Abstract

FERRARI, César Attilio  and  AMALFI GONZALEZ, Alex. Business and economic foundations in valuation of shares: the Colombian stock exchange. Cuad. Adm. [online]. 2007, vol.20, n.33, pp.11-48. ISSN 0120-3592.

This work develops a model of the comportment adopted by investors who have succeeded in diversifying their risks in the local stock market, given the relative shallowness of that market. Therefore, they purchase currency as an alternative instrument of investment. The model was econometrically verified for the Colombian economy. The conclusion was that while strong increases in share prices occurred in 2005 in the Colombian stock exchange, they are not entirely explained by the basis of valuation; corporate performance measured by dividends and the perception of risk measured by discount rates. Econometric tests provide data with regard to the important effect of the fluctuations of the exchange market, and the monetary situation as a factor in the determination of share prices. At the same time, there are findings of rational bubbles in the Colombian variable-income market, where there are strong expectations of a revaluation of the peso, or of expansive monetary policies.

Keywords : Valuations of financial assets; the efficiency of the capital market; exchange market; monetary offer.

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