Stock Market Simulator
Stock Market Simulator — Prices & Valuation
Stock market prices reflect the discounted present value of expected future cash flows, but sentiment, momentum, and information asymmetries cause prices to deviate from fundamentals. This simulation implements the Gordon Growth Model for fundamental valuation while layering in stochastic noise to mimic real price processes. Changing the discount rate or growth forecast shows immediately how sensitive prices are to these assumptions.
What you can do in this simulation
- Set dividend growth rate and discount rate to compute fundamental stock value via DDM
- Add noise and sentiment drift to simulate realistic price path randomness
- Change interest rate assumptions and observe the inverse relationship with stock prices
- Run a momentum-based strategy and compare its return path against fundamental value
- Observe mean reversion behavior when prices diverge significantly from intrinsic value
Concepts covered
dividend discount model · discount rate · earnings expectations · market sentiment · volatility · intrinsic value
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