The Ups and Downs of the Nyse

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The Ups and Downs of the NYSE

Abstract
This paper uses an online dataset provided by our Econometrics class that shows the fluctuation in price as well as the return on investments found in the New York Stock Exchange over a certain period of time. In this paper I will demonstrate through the use of Gretl how the return on investment affects the future price of the investment. As well as why fluctuations in price are directly affected by the returns of the investment. Keywords: Price, Returns, Investments, NYSE, Price Fluctuations 1. Introduction

This paper uses an original dataset provided by our wonderful professor about fluctuations in price of the New York Stock Exchange. Of course we all know what the New York Stock Exchange is, and if you don’t you should. Let me provide a brief explanation of what the NYST is. The NYSE is obviously a stock exchange, the largest in the world actually by market capitalization. It’s located in New York City on Wall Street as you all might have guessed. Its average daily trading value was approximately US$153 billion in 2008. There is no doubt that the NYSE is a powerful force in determining how our economy flows. Now this dataset shows fluctuations in price and what this dataset proves his how the constant change in returns directly affects the price of the NYSE index in the following time period. The term return on investment refers to the percentage of profit made by a single asset in a given amount of time. The way to calculate this percentage is fairly easy, you must find the difference between the old price and the new price, and then divide that number by the old price. This will give you a small number, sometimes negative, that represents the percentage of profit, or the “return”. The reason this number sometimes ends up being a negative percentage is because the return on the asset may be at a loss once in a while. Not all investments are sure to bring back a profit, which is why there is a large amount...
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