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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
Theoretical Modelling of Stock Price Dynamics in Stock Markets Using A Phynance Approach
Author(s)
Leonard Mushunje
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DOI:10.17265/1537-1514/2019.03.003
Affiliation(s)
Midlands State University, Gweru, Zimbabwe
ABSTRACT
In this paper we present
time to time price dynamics associated with stock assets within stock markets.
Our conjecture was that, stock prices are stochastic and time variant as such
they do attain and possess different values from time to time. We then
centrally aimed to model this old way phenomenon of stock price dynamics using
a distinct model from the physics field so as to substantially expose the core
idea of phynance on an open academic space. We used the two-form of Schrödinger
wave Equation (SWE) to fully model our core study. We derived the time part and
space (market) value functions for stock assets from the SWE. Meaning that, we
managed to derive the time function measuring the time intervals taken by stock
assets in the market space and the market value function which gives out the
value of stocks without any time factor. Our results suggested that, stock
price dynamics can well be modelled and presented using both time independent
Schrödinger equation (TISE) and time dependent Schrödinger equation (TDSE) with
traceable stock price and time changes. This supported our conjecture and our
model proposition as stock prices are traditionally known to be stochastic in
nature and normally they are non-stationary. As such we safely concluded that,
physics indeed play important roles when modelling finance problems, hence
phynance should be well credited in finance as it presents fruitful and
powerful abstractions of the real time happenings in the financial markets.
KEYWORDS
stock price dynamics, phynance, Schrodinger wave Equaqtion, stochastic
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