Phyllis Said:

what are stock market values based on? (sub Q. why is the Italian stock exchange so high?)?

We Answered:

Overall Stock Market 'value' is based on a mathematical calculation of how all the individual Stock Prices have changed since the 'base year' ..

Each Stock Exchange has it's own calculation and base year .. it is not possible to compare the different Exchanges by looking at the 'value' number

The 'absolute' number (6,000 or 60,000) is irrelevant anyway ..it's the CHARGE in the number that is significant ..


Any individual Company's Share price is the 'balance point' between Buyers and Sellers ..

Adam Said:

what is the mechanism under which a surge in the stock market might translate into a surge in inflation?

We Answered:

When their asset values rise, people think of themselves as being rich and spend more, even going into greater debt to do so. When more people are trying to buy the same goods, you have inflation.

Many have noted that much consumer spending was powered by the housing price bubble, with many refinancing their homes, and spending some of the money.

The same with stock market bubbles.

Javier Said:

What is the market value and price of the stock?

We Answered:

The options market value = exercise value + time value = $22 + $5 = $27.
The time value is the price you pay for the possibility that the stock will increase even more in value before the exercise date.

The price of the stock = exercise value + exercise price = $22 + $15 = $37 This is so because the exercise value is the value the option will have at the final exercise date when the time value is down to zero.

Billie Said:

Stock market values are all over the place - is this a broken system?

We Answered:

Not really, if you are for the gold standard. Or a lot of value if you believe in backing currency with the value of their products.

The stock market itself has the same value as the bet you made on the LA Lakers or the NY Yankees if a portion of the money went to the teams to pay the player's salaries. You are investing in a commodity in hopes that they make money and thank you with a portion of the profits or you can sell the investment for an increased worth.

In a true capitalist system, the reality check would be if the government let bad companies fail. Then the true value of the company is exposed. Look at Enron. It was only worth what it wanted to be. There was nothing behind it, so it failed.

We are now better to have lose Enron.

Ricky Said:

Is stock normally bought or sold for an amount above or below market value?

We Answered:

Stocks are bought and/or sold at their market value, since the price an order is executed IS the current market price thus the market value