Creation of the Measure
Stock price refers to the price in dollars at which a company's stocks are sold in the stock exchange market. On the other hand, the ending stock price is the average price of stocks at the end of a trading day (Billah et al., 2015). Stock value is determined by a specific committee at the stock exchange market and depends mainly on the company's performance (Vijh et al., 2020). When a company performs well, its stocks attract increased demand from potential investors. In response to increased demand, stock price rises.
Implication of Ending Stock Price
The ending stock price is vital for several reasons. Using stock price to make investment decisions is an accurate determinant of company performance, just like ending market capitalization. Investors, shareholders, regulators, and financial institutions rely on stock price to evaluate a company's performance over time. According to Billah et al. (2015), i nvestors base investment decisions on the changes in a company's ending stock price. When the stock price increases progressively over time, investors interpret this trend to mean that a company uses appropriate strategies, faces minimal risk, and generates income regularly ( Vijh et al., 2020 ). Thus, they choose to invest in such a company with confidence that their investments will yield revenue. On the contrary, falling stock price is an indicator of poor performance. Investors evade companies whose stock prices are falling because investing in such involves significant risks.
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Comparison with CAPSIM
The Andrews' team ending stock price measures are consistently growing. According to week six results, the company's stock price had maintained an upward trend since the commencement of the competition rounds. In the first competition round, the stock price stood at $25.10. This figure increased to $22.93, $31.45, $50.76, $77.05, $116.20 and $129.52 in rounds 2,3,4,5, and 6 respectively ( CAPSIM, 2021) . As the stock price increased, the market capitalization measures also increased progressively through the six rounds.
The company's consistently increasing stock price was the highest in the industry. Whereas the team's stock price stood at $ 129.52, the stock prices for Baldwin, Chester, Digby, Erie, and Ferris were $ 61.76, $ 25.58, $ 52.80, $ 83.56, and $ 31.44, respectively ( CAPSIM, 2021). This high stock value is a direct indicator that Andrews team performed better than competitors in the round. Also, it s an indirect marker of proper business strategies.
References
Billah, M., Waheed, S., & Hanifa, A. (2015). Predicting closing stock price using artificial neural network and Adaptive Neuro-Fuzzy Inference System (ANFIS): The case of the Dhaka stock exchange. International Journal of Computer Applications , 129 (11), 1-5. https://doi.org/10.5120/ijca2015906952
CAPSIM. (2021). Industry C124451_012 selected statistics for round 6 . Retrieved May 16, 2021, from https://ww3.capsim.com/student/portal/index.cfm?template=dashboard.selectedstatistics&simid=C124451_012&round=6&rdtype=2&edition=Capstone
Vijh, M., Chandola, D., Tikkiwal, V. A., & Kumar, A. (2020). Stock closing price prediction using machine learning techniques. Procedia Computer Science , 167 , 599-606. https://doi.org/10.1016/j.procs.2020.03.326
