Record Details

Stock Price Forecasting in an Interest Free Economy

International Journal of Economics, Management and Accounting

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Field Value
 
Title Stock Price Forecasting in an Interest Free Economy
 
Creator Mabrouk, Ahmed Hassan
 
Description Stock price forecasting models are equally important for investor decisions in the western market as well as in the Islamic market. Both dividend discount and earning-based valuation models use interest rate as a fundamental measure to reflect the present value of future dividends and earnings respectively. In general terms, stock prices are forecasted based on the correlation between stock return and interest rate. However, in an Islamic, interest-free economy, no such correlation is available. This paper suggests that an interest-free economy could realize the principle of market efficiency more efficiently and would render stock prices more related to economic realities. In other words, stock prices would capture the real growth component of the concerned stock, rather than the speculative and artificial ones. It is argued that such an economy provides more accurate indicators to investors as to where to direct their funds for potential growth at a rate higher than the market capitalization rate.
 
Publisher Kulliyyah of Economics and Management Sciences
 
Date 2013-01-01
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/202
 
Source International Journal of Economics, Management and Accounting; Vol 19 No 3 (2011)
2462-1420
 
Language eng
 
Relation http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/202/159