The Measurement Of Stock Development

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The Measurement of Stock Development There are three variables that help measure the stock development in a country; Stock market capitalization to nominal GDP, Stock traded to nominal GDP, Turnover ratio. First, with respect to measuring the stock market development, Stock trading (stock traded to nominal GDP) can be used. A rapid increase in the trading volume/value of security on an exchange is indicative of interest in the security or the market. The trading volume and value is an important indicator of the level of liquidity, the efficiency of the infrastructural facilities of a stock market and the investment culture of the populace. Liquidity is the ease with which a security is converted into cash. The activities of portfolio managers, pension funds manager, and unit trust managers are capable of stimulating trading and improving liquidity. The level of awareness of investors and the number of listings could have favorable impact on the trading volume. The market float which is the proportion of number of shares available for trading is another influencing factor on trading activities. Second, Market capitalization is perhaps the most important criterion in assessing the size of a capital market. Market capitalization equals to stock market capitalization divided by nominal GDP. To assess how big a stock market is within the national economy, the market capitalization is usually compared with the nominal Gross Domestic Product (GDP). This depicts the saying that capital market is a barometer with which to measure the state of a national economy. For individual quoted Companies, the size of market capitalization is an indicator of the market value (i.e. investor’s perception or assessment) of the Company. Thus ma... ... middle of paper ... ...ael Todaro sees three objectives of development. Producing more ‘life sustaining’ necessities such as food, shelter, and health care and broadening their distribution Raising standards of living and individual self esteem Expanding economic and social choice and reducing fear The UN has developed a widely accepted set of indices to measure development against a mix of composite indicators. UN’s Human Development Index (HDI) measures a country’s average achievements in three basic dimensions of human development: Life expectancy Educational attainment Adjusted real income ($PPP per person). UN’s Human Poverty Index (HPI) measures deprivation The percent of people expected to die before age 40 The percent of illiterate adults The percent of people without access to health services and safe water The percent of underweight children under five.
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