The impact of P/E ratio and price return on the stock market Bohmian quantum potential approach

Document Type : Original Article

Authors

1 Department of Accounting, Faculty of Management and Economics, Science and Research Branch, Islamic Azad University, Tehran, Iran

2 Department of Business Management, Faculty of Management and Economics, Science and Research Branch, Islamic Azad University, Tehran, Iran.

3 Department of Marine Sciences, Faculty of Natural Resources and Environment, Science and Research Branch, Islamic Azad University, Tehran, Iran

4 Department of Financial Management, Science and Research Branch, Islamic Azad University, Tehran, Iran

Abstract

Price return and P/E are two important factors for a lot of investors based on the latest studies by researchers in Tehran Stock market; however, it is expected that the price and the variation of that affect the return and the P/E of any given market as a complicated system. The Bohmian quantum mechanics used referring to the time correlation of return and P/E of the stock market under consideration. In this study, we extend the quantum potential concept to determine the behavior of P/E and also price return. The obtained results show that the quantum potential behaves in the same manner for P/E and price return, also confines the variations of the P/E and price return into a specific domain. Furthermore, a joint quantum potential as a function of return and P/E is derived by the probability distribution function (PDF) constructed by the real data of a given market. It serves as a suitable instrument to investigate the relationship between these variables. The resultant PDF and the corresponding joint quantum potential illustrate that where we have light points in joint quantum potential chart, the probability of those amount of P/E and price return are more than other point.

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