A Fuzzy MCDM Approach to Stock Selection Under Uncertainty
Page No.: 30-41
Keywords:
Stock Selection; FAHP; Making decision based on numerous criteria; Financial Ratios; Investment Decision Making.Abstract
Identifying which stocks to buy and invest in is a complex process, as the financial markets are non-linear and dynamic. This study assesses the stock performance based on six important ratios in economics: expense to Earning (P/E) Ratio (C1), Return on Equity (C2), D/E Ratio (C3), Current Ratio (C4), Quick Ratio (C5), and Earnings per Share (C6). The uncertainty and subjectivity in financial evaluations were overcome by using the FAHP, and these is a structured a multifaceted approach to deciding. The knowledge for the top ten organizations featured in the Bombay Stock Exchange, India, were collected. The ranking of results obtained from the FAHP analysis showed that the Current Ratio (C4) had the lowest priority, signifying that this ratio has little influence on the selection of stocks, whereas the Price to Earning (P/E) ratio (C1) had the highest priority. This new FAHP model can be used to systematically and reliably assess stocks, which can be used as a useful tool to make choices for investors and mutual fund managers in making informed investment decisions.
