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Decision Trees and Financial Variables

Decision Trees and Financial Variables

Roy Rada, Hayden Wimmer
Copyright: © 2017 |Volume: 9 |Issue: 1 |Pages: 15
ISSN: 1941-6296|EISSN: 1941-630X|EISBN13: 9781522512554|DOI: 10.4018/IJDSST.2017010101
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MLA

Rada, Roy, and Hayden Wimmer. "Decision Trees and Financial Variables." IJDSST vol.9, no.1 2017: pp.1-15. http://doi.org/10.4018/IJDSST.2017010101

APA

Rada, R. & Wimmer, H. (2017). Decision Trees and Financial Variables. International Journal of Decision Support System Technology (IJDSST), 9(1), 1-15. http://doi.org/10.4018/IJDSST.2017010101

Chicago

Rada, Roy, and Hayden Wimmer. "Decision Trees and Financial Variables," International Journal of Decision Support System Technology (IJDSST) 9, no.1: 1-15. http://doi.org/10.4018/IJDSST.2017010101

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Abstract

A decision tree program for forecasting stock performance is applied to Compustat's Global financial statement data augmented with International Monetary Fund data. The hypothesis is that certain Compustat variables will be most used by the decision tree program and will provide insight as to how to make investing decisions. Surprisingly, the authors' experiments show that the most frequently used variables come from the International Monetary Fund and that variables provided exclusively for Financial Industry stocks were not useful for forecasting financial stock performance. These experiments might be part of a constellation of such experiments that help people map financial forecasting problems to the variables most useful for solving those problems. The research shows the value of using decision tree methodologies as applied to finance.

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