The Relationship Between Money Supply And Stock Prices Finance Essay - Free Essay Example

Sample details Pages: 6 Words: 1755 Downloads: 6 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? In this paper Rudolph studied on short-term relationship between money supply and stock prices that shows the correlations between changes in the money supply and changes in the stock prices, which was the subject of this body, that first became deceptive for Rudolph in 1967. It was in short-term nature, It believed these correlations signify a new finding in the ongoing investigation into the relationship between money and level of stock prices. For this Rudolph take the data of money supply (M) was used in the charts that comprises of time and demand deposits of all commercial banks in the country + currency in the hands) which becomes seasonally adjusted M2.and stock price data was gathered from slandered and Poor (SP). Don’t waste time! Our writers will create an original "The Relationship Between Money Supply And Stock Prices Finance Essay" essay for you Create order Both money supply and stock prices were gathered weekly basis. It follows from his findings that long-term rates of change tend to show stock prices synchronized with or even projecting money supply changes, however, indeed, money supplu leads stock prices. According to Rudolph Changes in the rate of change of Money supply M were followed about seven weeks later by equivalent changes in stock prices SP. This knowledge is was helpful for to the longer-term investor as well as helpful for the trader, for to properly delay a purchase for a few weeks, for in-stance, can often mean a substantial difference in the return on the investment. The investment results described above are based on a single time period (67 to 71), and disregard trading costs (which would be substantial, given the indicated number of purchases and sales). In conclusion Rudolph were found the correlation between money-supply changes and stock-price changes evident in his charts. On the other hand, he believed that t hese charts, which were presented in his reports that were merely a incomplete selection, deliver powerful new support for the relationship between money supply and stock prices a relationship no serious investor can afford to ignore. (Hamburger and Levis, 1972) The purpose of this paper was to addition to the understanding of relationship between money supply and stock prices and also the channel of influence of money supply on stock prices. In precise the analysis was interconnected to a number of limitations contained in earlier studies. For this few activities had been made by researcher (i) to estimate the effects of risk on the common level of stock prices (ii) to determine the effect, if any, that distinctions in the growth rate of money have on these dynamics the hypothesis was that money has no direct influence on the stock market and for this data was used quarterly . The first of these effects the most acquainted was the liquidity effect of changes in the amount of money upon interest rates. The money stock is itself an asset in the portfolio of capital owners. Increases in the money supply will cause decreases in the profits to holders from the last dollar of money held. Changes in the money supply we re, therefore, a alternative for changes in the stock return of capital owners. The second main channel by which money touches stock prices was by changing the actual demand for goods and services. Third important component by which money effects the stock prices was risk premium .An asset has a risk premium to the extent that it contributes to the variation in the value of the holders total portfolio. In conclusion it was doubtful that the indication will provide final answers to the questions of how money affects the stock market or how the possessions of money should be measured. There are the widely known influences rolling through long-term bond rates and corporate earnings. (Michael Palmer 1970) This study discovered the relationship of engagements in the nations money supply to variations in common stock prices. this theory credits changes in the stock of money as the main causal factor creating fast changes in total monetary demand and ultimate changes in total output and/or price levels. The model emphases on major changes in the money supply and common stocks prices 10years data was gathered for this research on weekly basis. This investigation was recommending that changes in the growth rates of the private sectors stock of money may changes that sectors wishes to substitute money stabilities for other financial assets. from this relationship, two main situations can be explored: (i ) An increase in the growth rate of the money stock may create extra liquidity. This imbalance will motivate the private sector to substitute extra money balances for less liquid financial assets like as corporate stocks. This change can lead to increased buying pressur es on these less liquid financial assets. (2) A decrease in the growth rate of the money stock may create a shortfall liquidity situation. This imbalance may motivate a shift from less liquid financial assets into money. This conclusion of the private sectors effort to achieve liquidity balance can generate selling pressures on these less liquid financial assets which may produce overall price decrease. Conclusion liquidity disequilibrium may ultimately changes less liquid financial assets through a sifting process with investors initially changing new money balances into financial assets similar (in terms of liquidity) to those released. the