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Summary of a research paper - Essay Example
Author : dpollich
Finance & Accounting
Pages 3 (753 words)
[Instructor Name] Summary of Research Paper A journal article published in the Journal of Finance that has been selected for review in this paper is titled “Are Stocks Really Less Volatile in the Long Run?” which includes findings of an empirical study for testing out volatilities in stock prices in the long run by Lubos Fastor and Robert F…
It would be therefore be interesting to review findings of such study which presents contradicting results and concludes from the perspective of investors that there are substantial variances in annualized stock returns in the long run. The journal article refers to previous studies including Siegel (2008) and Campbell and Viceira (2002, 2005) that have concluded that both unconditional and conditional variances in stock returns are greater in the shorter time frame as compared to the longer investment horizon. The study by Pastor & Stambaugh is carried out from investors’ perspective and suggests that stock returns have greater volatility in the long run mainly due to two conditions which investors face. These include inability of investors to know the drivers of conditional expected return from stocks and also investors are of the view that even observable factors influencing stock returns forecasts do not sufficiently predict changes in conditional expected return. ...
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