Skip to content

Stock Market Experience Essay Ideas

Author

Abstract

This thesis consists of four self-contained papers related to the change of market structure and the quality of equity market. In Paper [I] we found, by using of a Flexible Dynamic Component Correlations (FDCC) model, that the creation of a common cross-border stock trading platform has increased the long-run trends in conditional correlations between foreign and domestic stock market returns. In Paper [II] we study whether the creation of a uniform Nordic and Baltic stock trading platform has affected weak-form information efficiency. The results indicate that the stock market consolidations have had a positive effect on the information efficiency and turnover for an average firm. The merger effects are, however, asymmetrically distributed in the sense that relatively large (small) firms located on relatively large (small) markets experience an improved (reduced) information efficiency and turnover. Although the results indicate that changes in the level of investor attention (measured by turnover) may explain part of the changes in information efficiency, they also lend support to the hypothesis that merger effects may partially be driven by changes in the composition of informed versus uninformed investors following a stock. Paper [III] analyzes whether the measured level of trust in different countries can explain bilateral stock market correlations. One finding is that generalized trust among nations is a robust predictor for stock market correlations. Another is that the trust effect is larger for countries which are close to each other. This indicates that distance mitigates the trust effect. Finally, we confirm the effect of trust upon stock market correlations, by using particular trust data (bilateral trust between country A and country B) as an alternative measurement of trust. In Paper [IV] we present the impact of the stock market mergers that took place in the Nordic countries during 2000 – 2007 on the probabilities for stock price jumps, i.e. for relatively extreme price movements. The main finding is that stock market mergers, on average, reduce the likelihood of observing stock price jumps. The effects are asymmetric in the sense that the probability of sudden price jumps is reduced for large and medium size firms whereas the effect is ambiguous for small size firms. The results also indicate that the market risk has been reduced after the stock market consolidations took place.

Suggested Citation

  • Liu, Yuna, 2016. "Essays on Stock Market Integration - On Stock Market Efficiency, Price Jumps and Stock Market Correlations," Umeå Economic Studies 926, Umeå University, Department of Economics.
  • Handle: RePEc:hhs:umnees:0926

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:umnees:0926. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Skog). General contact details of provider: http://edirc.repec.org/data/inumuse.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.


    Phil Nast, retired middle school teacher and freelance writer

    Found in:mathematics, social studies, 3-5, 6-8, 9-12

    Recent activity in international stock markets demonstrated how interconnected the economies of nations have become. The following lessons, activities, resources, and videos provide a basic understanding of stocks and the market.

    Lesson Plans:

    • How Are Stock Prices Determined? ( PDF, 1.7 MB, 295 pgs. Intermediate students discover that prices are determined by the behavior of many individuals in the market. Scroll to lesson six, p. 46.
    • NYSE Made Easy Students in grades 6-12 learn terms associated with the New York Stock Exchange and how to read a stock market report found in newspapers or online.
    • Here's Your Chance to Make Millions in the Stock Market (Part 1) In Part 1, students in grades 9-12 learn how efficient markets affect investor's efforts to time the stock market. Parts II and III are an interactive historical simulation that gives students a chance to make investment decisions.
    • Getting Fancy: The Bulls, The Bears, And The Pigs! ( PDF, 1.7 MB, 295 pgs.) Advanced students learn how buying on margin and selling short can increase potential gains on stock purchases, but at the risk of greater potential losses. Scroll to lesson nine, p. 92.

    • Teaching Financial Crises Eight lessons for students in grades 9-12 that examine the financial crisis of 2007. Lessons can be viewed online. Visuals can be downloaded. Aligned to economics standards. A print version can be purchased.

    Activities & Games:

    • Play A Virtual Market Starting with a virtual fortune, students can trade traditional stocks or use call options.
    • The Stock Market Game An online simulation of global capital markets for students in grades 4-12. Registration is free. A Teacher Support Center is provided and Apps are available. The Stock Market Game Teacher’s Guide ( PDF, 705 KB, 20 pgs.) includes suggestions for extended activities.

    Background Resources:

    Online Courses:

    Video: