The dependent variable in a statistical model for stock investors is usually the stock's price. Since investors are primarily concerned with the value of shares, most models try to predict what the share will be worth in the future. There are exceptions, however.
Full Answer
What is a stock variable?
A stock variable is a quantified variable that is measured at a particular point of time. Since, stock of capital, total money supply, and number of persons employed are a quantities measured at a particular point of time, these are stock variables. Was this answer helpful?
What is variable pricing?
What is Variable Pricing? Variable pricing is a system for altering the price of a product or service based on the current levels of supply and demand. It is commonly employed in environments where supply and demand information is easily available.
What is an independent variable in a stock market analysis?
Independent Variable. In some instances, the analyst uses the price of one stock to predict that of another. This is usually done if two stocks are issued by competing corporations, whose stock prices have exhibited similar movements in the past. In such cases, the independent and dependent variables are both stock prices.
What's the difference between a stock's value and its price?
Most people believe a stock's value is indicated by its price. That's only true to a certain extent. There is a big difference between the two. The stock's price only tells you a company's current value or its market value . So, the price represents how much the stock trades at—or the price agreed upon by a buyer and a seller.
What are stock variables?
A stock variable is a quantified variable that is measured at a particular point of time. Since, stock of capital, total money supply, and number of persons employed are a quantities measured at a particular point of time, these are stock variables.
What is an example of a stock variable?
An example of a stock variable would be wealth. We measure wealth at a “point in time.” For example my wealth at the end of the year. An example of a flow variable would be income. We measure income over a period of time.
Is money a stock or flow variable?
Wealth is measured in dollars at a point in time and is a stock variable. Saving is measured in dollars per unit time and is a flow variable.
Is capital a stock variable?
Capital is a stock variable. On a particular date (say, 1st April, 2011), a country owns and commands stock of machines, buildings, accessories, raw materials, etc. It is stock of capital. Like a balance-sheet, a stock has a reference to a particular date on which it shows stock position.
Which of the following is not a stock variable?
Q.Which of the following is not a stock variable:B.WealthC.Money supplyD.SavingAnswer» d. Saving1 more row
Is inventory a stock variable?
Inventory is a stock variable because it is measured at a point of time and change in inventory is a flow variable because it ts measured for a period of time.
Is profit a stock variable?
Examples of flow variables include income, budget deficits, investment expenditure, sales revenue and gross profit. When thinking about these variables, these are things that change frequently and may have substantial rates of changes over time as well as large amounts of change over time.
Is capital stock or flow?
Capital is a stock concept which yields a periodic income which is a flow concept.
Is debt a stock variable?
Debt is a stock variable, meaning that it represents the amount of debt at a specific time. A deficit is the amount that the debt increases over a certain time period, usually 1 year, equal to the total expenditures minus the total revenue collected over that time period.
Which of the following is a stock variable *?
Variables whose magnitude is measured at a particular point of time are called stock variables. Assets, Liabilities, wealth, inventory, capital as all these variable are calculated at as on 31st march. Note:- In simple words all items in balance sheet are stocks variables.
Is GDP a stock variable?
For example, U.S. nominal gross domestic product refers to a total number of dollars spent over a time period, such as a year. Therefore, it is a flow variable, and has units of dollars/year.
What are the examples of flow variable?
National income, investment in the economy and aggregate supply- all are flow variables since they relate to a period of time.
What does it mean when one variable changes?
The field of economics is filled with interconnected items, sometimes called variables, which are examined both independently as well as taken as a whole. When one variable is set, it can mean that other things are set too. When one variable changes, it often means that other things change as well. These changes can be either significant ...
What is flow variable?
Flow variables refer to variables that are measured over a period or per unit of time. Stock variables, on the other hand, mean those variables that are measured at a point in time.
What are flow variables? What are some examples?
Examples of flow variables include income, budget deficits, investment expenditure, sales revenue and gross profit. When thinking about these variables, these are things that change frequently and may have substantial rates of changes over time as well as large amounts of change over time. Income, both on the national level and on ...
When is employment a flow variable?
Similarly, employment can be treated as a flow variable when it is viewed regarding work effort per staff hour. Also, money transforms from a stock variable to a flow variable when it is exchanged for goods and or services.
Is stock and flow variable mutually dependent?
Stock and flow variables are mutually dependent. For instance, the quantities of savings people have are highly dependent on the frequency or the rate of flow of deposits into their savings accounts. Similarly, their stock of savings determines their flow of withdrawals – say, per month. References.
Is there a time dimension to a flow variable?
There’s no time dimension to this variable . A flow variable can be thought of as being a video camera, which shows the viewer what is happening – how things change over time. A stock variable can be thought of as a photograph rather than a video.
Is national income a flow variable?
