Stock market investment approaches in pandemic conditions: a case study analysis
Keywords:
Stock, Portfolio, UAEAbstract
Price and quantity are fundamental components of market theory, yet trading volume plays an equally critical role in understanding financial market behavior. Despite the extensive development of economic models explaining price predictability, volatility, and information content, trading volume has received comparatively less attention. This study aims to deepen the understanding of trading volume by constructing rigorous economic models of asset prices and trading activity, and empirically estimating these models using recently available daily volume data for individual securities from the University of Chicago’s Center for Research in Securities Prices. The theoretical contributions of this study include:
- A formal economic definition of trading volume that aligns with models of trading activity;
- Derivation of the volume implications of basic portfolio theory; and
Development of an intertemporal equilibrium model of asset markets, in which trading emerges endogenously from liquidity needs and risk-sharing motives.
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