What determines the price of stocks in the open market?

Role of diversification and assets: Part 2

What determines the price of stocks in the open market? The answer might seem clear at first, but depending on the investment theory you prefer, that answer might differ more than you think. For example, efficient market hypothesis (EMH) theories state that stock market prices reflect relevant information, thus stocks are always tradable at fair values. None are ever undervalued or inflated. Considering this, for this Collaboration, you will continue your discussions from last week, which focused on the concept of return on investment. As you might expect, you will build upon that discussion by focusing on the noted EMH theories as well as pricing asset theories.

To prepare for this Collaboration:

  • Review this week’s Learning Resources with a focus efficient market hypothesis theories.
  • Review the Week 2 Collaboration as necessary.
  • Research at least one recent (and major) financial or economic event of interest to you.
  • Reflect on the effects of this event on market prices.

To complete this Collaboration:

In Week 3, you are NOT required to submit an Initial Collaboration post. You will, however, find that your Instructor has posted some initial questions in the Discussion Board Week 3 Collaboration Thread so as to help stimulate your subsequent debates.

A Summative Grade will be awarded in Week 3, based upon your Participation in Weeks 1, 2 and 3.

Click on the Reply button below to reveal the textbox for entering your message. Then click on the Submit button to post your message.

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