An investment workshop is not complete if the stock exchange has not been adversely mentioned in the course of it. In fact, it takes up much of any investment related talk. Stories abound of people who have made it big in the stock market. One wonders if it is all by chance or if there is a strategy to it.
You have heard terms like share price or the synonym stock price bandied about and wondered what they could be in reference to. If you have taken a shine to the stock markets and would like to indulge, it is necessary to get some information.
Share Price :
What is a share price? It is the amount of money that you would pay for one share of stocks on sale of secondary or any other monetary assets of a company. Simply put, the share price is the highest price you are prepared to pay or the lowest a share can go for. Studying the play on the market on say, Lloyds share price live and other trading platforms will giveyou a practical feel of share prices.
How Share Prices Behave :
When you hear ‘random walk’, what comes to mind? A random stroll in the woods? Well, in financial circles, that is a term that has nought to do with walking.A random walk is a theory used by financial gurus to standardizethebehaviour of share prices. This theory indicates that share price variations are distributed equally and rely on each other. This is based on the following assumptions:
- Investors are sensible in their dealings and unbiased.
- They project the value of an asset to future possibilities.
Every bit of information concerned with share price that exists becomes relevant as a result of these circumstances. This is because the price is affected and it changes only when new information is availed.
Interestingly, share prices do not always depend on random walks. There are some short term and long term correlations that must be taken into account. The strength and sign of the prices depend on other additional factors. Some of the factors that may result in price fluctuations include:
- Seasonal and temporal patterns, for instance, the January effect. Returns in January are significantly higher than other months.
- Future price behavior. Some experts argue that future price is affected by past behavior, but others feel that the patterns occur accidentally. They cannot be pinned on the behavior of the investors.
- Intellectual and emotional bias on the part of the investors. Investors’ actions and biases towards particular assets can and do cause prices to fluctuate.
- Projected earnings and dividends of a company. The relationship between the stock price and dividends is not always equal.
Share prices are dependent on more than just the value of the companies involved in the trading process because even investors can cause market fluctuations depending on their leanings whether intellectual or emotional, but one can follow the action by visiting Lloyds share price live or other preferred platforms to get a feel of how share prices work.
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