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Q. What drives stock prices? The most literal and superficial analysis reveals it to be simply supply and demand…but there are different ratios and metrics that help us figure why that is the case and they are all outlined in this infographic.
By Timothy Sykes (timothysykes.com). The original* infographic was entitled Stock Market Basics Tutorial and was sourced from VisualCapitalist.com (from which the copy below is excerpted) where it was posted** under the title What drives stock prices?
The most basic metrics are:
- earnings,
- price movement, and
- market capitalization
and are straight forward. The next level of complexity is using ratios such as:
- Price-to-Earnings (P/E),
- Price-to-Book (P/B),
- Price Earnings Growth (PEG), or
- dividend yields.
These numbers are much more concerned with value, and allow more direct comparisons between different equities…
*Original Source: http://www.timothysykes.com/wp-content/uploads/2015/01/Stocks-2.0.png; **http://www.visualcapitalist.com/what-drives-stock-price/
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