Abstract
This paper mainly studies whether and how stock prices fluctuate around their intrinsic values. Based on data from 10 stock markets for the period between 2000 and 2018, we demonstrate that the relative price fluctuates around and approaches the intrinsic value in the long term. For the ten markets, the relative price crosses the intrinsic value on average once in 3 ∼ 4 years. Profitability growth is a key factor in rising stock prices, but the level of valuations in the market has a regulatory effect to the growth of price in the future: For every 1 % increase in valuation, the price tends to decline by 0.26% in the next year, 0.74% in the next 3 years.
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Articles in the same Issue
- Could the Stock Market Adjust Itself? An Empirical Study Based on Mean Reversion Theory
- Research on the Satisfaction Impact Factors of China-Eurasia Expo: From the Perspectives of Local Residents and Exhibitors
- Study on the Measurement of Industrial Structure “Sophistication, Rationalization and Ecologicalization” Based on the Dynamic Analysis of Grey Relations — A Case Study of Beijing-Tianjin-Hebei
- Can Positive Entrepreneurship Policies Always Improve Social Welfare?
- PMCMC for Term Structure of Interest Rates under Markov Regime Switching and Jumps
- How to Bid Success in Crowdsourcing Contest? ― Evidence from the Translation Tasks of Tripadvisor
- Single Image Dehazing with V-transform and Dark Channel Prior