Stochastic Model of Market Assessments of Stock Returns and Value of Asset Prices in Time-Varying Investment Returns

In stock trading, investors are mainly interested in the basic decisions that will help to assess good stock return rates to optimize the value of asset pricing. Thus, in this study, a coupled system of variable coefficient problems with stochastic parameters in the model for two different investments in the capital market has been studied. The problems were solved by adopting the Frobenius method of series solution and the method of the undetermined coefficient to determine the assessments of stock returns and value of asset prices in time-varying investment returns. These equations were solved as a coupled investment equation to establish the behavior of stock return rates and asset price valuation when it follows multiplicative, additive effects series with quadratic functions which is not found in the literature. This paper extends the works in literature by incorporating multiplicative effect series and additive effects series and solving the problem as coupled systems.