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The Economy and Financial Markets
The Economy and Financial Markets

... P/E Multiple: A tool for comparing the prices of different common stocks by assessing how much the market is willing to pay a share of each corporation’s earnings. It is calculated by dividing the current market price of a stock by the earnings per share. Past performance is no guarantee of future r ...
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Latin American Growth Dynamics
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Exploiting Market Anomalies in the Saudi Stock
Exploiting Market Anomalies in the Saudi Stock

... month, and increase positions during the end of March and October, where the TASI always showed the worst performance during these mentioned months and then recovered significantly. (2) Effect of valuation on market performance: The correlation between valuation parameters and stock market performan ...
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Section 11 - Loss of Lot Market Value
Section 11 - Loss of Lot Market Value

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Annual reports of listed issuers with financial year ended on 31st
Annual reports of listed issuers with financial year ended on 31st

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Impact Of Short Selling Activity On Market Dynamics

Stock market boom and the productivity gains of the 1990s
Stock market boom and the productivity gains of the 1990s

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Stock valuation

In financial markets, stock valuation is the method of calculating theoretical values of companies and their stocks. The main use of these methods is to predict future market prices, or more generally, potential market prices, and thus to profit from price movement – stocks that are judged undervalued (with respect to their theoretical value) are bought, while stocks that are judged overvalued are sold, in the expectation that undervalued stocks will, on the whole, rise in value, while overvalued stocks will, on the whole, fall.In the view of fundamental analysis, stock valuation based on fundamentals aims to give an estimate of the intrinsic value of a stock, based on predictions of the future cash flows and profitability of the business. Fundamental analysis may be replaced or augmented by market criteria – what the market will pay for the stock, without any necessary notion of intrinsic value. These can be combined as ""predictions of future cash flows/profits (fundamental)"", together with ""what will the market pay for these profits?"" These can be seen as ""supply and demand"" sides – what underlies the supply (of stock), and what drives the (market) demand for stock?In the view of others, such as John Maynard Keynes, stock valuation is not a prediction but a convention, which serves to facilitate investment and ensure that stocks are liquid, despite being underpinned by an illiquid business and its illiquid investments, such as factories.
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