Assignment:
Determination of Stock Prices
Stock prices are very difficult to predict; although, there are some theories for the determination of stock prices such as the fundamental analysis, the Gordon growth model (or dividend-discount model), and the efficient market analysis. Prior to beginning work on this assignment, read Hubbard and O'Brien's (2017) Chapter 6 and Garth Friesen's (2017) article, When Good News Is Bad for Stocks and respond to the following components.
- Analyze reasons why good news for the economy (long term) isn't always good news for stock and other financial markets (short term).
- Evaluate the assumption that stock price movements are purely random (the random walk theory), describing what a random walk is.
- Discuss the strengths and weaknesses of the efficient markets hypothesis.
- Explain the rationale for buying stocks when stock prices are not predictable, noting what kind of strategies would be useful for investing $100,000.
The Determination of Stock Prices paper
Must be three to four double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the Ashford Writing Center.