Open AccessMarket model of the czech capital market
Author(s) -
Martin Sommer
Publication year - 1996
Publication title -
prague economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.233
H-Index - 17
eISSN - 2336-730X
pISSN - 1210-0455
DOI - 10.18267/j.pep.109
Subject(s) - czech , capital market , financial economics , equity (law) , economics , factor market , market microstructure , market depth , capital market line , business , microeconomics , stock market , finance , order (exchange) , paleontology , philosophy , linguistics , horse , political science , law , biology
Market Model is a powerful analytic tool both for market description and for the creation of investment strategies. Its ideas are generally accepted on the developed markets, but there have not been proper attempts to apply it on new Eastern European markets, especially on the Czech market. However, results from this study seem to support the hypothesis about Model's validity on Czech equities. Emerging markets often lack an adequate reaction of equity prices to the fundamental measures. Although investors correctly tend to back them up with real firm figures, every relevant price mechanism available is warmly welcomed. The Market Model compares price movements of individual stocks with the performance of the market as a whole. In its simplest and most powerful form, the Model discloses relationships among equity returns and enables the risk evaluation of each security.