Share price
hideA share price is the price of a single share of a number of saleable stocks of the company. Once the stock is purchased, the owner becomes a shareholder of the company that issued the share. The price is calculated by dividing the market capitalization by the total number of shares outstanding.
When viewed over long periods, the share price is directly related to the earnings and dividends of the firm. Over short periods, especially for younger or smaller firms, the relationship between share price and dividends can be quite unmatched.
In the US, a share must be priced at $1 or more to be covered by NASDAQ. If the share price falls below that level the stock is "delisted", and becomes an OTC (over the counter stock). A stock must have a price of $1 or more for 10 consecutive trading days during each month to remain listed.
Many US based companies seek to keep their share price (also called stock price) low, partly based on "round lot" trading (multiples of 100 shares). A corporation can adjust its stock price by a stock split, substituting a quantity of shares at one price for a different number of shares at an adjusted price where the value of shares x price remains equivalent. (For example 500 shares at $32 may become 1000 shares at $16.) Many major firms like to keep their price in the $25 to $75 price range.
In economics and financial theory, analysts use random walk techniques to model behavior of asset prices, in particular share prices on stock markets, currency exchange rates and commodity prices. This practice has its basis in the presumption that investors act rationally and without bias, and that at any moment they estimate the value of an asset based on future expectations. Under these conditions, all existing information affects the price, which changes only when new information comes out. By definition, new information appears randomly and influences the asset price randomly.
Empirical studies have demonstrated that prices do not completely follow random walks. Low serial correlations (around 0.05) exist in the short term, and slightly stronger correlations over the longer term. Their sign and the strength depend on a variety of factors.
Researchers have found that some of the biggest price deviations from random walks result from seasonal and temporal patterns. In particular, returns in January significantly exceed those in other months (January effect) and on Mondays stock prices go down more than on any other day. Observers have noted these effects in many different markets for more than half a century, but without succeeding in giving a completely satisfactory explanation for their persistence.
Technical analysis uses most of the anomalies to extract information on future price movements from historical data. But some economists, for example Eugene Fama, argue that most of these patterns occur accidentally, rather than as a result of irrational or inefficient behavior of investors: the huge amount of data available to researchers for analysis allegedly causes the fluctuations.
Another school of thought, behavioral finance, attributes non-randomness to investors' cognitive and emotional biases. This can be contrasted with Fundamental analysis.
For more information about Share price, read the full article at
Wikipedia.
This text uses material from Wikipedia and is available under the GNU Free Documentation License.
News tagged with stock price
Yahoo CEO pledges to boost profit margins
Nov 10, 2009 |
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(AP) -- Yahoo Inc. Chief Executive Carol Bartz promised Tuesday to turn around the struggling Internet company after this year's "terrible" performance.
Failing the sniff test: Researchers find new way to spot fraud
Nov 09, 2009 |
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Companies that commit fraud can find innovative ways to fudge the numbers, making it hard to tell something is wrong by just looking at their financial statements. But research from North Carolina State University unveils ...
Yahoo sets out to regain analysts' respect
Oct 28, 2009 |
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(AP) -- With its stock in a three-year funk, Yahoo Inc. set out Wednesday to persuade investors that the Internet company's struggles are nearly over.
Netflix 3Q earnings rise 48 pct, but stock falls
Oct 22, 2009 |
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(AP) -- Netflix Inc. has been doing so well during the recession that it's getting tougher for the DVD-by-mail pioneer to live up to investors' lofty expectations.
Google ready to open wallet again after stellar 3Q
Oct 16, 2009 |
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(AP) -- Google Inc.'s earnings and stock price are soaring again - and so is the Internet search leader's optimism.
Hard-drive makers see big run-ups on PC recovery hopes
Sep 25, 2009 |
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Investors willing to make early bets on the recovery of the PC sector have scored big with Seagate Technology and Western Digital Corp. -- two makers of hard-disk drives that have seen their market values more than triple ...
Adobe to buy Omniture for $1.8B; 3Q profit slides
Sep 15, 2009 |
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(AP) -- Adobe Systems Inc. said Tuesday it will buy Web analytic software company Omniture Inc. for about $1.8 billion, giving the maker of content-creation software a way to let marketers measure the effectiveness ...
Accused spam scammer pleads guilty in Detroit
Jun 23, 2009 |
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(AP) -- A Michigan man described as one of the world's most prolific senders of spam e-mail has pleaded guilty to charges accusing him of defrauding people by manipulating Chinese stock prices.
Monster settles SEC backdating charges for $2.5M
May 18, 2009 |
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(AP) -- Monster Worldwide Inc., which runs the Monster job search Web site, has agreed to pay $2.5 million to settle federal civil charges that it secretly backdated options for its executives and employees.
Study describes what companies should do to recover from a product recall
May 11, 2009 |
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A product recall can significantly affect a company's bottom line and its reputation, but a swift recall and restitution to purchasers can minimize harm to the company - and even improve customer satisfaction. ...
Sun unmoored as acquisition talks hit standstill
Apr 06, 2009 |
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(AP) -- Without IBM Corp.'s $7 billion takeover offer, Sun Microsystems Inc., a Silicon Valley rebel known for independence, is possibly alone again. Unless a new suitor somehow emerges, Sun will have to ...
Stock Price Correlated to Likeability of Super Bowl Ads
Jan 26, 2009 |
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(PhysOrg.com) -- When TV viewers like a company's Super Bowl commercial, the company's stock price goes up, according to a study by researchers at the University at Buffalo School of Management and Cornell University.
Thank God for new Yahoo chief's candor
Jan 21, 2009 |
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I want to like Carol Bartz -- and maybe I will. But here's a novel thought: I'm going to give her 45 minutes or so to get something done before I decide. "Friggin' breathing room," Bartz might call it.
