In this page, I will introduce the theory of chaos as a way to explain the continuous fluctuations in the stock market. The BDS Statistic.
Stocks are pieces of paper which represent ownership in a company.
Stockholders receive dividends from their stock. That is, at the end of the year, the corporation may decide to pay out some of its retained earnings in the form of dividends to its stockholders. Stocks are frequently bought and sold, hopefully sold at a higher price than what they were purchased for. This says that a stock's required rate of return is equal to the risk-free rate of return plus a risk premium which reflects only the risk remaining after diversification. The stock market is where the prices of firms' stocks are set.