closer the degree of liquidity of the initial asset purchased by the Federal Reserve to corporate stocks, the lesser the time period between a change in the growth rate of the money supply and changes in stock prices. (ROGALSKI VINSO 1977) It state the purpose of this paper was to re-examine the relationship between money supply and stock prices to determine whether dependence can be recognized and in which direction the causality is demonstrated. It was generally prescribed that an unpredicted increase or decrease in the growth rate of money results in a change in the balance position of money with respect to additional assets in the portfolio of investors. As a outcome, investors try to change the proportion of their asset portfolios characterized by money balances. While investors can correct, the system cannot since all money balances must be held. As a outcome, stability was recreated by changes in the price levels of the various asset types. Value of financial assets is an important element in asset portfolio of investor, including common stocks. It can be anticipated that changes in portfolios caused by changes in the monetary element will arise in this account as well as those accounts si gnifying real goods and services. Since it also can be anticipated that the time response of investors may be delayed, ResearcherÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¾Ãƒâ€šÃ‚ ¢s hypothesis was changes in the money supply cause changes in stock prices. If the hypothesis is true, then changes in stock prices should respond to monetary disturbances with a lag. . The conclusion was changes in money supply causes the stock return but stock return can not predict future money supply (PEARCE ROLEY, 1983) This paper investigates whether the response of common stock prices to weekly money announcements is consistent with the efflcient markets hypothesis. In this research the focus was on the very short-run response of stock prices to both anticipated and unanticipated announced changes in money. For this the weekly data were used in this paper start from 29 September 1977, and end on 29 January 1982. the hypothesis was for this research was that anticipated money affects stock prices The implication of this work was that investors could earn above normal profits by using a exchange strategy based on the observed behavior of the money stock. This contradicts the efficient markets hypothesis which asserts that current asset prices reflect all available information so that no such trading strategy can exist. This paper was studied the short-run response of stock prices to weekly money supply publications. Several results emerge from this experimental investigation. ( i) stock prices react only to the unanticipated variation in the money supply as predicted by the efficient markets hypothesis. (II), an unanticipated increase in the announced money supply reduces stock prices while an unanticipated decrease raises stock prices. (III), the stock price reaction did not depend on the relationship of the money supply to the long-run series of the Federal Reserve, there was limited proof that the stock price react changed as a result of the Federal Reserves change to a reserve-aggregate approach to monetary control. (BENNETT and SIAS, 2001) . In this analysis it illustrate that money flows was highly correlated with stock returns of same period. It also establish strong proof of money flow motion, in that a times series data with lagged can be helpful to predict future flow of moneys. Most important thing in this was finding was that flow of money appeared to predict cross-sectional deviation in future returns. money flow was defined as the change between upward and downward position of dollar trading volume, and was used as a technical indicator since the timely 1970s. The sample was taken from NYSE- listed companies for 1-year and calculated daily money flows and excluded the companies which was traded less than 25 times in a day.in conclusion money flow as an fascinating technical indicator that show the Positive change indicate surplus demand, while negative changes indicate surplus supply. If persistence happens in surplus demand and supply, then money flow can be able to forecast future re turn and also it concluded strong positive correlation between flow of money and return measured for the concurrent period. (HOMA and. JAFFEE, 1971) The objective of this paper was to develop and evaluate a relationship between the money supply and common stock prices, and then estimate the effectiveness of this relationship as a predicting tool in the use of investment strategies. The importance of the money supply as a element of stock prices and resulting of both from the structural relation of the stock market with monetary environments and from the part that the supply of money plays as a common indicator of economic anticipation. Return was calculated from dividend growth model and price of any share was described in three variables growth rate of dividend, risk free interest rate and risk premium. And study the relationship between the money supply and the stock market was calculated by using regression analysis technique. The conclusion of this paper was divided into two parts first part shows the evidence that shows a significant and systematic relationship between money supply and stock return. In second part it shows the estimation of these results called the market test from which information generated by the stock market relationship that was helpful for an investor. The estimation clearly depends on the investors ability to forecast the money supply.

