The Measures of the Quality of Trading in a Stock: Empirical Evidence from the National Stock Exchange (India)
15 Pages Posted: 6 Sep 2004
Date Written: July 20, 2004
The quality of trading in a stock depends on many factors; of which information asymmetry is suppose to be only one. The three common measures of quality are Float, Turnover and Bid - ask spread (i.e. the impact cost of shares). In our study two additional factors have been taken and they are Standard Deviation and Return generated as compared to the index. Our study is based on the Indian Stock market and the top traded stocks have been taken to ascertain their quality. Our study has found out that in some of the characteristics the 10 top traded stocks behave as expected while in some other areas they behave in an inappropriate manner. This brings us to the conclusion that the Indian market is not perfect in nature and there are imperfections in it which along with other factors play a significant role.
Keywords: quality of a stock, float, turnover, bid-ask spread
JEL Classification: N25
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