Questions tagged [stock-market]

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

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5
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2answers
889 views

What does a stock market index stand for?

I know that a stock market index (like S&P, NIKKEI, etc.) is computed from the prices of selected stocks, but I was wondering why the name of the currency is almost never expressed. For example, ...
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1answer
25 views

How are final stock prices arrived at?

'Everybody' knows that prices are generally governed by offer & demand, but I am wondering on the details of the stock exchange here. How are stock prices (the ones which are nicely listed every ...
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1answer
28 views

What would an investment bank have to gain by warning of an impending financial crisis?

After reading a recent article and a discussion with a friend, I was left wondering what an investment bank would have to gain by claiming that a financial crisis is coming. I can see an obvious ...
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1answer
70 views

How do companies with shareholders close up shop?

How can a company with shareholders stop operations without being acquired or going bankrupt? How is a company with shareholders that is closing up shop able to give shareholders money back for ...
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1answer
92 views

How can CVS which has about 3 billion in cash on hand buy Aetna for 69 billion?

How will CVS be able to buy Aetna for 69 billion if CVS only has 3 billion in cash without borrowing a large amount of money? I understand that a company can trade for a multiple larger than 1 of ...
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1answer
225 views

Stock pricing with cross ownership

Cross-ownership is a phenomenon where companies own parts of other companies they do business with. An example: Two companies are now involved in the diamond operation, the mining group Anglo-...
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0answers
145 views

Value of companies with circular ownership [duplicate]

Given two companies, total assets of $100 million each. Company 'A' owns \$50M of company 'B'. Company 'B' owns \$50M of company 'A'. If you look at the value of both companies do you get \$200M or ...
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23 views

Best texts on cash usage and share buybacks in companies

What would be a good reference for how companies utilise their cash to conduct share buybacks. I am trying to understand how share buybacks affect the valuation of a company.
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60 views

Why are share repurchases particularly accretive?

From the "Manual of Ideas"... VALUE CREATION VIA BUYBACKS Share repurchases tend to be particularly accretive in the case of companies generating cash from operations while trading below tangible ...
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2answers
110 views

Why is the stock market always rising?

I asked myself: How is it that the stocks are always rising? How is money generated every year so that the value of a company rises? I mean, at some point there is a finite amount of money in the ...
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2answers
98 views

Using the Dividend Discount Model when no current dividend exists?

Say a company is doing an IPO and we expect them to start paying dividends in 5 years? I understand how we could use the Dividend Discount Model to predict their stock price 4 years from the IPO. But ...
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1answer
60 views

Are stock exchanges market makers?

Are stock exchanges like NASDAQ and NYSE market makers? In other words, are they providing liquidity by pairing individual buyers and sellers with each other in real-time? Or does it work differently?
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1answer
38 views

Where can I find data on market capitalization?

I am working on Home Equity/Bond Bias and need data to calculate the indicators of Home Equity Bias. So where can I find data on market capitalization (stocks and bonds) by year for each country? ...
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1answer
40 views

Market Value Changing in Response to News

On May 24th the DJIA dropped and the news has been attributing it to Donald Trump's cancelation of a talk with North Korea (see image below). My understanding is that the companies making up the DJIA ...
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1answer
25 views

Growth in dividends will equal growth of earnings

Let $Div_t$ be the dividend per share at date $t$. $\displaystyle Div_t=\frac{\text{Earnings}_t}{\text{Shares Outstanding}_t}\times\text{Dividend Payout Rate}_t$ ------------------- (1) My textbook ...
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0answers
44 views

How does a stock market work under a command economy

If a central government owns the means of production and controls business, what ramifications does that have on a stock market? Under such an economy are shares still traded as they are in a mixed/...
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2answers
449 views

Fisher Effect - inflation and stock return

This is my understanding: Fisher effect posits that expected nominal returns on any asset would move one-for-one with expected inflation. That is, when expected inflation increase, the nominal return ...
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0answers
22 views

Why does US jobs and inflation have an affect on European equities?

There are articles such as 'European shares crawl higher as investors eye US inflation data'. Is this just put down to Americans may have more money to spend overseas so investors speculate higher ...
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3answers
2k views

What is the exact relationship between the efficient-market and random-walk hypotheses?

The efficient-market and random-walk hypotheses are often discussed together as formalizations of the idea that "you can't consistently beat the stock market". But in my experience, they're often used ...
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1answer
101 views

Inflation and stock price

I have indicated my understanding and problem on the attached image below. I'm a bit confused on the impact of inflation on stock price. As increase in inflation would cause nominal interest rate to ...
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0answers
58 views

What caused the increased market trading since late 2016?

I was looking at the market (DOW) performance today and noticed an oddity: Beginning late in 2016 trading activity roughly tripled. The change was sudden and remarkably consistent. What would cause ...
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2answers
45 views

What does a "sell-off" mean if every stock transaction is balanced?

If every stock transaction is "balanced" (1 sell = 1 buy), then what does a "sell-off" actually mean and how does it move the price of a stock? Ex. If millions of people sell a stock, there's ...
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1answer
45 views

Alternative measure for market capitalization, company "value"

I wonder what the term "value" of a company, currency, etc could mean. The most obvious, to me, is market capitalization (related: Clarifying the meaning of market capitalization) Is there also ...
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53 views

U.S. stock market 2/5/18

Why did American share prices fall sharply on February 5, 2018? What are the major contributing factors to this?
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2answers
119 views

Pro and cons to finding coal

I found some Anthracite coal. I know a coal bed of this quality is worth money? I also know that there is a "no pun intended" carbon foot print if I decide to share my findings to others. Economics ...
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1answer
43 views

How Mark Zuckerburg (or any other company founder) got valued at billions?

