Stock Price and Trading Volume - Essay Example

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Stock Price and Trading Volume

Wood, McInish, and Ord (71), had found contradicting evidence, in the price-volume relationship. For they established the ratio between the price change and trading volume to be greater for the share prices downticks.
Smirlock and Starks (64) had found that the relationship could only be supported during the time intervals when they could distinguish when the new information ex ante had reached the financial market. Due to the lack of the delivery of information to the financial market and the upbeat transaction costs, small amounts of evidence found that the relation had been lower for the up-ticks in the price than for the downticks.
Data collected over an hourly basis from an extensive market index by Jain and Joh (38), had discovered the trading volume relates positively to the enormity of the price change. Findings have shown though, that the volume is more sensitive towards the positive price changes in contrast to the
negative price changes. Epps, Hanna, Jain, Joh and parts of Smirlock and Starke's findings shown an implication of a positive correlation between the price change and trading volume per se. Ying's items (1) and (2) and a numerous number of researchers had found a similar positive correlation as found above.
Rogalski (60) had ...Show more

Summary

The Volume and Price Change Per Se and the empirical evidence found. There are the bull markets and the bear markets, the volume is found to be relatively heavy within the bull markets and to be lighter within the bear markets. First bond market (20) tests had been developed by Epps as to sustain the above mentioned theory and then later tests were developed upon stock markets (22).
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