The impact of Major Technology Announcement on IT firms Towards the Stock Market

The impact of major Technology Announcement on IT firms towards the Stock Market

Introduction

The breadth of a research s usually give insight of what are the major theoretical concepts that are preliminary for understanding some core concepts . Like all , In this breadth I would focus on what is investment , what are major theories of investment (namely Irving fisher 's theory of investment , Dow theory forecasts and modern portfolio theory ) entails and which one is best suited for my purpose of research which to investigate the effects major Technology announcements on

IT firms brings in stock market

In this I would also focus on the major drifts that affect the Stock trends and the influence of announcements on Stock market and IT firms . Further at the end of the I would focus on concluding that may help me write the next part of this research , the depth

PART A

What is Investment

By definition , investment is the change in capital stock during a period . Consequently , unlike capital , investment is a flow term and not a stock term . Capital is measured at a point in time while investment can only be measured over a period of time . This clearly means that Capital of today can be estimated right now but what is investment right now cannot be answered (Abel , 1979 . However we can certainly measure the investment for a month and year as quantity of a flow always depends on the period in consideration

We can calculate the investment flow in a period as the difference between the capital stock at the end of the period and the capital stock at the beginning of the period . Thus , the investment flow at time period t can be defined as

It Kt - Kt-1

Where Kt is the stock of capital at the end of period t and Kt-1 is the stock of capital at the end of period t-1 (and thus at the beginning of period t

Both , the theory of investment and the theory of capital are different For example : if all capital is circulating capital , so that it is completely used up within a period , then no capital built up during the previous period can be brought over into next period . In this special case , the theory of capital and the theory of investment become one and the same thing

However , the case of fixed capital is different and more complicated . It needs two different things to be addressed : the amount of capital and the amount of investment . One is about the desired level of capital stock . The other is about the desired rate of investment flow . The decisions governing one will inevitably affect the other , but it is not necessarily the case that one is reducible to the other

There are two ways of thinking about investment . These are referred as the "Hayekian " and "Keynesian " perspectives (Alchian , 1955 . The Hayekian perspective envisions investment as the adjustment to equilibrium and thus the optimal amount of investment is effectively...