I read that Facebook got worth at billions after IPO, but how did this brought money to Mark himself. And did Facebook earned before IPO, or after IPO. I think that after facebook earns from revenue ...
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1answer
99 views

testing the relationship between stock price and macroeconomic variables

I'm in the midst of preparing data to test the relationship between stock index and macroeconomic variables. The variables include m1, cpi, ipi, interest rate, exchange rate. I have some question ...
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3answers
249 views

Aside from buying IPOs, what exactly is the point of shareholders?

The more I look at the shareholder system in modern capitalism, the more it starts to appear as nothing more then an otherwise meaningless system that allows rich people to profit off others work ...
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2answers
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Economic Data - Frequency

I obtained the historical CPI data available in monthly and quarterly format from a data repository. It seems that the Q1, Q2, etc. data are the average of the monthly data. I thought that if I were ...
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1answer
179 views

What lies behind supply and demand model?

This is a very basic question. I can understand that price of goods and stocks change follows the supply and demand law. On the other hand, I find it difficult to understand what happens in the real ...
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0answers
24 views

In a closed system, what is the relationship, if any, between currency supply and market capitalization?

Assuming: A world in which the market value of publicly traded companies is known Any transaction to buy or sell stock of said companies can only be consummated with a new currency X, which is freely ...
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2answers
3k views

If there was world war 3, which stocks should I short? [closed]

With the Trump administration, Turkish dictatorship, North Korean nuclear weapons, and general tension around the world, we might think that there is a likelihood of something like a world war ...
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3answers
142 views

Where is there more money: Bank Accounts or Brokerage Accounts?

There is a significant amount of money in the stock market in US companies. For example, look at the largest US company by market cap - Apple. It is currently worth over 800 billion US dollars. I've ...
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1answer
1k views

How do Sharks make money on Shark Tank through equity alone?

When the Sharks on Shark Tank buy equity in private companies, how do they eventually make money by purchasing only equity? For example, if the company makes a lot of money for a few years but then ...
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2answers
526 views

Is trading in the commodity futures much more riskier than trading in stock market futures?

My understanding is that the price of a stock at the stock exchange is determined by supply demand mechanics during trading hours, and the price of futures is determined by the price of the underlying ...
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Monthly savings plans

Monthly savings plans in stocks or funds are typical investments for many people. On aggregate, these plans generate a large demand on the underlying assets, often around the end/beginning of a month. ...
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6answers
493 views

Why do falling oil prices take stocks with it?

The price of oil fell again today and is now below $30/barrel for the first time in 12 years. Along with the fall came most of the US stock markets. If I didn't know any other information except for "...
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How to know when hype is reason of a stock prices increase?

I was going to ask if there are any industries or companies that would be insulated from experiencing price changes from hype but I'm assuming it always plays a role. So, the question then turns to ...
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4answers
6k views

Does the US stock market tend to rise after natural disasters?

It seems counter intuitive that markets would rise after a huge disaster that probably affects multiple industries like oil or produce. For example, can someone explain why the US markets actually ...
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2answers
56 views

Is falling inflation in India one of the reasons for the Nifty crossing the 10,000 points mark?

Recently the Nifty crossed the 10,000 mark for the first time. At the same time inflation in India is falling. My question is whether the fall in inflation in India one of the reasons for the Indian ...
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0answers
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What is a stockholder class action for?

Sometimes, when a public company allegedly does something wrong/illegal/etc, the investors of the company organise a class action suit against the company, such as the Commonwealth Bank of Australia (...
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1answer
1k views

1929 stock market crash and unemployment rate

Thomas Sowell has repeatedly made the case that government intervention is largely responsible for the Great Depression. For example, he notes what happened with the unemployment rate in the months ...
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1answer
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Clarifying the meaning of market capitalization

I'm new to this kind of topic and I'm trying to get a deeper understand. I read that "the shares' price times the number of shares outstanding is the value of a company (=market capitalization)". ...
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2answers
43 views

How long do stock markets usually take to process complex new public information?

Here is a question that I've been thinking about for a while: Theoretically, assuming investors are rational, a stock's price will be equal to its its intrinsic value (present value of discounted ...
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0answers
19 views

Model for the psychology of trading?

In some cases I see otherwise stable stocks or commodities having wild swings in price on exchanges. Even though the underlying company or commodity is going along normally and there is no news that ...
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2answers
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Buying stocks in company merging/acquisitions

Does an acquiring company have to buy all the stocks of a target company to acquire/merge with it? If so, why? I thought stocks give voting rights and dividends, but not direct control of company ...
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1answer
57 views

Collar strategy for options trading [closed]

I am new to investing on the market so I am doing some research and studying. From what I can tell, the purpose of a collar strategy for options trading is to protect your gains you've made on the ...
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2answers
310 views

Do stock markets price in existential risk (i.e. global nuclear war)?

Question Moved from Money StackExchange: https://money.stackexchange.com/questions/74002/do-stock-markets-price-in-existential-risk-i-e-global-nuclear-war Q: Do stock markets price in existential ...
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1answer
192 views

Beginner level books on market economics

Which books can be recommended for a beginner with a strong math background, who wishes to learn how markets work, what is a stock, what is a bond, how to trade e.t.c. and has a minimal knowledge of ...
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5answers
4k views

When a stock market crashes, how does money just disappear?

I looked it up online (here), but I find it hard to believe that money literally "disappears". For example, if I buy 10 stocks of a toaster company for \$100 per share, and then the stock value drops ...