Wednesday, 15 April 2009

Volatility

The movement of a price of a security over a given period of time is called volatility, stock (or
any financial instrument) whose price moves wildly fast is usually not preferred by serious
investors because it denotes that the stock higher risk.
Just on a personal note, I never understood stock market, I mean its just like selling a promise
of future earnings. Just like supply and demand there are only enough number of stocks
meaning only a limited number of promises that are bought and sold. Only rarely do the
investors or buyers of these promises get rewarded by way of dividends. All they can see it the
notional increase in value of the stocks, which they rarely get if they decide to sell.

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