Name: Edlyn Grace P.

Domingo Section: PCBET-01-301P

Activity in stocks Date: September 4, 2022,

1. What is Stock of a corporation?

Stock is also known as equity and a company's capital share. The stockholder
or shareholders own the stock. It serves as a symbol of their ownership.

2. Why does the value of stock changes?

In my opinion, the value of stocks fluctuates due to changes in demand and
supply. When a large number of consumers or people want to buy a stock, the
price rises (supplies rise as well), and when there are no or few buyers and a
large number of sellers, the price falls (supplies go down). Other factors that can
influence prices include technical reasons, political views, environmental factors,
and so on.

3. What is overvalued and undervalued stock?

Undervalued stocks are those stocks that sell or buy for a lower price rather than
their original value. For example, suppose A buys a stock for 50 pesos and then
trade it for 45 pesos after a month. While overvalued stocks are those stocks
that sell or buy for a higher price rather than their original value. For example,
suppose A trade a stock for 60 pesos but
purchases it for only 50 pesos.

4. What instances results to stocks being overvalued?

The possible instances of stocks being overvalued are the first, external factors. It
includes market fluctuations, economic expansion, and rising demand in the
market. Second, where the company faces a fundamental or fiscal crisis. Lastly,
when the company grows rapidly and attracts a lot of positive attention. In short,
they are building a strong foundation or a good image.

5. What instances results to stocks being undervalued?

The possible instances of stocks being undervalued are first, the external factors
where the demand in the market falls. Second, arising problems to companies’
overall performance. Lastly, the negative branding of the company can drive
people away.
6. How can we say that the market is efficient?
Market is efficient when no one can out-profit anyone else. In market efficiency,
the prices are random, unbiased, and unpredictable. When new information is
added, it is immediately reflected in prices and all available information about a
particular stock or market at any given time.

7. What instances results to stocks on an equilibrium state?

In economics there's equilibrium when in the business the given supply and
demand are balanced. We can also apply this state in stocks where the prices of
stocks in the market become stable because the demand and supply match each
other.

8. Discuss the Efficient Market Hypothesis.

According to the efficient market hypothesis, new information is immediately
reflected in stock prices, and it either technical or fundamental analysis can
generate excess returns. It also implies that stocks are never overpriced or
underpriced. It means that asset price states are always correct and reflect all
available information. There is no room for excess profits through investing
because everything is already fairly and accurately priced. In short, no one can
out-profit the other.

9. What does it mean by the book "we beat the market"?

" We beat the market," in my vocabulary, means doing your best and aiming for
the best result rather than the industry or market standard. In the dictionary, beat
means defeat, and analyzing the phares reveals that this one wish to surpass the
main standard. For example, ABC company agreed that their goal for this year is
to trade 3,000 stocks in two months, but the investor/corporation aims for more.