Introduction. The Pilgrimage Of Faxian And Xuanzang To

Introduction The pilgrimage of Faxian and Xuanzang to the India is an important event in the cultural exchange between China and India because their experiences of pilgrimages have significant effects on not only development of Buddhism in China as well as cultural exchange between China and India. Faxian and Xuanzang actively participated in various Buddhist activities in India. Their travel experiences were maintained in detailed records of their precious books, which are preservation of valuable historical information such as Ancient Buddhism, geography and social customs in order to study India, Sri Lanka, and other countries. Motivations of the Chinese monks The main motivation of the Chinses monks’ pilgrimage is the emergence of†¦show more content†¦From this perspective, the pilgrimage to India is necessary. At the same time, the Buddhist scriptures and discipline were incomplete and there were only a few of them. Monks acts in his own way without law compliance at that time. These two reasons are there was a movement to seek the Buddhist scriptures and discipline in India. And they are the motives of Faxian’s pilgrimage to India. On the other hand, the motivations of Xuanzang’s pilgrimage to India are due to inspiration of Faxian and mere and messy situation of Buddhist scriptures and discipline. It is no doubt that Faxian s pilgrimage to India is successful. And his book Record of the Buddhist Kingdoms has more directly inspired Xuanzang to obtain Buddhist scriptures and discipline. Another important reason for Xuanzang’s pilgrimage to India is the mere and messy situation of Buddhist scriptures and discipline. Within the study of the theory of different Buddhist scriptures and discipline, there was more doubt and confusion due to lack of sufficient Buddhist scriptures and discipline. Based on the introduction of Buddhism situation in India, especially the Buddhist Center Nalanda which is the highest school of Buddhism from one monk from India, Xuanzang determined his pilgrimage to India. Both two reasons show that he has a purpose and will to pursue for his pilgrimage to India. Experiences of Faxian and Xuanzang’s

Mountain Essay Example For Students

Mountain Essay GorillasHalf man and half beast this is what is usually said about the gorilla. They say that the gorilla is related to us. You can find mountain gorillas inthe Virunga Volcanoes, which are located on the boundaries of Zaire, Rwanda, andUganda. The Virungas are 600 miles of tropical rainforest. Youll find thenroaming around 7,800 and 11,000 feet, but at low elevations. The gorillas livein units. Most of the units consist of about 6-12 members in it, most of thembeing related in some way. With each unit, there is a leader, usually an oldsilverback, who was a virtual dictator. A silverback male has large canines andhe may weigh 400 pounds. He is the one who decides when to proceed, and when tostop, and which direction to go. When he sleeps, everyone else is supposed to besleeping to, and then he gives a signal to wake up. When the old silverback getstoo old, then his eldest son usually is the one to take over. The females areusually responsible for the nursing portion in the unit. Gorillas are peacefuland tolerant by nature. Whenever two groups meet, they either i gnore each other,or they give each other a grumpy grunt. Sometimes the two groups would even staytogether, and then eventually separate. There are many rumors about gorillasbeing very violent, but there are no reports about it. There are times when theyhave little mock fights, but there is never any blood shed in them. Right nowthere are not too many mountain gorillas you will find in the Virungas. Theirpopulation is only in the hundreds. In 1960, there was an estimated 450 gorillasstill remaining in two isolated habitats. In a 1981 census, it gave a figure ofabout 254 gorillas. Right now there is somewhere between 400-450 mountaingorillas that have survived. There are so few of these creatures for manyreasons. There are many poachers who kill the gorillas for their head or handsto sell to tourists as a souvenir, or hunter that kill them to have a trophy. With so much of this going on, the rangers of the parks so not think there willbe anymore of these gorillas left by the end of the century. There have been afew projects and conservation groups made to save this endangered species. TheWashington-based African Wildlife Foundation, started a program in the parks onpark security, to prevent as much poaching. The tourist program also developedrapidly. They went from 1,352 paid visitors in 1978 to 5,790 in 1984. With thehelp of the money from tourism, they were able to start some programs on theconservation of the mountain gorillas. The basic issues of the groups andprograms are human population and the way land is used. The future for thegorillas look very bleak. Illegal logging, gold prospecting, and hunting hasbecome more and more popular where the gorillas live. To assure gorillas afuture will require a dedication that can not just be done through projects oreven years or centuries, but it takes a commitment for the rest of eternity. BibliographyBaumgartel, Walter. Up Among the Mountain Gorillas. New York: Hawthorn Books,1976. Fossey, Dian. Gorillas in the Mist. Boston: Houghton Mifflin Company,1983. Patterson, Francine. The Education of Koko. New York: Holt, Rinehart, andWinston, 1981. Schaller, George B. Gorilla: Struggle for Survival in theVirungas. New York: Aperture Book, 1989.

