Premium Essay

Stock Evaluation

In: Business and Management

Submitted By Ronelrich
Words 2219
Pages 9
Course Name: Economics of Financial Institutions
Course Code: ECON 3031
ID#: 620031134
Name: Ronel Richardson
Date: July 5, 2013
Introduction

In the eyes of the general public the stock market can seem a lot like gambling. Choosing the right time to invest plays a vital role in whether you realize tremendous returns on your investment or simply a loss. The fact that the stock market plays an important role in the health of the economy it leads us to ask the following questions: how the stock market is influenced? Are business performance and stock market performance correlated?
The first modern stock market, today called the New York Stock Exchange (NYSE) was established in 1792 in New York City. The purpose of the stock market is to give the opportunity to companies to open themselves up to public investment in order to raise capital.
The stock market is composed of a primary market and a secondary market. The primary market is where a company sells shares for the first time or issues new ones. In the secondary market, investors trade securities or assets with other investors, the cash proceeds from transactions go to the investors instead of the company. At this point companies do not have direct control over their stock’s price. There are several areas of influences that affect the stock’s price, which are the wider environment, the supply and demand driven by investors’ confidence, government monetary policy, the Gross Domestic Product (GDP), the unemployment and the Fisher Effects. When these influences are understood it is helpful in predicting the stock’s price forecast in order to buy or sell.
For the purpose of this study we will examine the performance of Wells Fargo & Company on the New York Stock Exchange over a three month period. Wells Fargo & Company is a bank holding company. The Company is a diversified financial services company. It has...

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