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 (Links to an external site.), 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 Writing Center (Links to an external site.).
- Must include a separate title page with the following:
- Title of paper
- Student’s name
- Course name and number
- Instructor’s name
- Date submitted
- Must use at least three scholarly, peer-reviewed, and/or other credible sources in addition to the course text.
- The Scholarly, Peer Reviewed, and Other Credible Sources (Links to an external site.) table offers additional guidance on appropriate source types. If you have questions about whether a specific source is appropriate for this assignment, please contact your instructor. Your instructor has the final say about the appropriateness of a specific source for a particular assignment.
- Must document all sources in APA style as outlined in the Writing Center.
- Must include a separate references page that is formatted according to APA style as outlined in the Writing Center.
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