The determinants of New York stock exchange. (c1994)

Abstract

New York Stock Exchange is the prototype of the exchanges. It is one of the national exchanges. It deals with all kind of securities. NYSE is considered as one marketplace for all kinds of trading transactions. In addition, its presence has largely contributed to the development of trading activities. Further, numerous factors do affect it ,and hence affect the price level of stocks. The purpose of this project is to discuss and analyze the different factors that determine the NYSE, such as inflation, GNP, interest rate, and Federal Budget deficit. It will also determine the type of relationship that exist between each factor and the marketplace and the degree of impact of each factor on the stock prices level. To be more elaborated about the historical background of NYSE , a library research was conducted. In addition, this research includes information about the theories advanced on the marketplace. Also, a brief review is added about the market crash that took place in October ,1987,description of that black day, causes and consequences. For a better understanding the movements of the price level in the NYSE, a regression analysis was conducted in order to test the degree of impact of each economic factor on the marketplace. Four main factors are taken in this paper: inflation, Gross National Product, Three Months Treasury Bills rate, and the Federal Budget deficit. S&P 500 is considered as the representative of the stock price level. According to the results of the analysis, the stock prices are positively affected by inflation and GNP. Whereas it is negatively affected by the interest rate and the deficit. These factors can be considered as the determinants of NYSE. Each factor has its own degree of impact. Thus investors must take these results into consideration while making up their minds towards investment.