Adrian Carter, M.S.
Education: Bachelor of Science in accounting (May 2010)
Master of Science in finance from Florida International University
McNair Project: Market Risk and Return: A Comparison of the Past and Present (2009)
Mentor: Eric Higgins, Ph.D.
The mortgage crisis and current economic downfall have left the U.S stock market in an inefficient state. Current market prices are not unbiased estimates of the true value of investments. Market prices can be greater than or less than the true value of investments, as long as the deviations are random. Markets do not correct themselves automatically; they are dependent on investor activity. Similarly, confidence and a belief that one can beat the market are key aspects of investor activity. My research can contribute to the goal of restoring investor confidence. My research targets three main questions: (1) Has market risk increased over time?; (2) In terms of growth stocks and value stocks, which has historically performed better by producing greater stock returns?; (3) Is there a correlation between default spread and market movement. We analyzed the data by looking at historical information on the standard deviation of stock returns, testing stock variables (Price/Earnings, Book/Market) to see if they can predict the quality of a stock, and comparing default spread with the status of the market. We have found that historical events (Great Depression, Cold War, 9/11) lead to fluctuations in the U.S Stock Market. This data can be an indication of what to expect in the future as the market has fluctuated due to the current mortgage crisis and economic downfall.