Testing the Existence of Price Bubble inTehran Stock Exchange

Tehran Stock Exchange, following the reopening in 1989, experienced a series of up and down trends in its operations which were generally considered as the nature of the market and the consequences of the market events. But, we are sometimes witness to a set of unexpected intense reactions to those events took place across the whole market. The stock market crash of 2004 may be included as a same reaction. Here, we have examined the hypothesis of "The Existence of Price Bubble in Tehran Stock Exchange during a Three-Year Period of 2003-2005". However, the existence of price bubble is examined by using the stationary test for P/E ratio and the results show the existence of price bubble in 280 stocks from among a number of 324 companies examined by this method. So, the dominance of a price bubble over the TSE stocks is confirmed.