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38 views

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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36 views

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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27 views

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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53 views

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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108 views

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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5k views

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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163 views

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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42 views

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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20 views

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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186 views

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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36 views

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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1answer
180 views

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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2answers
2k views

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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1answer
763 views

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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93 views

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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48 views

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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370 views

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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20 views

Stock Price vs Stock Return Autocorrelation

There are a lot of paper that claim stocks follow a random walk and therefore not predictable. A basis for this statements often times a autocorrelation test of the returns. However, what if there is ...
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38 views

Decomposition of stock index movements

I want to decompose stock index movements. I know the estimated 12 months earnings growth rate ($g_1$), estimated long run earnings growth rate ($g_2$) and the index value. I am about to use two-...
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24 views

Open offer made by companies to take over [closed]

What is open offer in simple terms? What is its meaning in cases of taking over the major stakes in other company?
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101 views

Can the major indice of an exporting nation decrease at the same time the currency devalues?

In the UK, the FTSE100 is achieving record highs at the same time the currency (GBP) is depreciating rapidly. The media often correlate the two events by reporting that since the indice is made of ...
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12 views

Commonly used indicators for currency pair strength?

I am attempting to write a program in Python that monitors a single currency pair, GPB/NZD to be specific. My main focus will be to run constant calculations every 2 to 3 minutes in order to give ...
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91 views

Why does a company want the value of its stocks to be as high as possible?

My professor claims that a company want the value of its stocks will be as high as possible. Why should the company care? The company "minds its own business" and make its money. Why should it cares ...
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1answer
48 views

Is this lottery like stock market? [closed]

Consider the following imaginary lottery (motivated by Massachusetts' Cash WinFall): Ticket money obtained in the previous draw are given to the participants of the next draw proportionally to the ...
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Where to find a list of marketplaces (NYSE,LSE) and the financial products they offer?

I'm looking for a list (csv/json/api...) of all marketplaces (New York Stock Exchange...) and the financial products that are offered on those market places. Preferrably worlwide but US and EU will ...
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22 views

Average Return for Commodity

Suppose I have a function of a varying values represented by randomness. A stock or price of a commodity would be a good example. What is the average return for that stock on any given interval of ...