The Reluctant Fundamentalist Nostalgia free essay sample

To understand the concept of nostalgia and how it is a theme in ‘The Reluctant Fundamentalist’. A warning: This will stray a little into ‘Whose Reality? ’ territory, but remember that this is a text response and whenever you mention nostalgia in a text response essay, it must be when directly discussing the text. NO general discussion of the concept is allowed! Definition The term nostalgia describes a yearning for the past, often in idealised form. Nostalgia is often triggered by something reminding the individual of an event or item from their past. The resulting emotion can vary from happiness to sorrow. The term of feeling nostalgic is more commonly used to describe pleasurable emotions associated with and/or a longing to go back to a particular period of time. We have all had to listen to someone being nostalgic for something they once had, eg: a beautiful home. Over time, this vision of the past can become idealised. We will write a custom essay sample on The Reluctant Fundamentalist Nostalgia or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The reality might not be as far away as this, but we know that some people forget to recall the unpleasant aspects of the past. Nostalgia The destruction of the World Trade Centre had, as she had said, churned up old thoughts that had settled in the manner of sediment to the bottom of a pond; now the waters of her mind were murky with what previously had been ignored. I did not know if the same was true of me. † Think about the above quote, then complete the table below, how does nostalgia affect each of the following after 9/11? America Erica Changez Nostalgia After the bombing and invasion of Afghanistan â€Å"our friend and a fellow Muslim nation besides†, Changez is deeply troubled and drinks himself to sleep. I was reminded of the film Terminator, but with the roles reversed so that the machines were cast as heroes. † Using the purple text as a starter, complete the paragraph answering the following question: What are â€Å"the embers† symbolic of? Changez struggles to remain focussed on the â€Å"fundamentals† rather he recalls that, â€Å"I remained aware of the embers glowing w ithin me. † Nostalgia Changez relates to the American that Pakistan has not always been reliant on â€Å"foreign aid and handouts†. We see his nostalgia for Pakistan’s past is a powerful force in his life. We built the Royal Mosque and the Shalimar Gardens in this city†¦ we did these things when your county was still a collection of thirteen small colonies, gnawing away at the edge of a continent. † Where else in the novel have we seen Changez angered at the actions of the young being rude and disrespectful to an older generation? â€Å"but I think I knew even then that she was disappearing into a powerful nostalgia† Use the above quote in a paragraph with a point, evidence and an explanation. Nostalgia Changez finds America in the grip of â€Å"a dangerous nostalgia† not dissimilar to that of Erica, pining for the deceased but not forgotten Chris. 1. How might Americans have felt immediately after the events of 9/11? I had always thought of America as a nation that looked forward; for the first time I was struck by its determination to look back. Living in New York was suddenly like living in a film about the Second World War. (p130-131) 2. How was the Second World War different to 9/11 and the â€Å"War on Terror†? 3. Considering the first two questions, why does America ‘look back’ to events such as the Second World War? 6 Despite upwards of 70 million people dying during the six years of the Second World War, only 6 deaths (from Japanese balloon bombs), occurred on mainland USA. 2996 The number of people killed on 11 September, 200. â€Å"Your country’s flag invaded New York after the attacks; it was everywhere. † Using the notes and quotes you have taken down, complete a mind map on the theme of nostalgia Changez Erica Nostalgia America