Barnes And Noble

Barnes and Noble

Introduction:

Barnes and noble is the worlds largest book selling company which include science fiction books, music and magazines and children books, the company’s stock are listed in the New York stock exchange, this paper analysis data from the 6th of august to the 10th of August 2007 regarding the price of stock and also the volume traded in this period.

Data:

Barnes and Noble Inc. (BKS)

Date

Opening

Closing

Barnes and Noble

Volume traded

ADJ Close

6-Aug-07

33.18

33.19

1,239,200

33.19

7-Aug-07

32.93

32.69

1,671,300

Barnes and Noble

32.69

8-Aug-07

32.93

32.23

2,009,300

32.23

9-Aug-07

31.47

31.36

2,449,400

31.36

Barnes and Noble

10-Aug-07

31.2

32.85

2,192,800

32.85

The following graphs depict the trends of the opening, closing and volume traded:

Opening:

The above graph depicts the trends of opening stock, from the graph it is evident that the opening stock has been declining for the last few days.

Closing:

Barnes and Noble

The graph above depicts the trends in closing stock, the trends in the graph depicts that there has been a decline and then a sharp rise in the closing stock in the last few days.

Volume:

The graph above depicts the volume of stock traded in the past few days, the volume traded has been rising but on the 10th the volume declined slightly.

Hypothesis:

In this paper we will test the relationship between the closing stock, opening stock and the volume traded, we try to investigate whether there exist any relationship between the three variables. We assume that closing stock is the dependent variable and that the volume and the opening stock are the independent variable, therefore the model will be stated as follows:

Y = α + β1X1 + β2 X2

Our estimated model is as follows:

Barnes and Noble

Y = 59.75- 1.68 X1 – 2.83 X2

Therefore the closing stock relationship with the opening and traded volume is negative, to describe this model we hold one variables to be constant and describe the effect of one variable, if we hold all other factors constant and increase the opening balance by one unit then the closing stock will decline by 1.68 units, if in the other hand we hold all other factors and increase the traded volume by one unit then the closing stock will decline by 2.83 units.

We shall now test the statistical hypothesis of the estimated variables, we will test the estimated variables at 95% using the table, our degrees of freedom will be 2, and therefore the value of the critical T is 2.92.

The following table shows the value of T calculated and the decision made in comparison with T critical;

CALCULATED

Barnes and Noble

NULL HYPOTHESIS

T α

1.426584258

ACCEPT

T β1

-1.423825243

ACCEPT

T β2

-1.21773E-06

ACCEPT

Because all the T calculated is less than the T critical then we accept the null hypothesis, therefore all our estimated parameters are statistically insignificant at 95% confidence interval,

Barnes and Noble

however this is attributed to the small sample size used.

However the closing stock will depend on the level of opening stock and the traded volume, the higher the level of volume the less the level of closing stock, also the higher the level of opening stock the lower the closing stock. However there is need to use a large sample size to predict the outcome of closing stock using regression. However the closing stock depends on the opening stock and volume of stock traded.

References:

Barnes and Noble (2007) the company, Retrieved August 12, available at www.barnesandnobl einc.com/our_company/our_company.html

NYSE Group (2007) Barnes & Noble Booksellers, Retrieved on August 12, available at www.n yse.com/events/1186657149501.html

Yahoo finance (2007) Barnes & Noble Historical Prices, Retrieved on August 12, available at w ww.finance.yahoo.com/q/hp?s=BKS&a=07&b=6&c=2007&d=07&e=1 0&f=2007&g=d