A Supply and Demand Model for Stocks （股票的供给和需求模型）.pdf

Chapter 3 - A Supply and Demand Model for Stocks written for Economics 104 Financial Economics by Prof. Gary Evans First edition August 28, 2011, this edition September 9, 2012 © Gary R. Evans There are few markets in the world that are more active or competitive than the market for stocks. Stock prices in every exchange in the world fluctuate actively at every moment throughout the trading day for any market that is open, and the prices of many popular stocks continue to move on a 24-hour cycle in the increasingly active electronic after-hours markets. Companies of larger and more popular stocks like Intel (INTC) generally trade around the clock, which implies that the price of Intel stock can, and does, change at any moment. But what causes the price to change? Why does the share price of Intel rise and fall in value? This chapter introduces an elementary Supply and Demand Model for stocks. The intent here is to give us an analytic perspective on why stocks rise and fall in value. This chapter does not so much discuss the multiple variables, like earnings and dividends, that affect stock prices. Those variables are mostly discussed in Chapter 4, although by necessity some variables are discussed in this chapter. Mostly, though, the intent here is to set up a model that explains the mechanics of the interaction between Supply and Demand. Here is what I intend to cover: 1. The logical justification of Supply and Demand curves and what they represent. 2. Multiple examples of shocks to Supply and Demand curves and an explanation of why the cause stock or index prices to rise or fall. 3. Using the model to understand or explain general market conditions rather than the behavior of individual stocks. 4. An introduction to four-quadrant analysis