Income, both on the national level and on the individual level, is a flow variable. National income is earned as a flow over a year. The individual earns personal income over the course of the pay period, which may be a week, two weeks or a month.
What is variable pricing?
Variable pricing is a system for altering the price of a product or service based on the current levels of supply and demand. It is commonly employed in environments where supply and demand information is easily available.
Why is variable pricing important?
Advantages of Variable Pricing. Variable pricing closely reflects the relationship between supply and demand, and so is a good way to maximize profits. Therefore, organizations for which profit maximization is a key concern are more likely to use variable pricing.
Why do companies refuse to use variable pricing?
Some companies refuse to use variable pricing, because they find that it annoys customers. For example, someone who paid a high price for a seat on an airplane will be annoyed if he finds that the person sitting next to him spent a fraction of that amount.
What does the price of a stock tell you?
The stock's price only tells you a company's current value or its market value . So, the price represents how much the stock trades at—or the price agreed upon by a buyer and a seller. If there are more buyers than sellers, the stock's price will climb. If there are more sellers than buyers, the price will drop.
Why is stock so expensive?
A stock is cheap or expensive only in relation to its potential for growth (or lack of it). If a company’s share price plummets, its cost of equity rises, also causing its WACC to rise. A dramatic spike in the cost of capital can cause a business to shut its doors, especially capital-dependent businesses such as banks.
How does financial health affect stock price?
Financial Health. A company's stock price is affected by its financial health. Stocks that perform well typically have very solid earnings and strong financial statements. Investors use this financial data along with the company's stock price to see whether a company is financially healthy.
What is the goal of a stock investor?
The goal of the stock investor is to identify stocks that are currently undervalued by the market. Some of these factors are common sense, at least superficially. A company has created a game-changing technology, product, or service. Another company is laying off staff and closing divisions to reduce costs.
How does good news affect stock price?
It may be a positive earnings report, an announcement of a new product, or a plan to expand into a new area. Similarly, related economic data, such as a monthly jobs report with a positive spin may also help increase company share prices.
What is intrinsic value?
If there are more sellers than buyers, the price will drop. On the other hand, the intrinsic value is a company's actual worth in dollars. This includes both tangible and intangible factors, including the insights of fundamental analysis . An investor can investigate a company to determine its value.
Is a stock with a low dollar price cheap?
Many people incorrectly assume that a stock with a low dollar price is cheap, while another one with a heftier price is expensive. In fact, a stock's price says little about that stock's value. Even more important, it says nothing at all about whether that stock is headed higher or lower.
Statistical Analysis of Stock Prices
The dy n amical behavior of stock prices is, in general, based on the following assumptions:
Correlations
The Geometric Brownian motion assumes correlations of ΔS to be zero. To test this assumption we use the following correlation function:
What is stock in economics?
A stock is a quantity which is measurable at a particular point of time, e.g., 4 p.m., 1st January, Monday, 2010, etc. Capital is a stock variable. On a particular date (say, 1st April, 2011), a country owns and commands stock of machines, buildings, accessories, raw materials, etc. It is stock of capital.
What are the variables that have time dimension?
Similarly, all other economic variables which have time dimension, i.e., whose magnitude can be measured over a period of time are called flow variables. For instance, income of a person is a flow which is earned during a week or a month or any other period. Likewise, investment (i.e., addition to the stock of capital) is a flow as it pertains ...
Is a stock a time dimension?
It is stock of capital. Like a balance-sheet, a stock has a reference to a particular date on which it shows stock position. Clearly, a stock has no time dimension (length of time) as against a flow which has time dimension.
Is wealth a stock or a flow?
A flow shows change during a period of time whereas a stock indicates the quantity of a variable at a point of time. Thus, wealth is a stock since it can be measured at a point of time, but income is a flow because it can be measured over a period of time.
When does price variance occur?
Since the standard price of an item is determined months prior to actually purchasing the item, price variance occurs if the actual price at the time of purchase is higher or lower than the standard price determined in the planning stage of the company's annual budget .
What does a positive price variance mean?
Based on the equation above, a positive price variance means the actual costs have increased over the standard price, and a negative price variance means the actual costs have decreased over the standard price. In cost accounting, price variance comes into play when a company is planning its annual budget for the following year.
Why is price variance important?
Price variance is a crucial factor in budget preparation. A price variance shows that some costs need to be addressed by management because they are exceeding or not meeting the expected costs.
How to achieve a favorable price variance?
A company might achieve a favorable price variance by buying goods in bulk or large quantities, but this strategy brings the risk of excess inventory. Buying smaller quantities is also risky because the company may run out of supplies, which can lead to an unfavorable price variance.
What is standard cost?
The standard cost of an item is its expected or budgeted cost based on engineering or production data. The variance shows that some costs need to be addressed by management because they are exceeding or not meeting the expected costs.
