"Stock Market Volatility" summarizes researchers' investigations into the causes, level, time patterns, and components of stock market volatility and the implications their findings have for stock market efficiency and investor diversification.
- How is stock market volatility commonly measured?
- What variables would you look at to explain the volatility of stock prices? Using these variables, how would you determine whether the stock market was excessively volatile?
- What would excessive volatility imply about the efficiency of the stock market? Why?
- How does an increase in stock market volatility affect the risk of investing in stock? How would this influence the demand for stock?
- How have the components of stock market volatility changed over time? What implication does this hold for investors?
Source: "Stock Market Volatility." John Krainer, Federal Reserve Bank of San Francisco FRBSF Economic Letter, No. 2002-32, October 25, 2002, pp. 1-2.
