Explain the rationale for buying stocks

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Reference no: EM131963791

Assignment: Determination of Stock Prices

Stock prices are very difficult to predict; although, there are some theories for the determination of stock prices such as the fundamental analysis, the Gordon growth model (or dividend-discount model), and the efficient market analysis. Prior to beginning work on this assignment, read Hubbard and O'Brien's (2017) Chapter 6 and Garth Friesen's (2017) article, When Good News Is Bad for Stocks (Links to an external site.)Links to an external site., and respond to the following components.

• Analyze reasons why good news for the economy (long term) isn't always good news for stock and other financial markets (short term).

• Evaluate the assumption that stock price movements are purely random (the random walk theory), describing what a random walk is.

• Discuss the strengths and weaknesses of the efficient markets hypothesis.

• Explain the rationale for buying stocks when stock prices are not predictable, noting what kind of strategies would be useful for investing $100,000.

The Determination of Stock Prices paper

• Must be three to four double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the Ashford Writing Center.

• Must include a separate title page with the following:

o Title of paper
o Student's name
o Course name and number
o Instructor's name
o Date submitted

• Must use at least three scholarly, peer-reviewed, and/or other credible sources in addition to the course text.

o The Scholarly, Peer Reviewed, and Other Credible Sources table offers additional guidance on appropriate source types. If you have questions about whether a specific source is appropriate for this assignment, please contact your instructor. Your instructor has the final say about the appropriateness of a specific source for a particular assignment.

• Must document all sources in APA style as outlined in the Ashford Writing Center.
• Must include a separate references page that is formatted according to APA style as outlined in the Ashford Writing Center.

Reference no: EM131963791

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