Time series analysis of stock price - Research Proposal Example

6). Stock refers to a fraction of ownership of a company by a person. It is a subdivision of a company’s capital that is sold to interested investors for capital generation. Based on the terms of the sale, stock, also known as shares are transferable at timely market prices (Borrowski, p. 3). Capital market is a network in which shares are sold. It consists of companies that issue the stock, the stocks to be traded and the investors who buy or sell the stock at a particular time (Borrowski, p. 3). This research proposal has been motivated by the increasing essence of capital markets in economies and has further been facilitated by the perception that statistics can be used to understand factors in stock prices such as trend and seasonality.

The paper with this respect seeks to conduct a time series analysis of stock prices in the New York Stock Exchange market. It will explore some of the factors that affect stock prices and in light with analysis of stock prices of listed companies in a sector, move to investigate possible factors that affects trend and seasonality factors of stock prices in the financial sector’s New York Stock Exchange market. The stock exchange markets, as a forum for buying and selling of shares of companies operates like the normal markets in terms of financial implications of transactions.

This means that among other factors, buyers and sellers engage in transactions with the aims of either buying the shares for as low costs as possible or selling them at as high prices as possible. Forces of demand and supply, subject the perceived financial position of particular companies that owns the shares, therefore influences the prices of shares over time. Stock prices are therefore expected to be on high demand when investors predicts higher stability and returns from investing in the issuing company.

Similarly, factors that would affect the ability of investors to spend in the capital market will also generally dictate the trend