VOLATILITY’S IMPACT ON MARKET RETURNS

 

Many investors realize that the stock market is a volatile place to invest their money. The daily quarterly and annual moves can be dramatic, but it is this volatility that also generates the market returns investors experience.

Volatility is a measure of dispersion around the means or average return of a security. One way to measure volatility is by using the standard deviation, which tells you how tightly the price of a stock is grouped around the means or moving average (MA). When the prices are tightly bunched together, the standard deviation is small. When the price spread apart, you have a relatively large standard deviation.

INTEREST RATE AND CORPORATE FINANCE

 

There is no doubt a theoretical link exist between interest rates and the financial structure of firms. Interest rate operate through their influence on the cost of capital to the investors as well as a returns to various groups of savers. A change in the interest rate affects the debt-equity choice of a firm, the overall cost of capital and real interest rates, and thereby sets in motion a chain of responses influencing the desired level of the capital stock and consequent speed of adjustment of the actual capital stock to its desired level. The debt-equity ratio is important because the overall cost of capital to investors, which influences fixed investments, their efficiency and profits can be expressed as a

Rate Volatility and Investment Determination in Nigeria.

2.1.1  Interest Rate Volatility and Investment Determination in Nigeria.

The variation of short-term and long-term interest rate is a prominent feature of the economic events such as changes in Federal Policy. Crises in domestic and international financial market in the prospects for long-term economic growth and inflation. However, economic event such as these, tends to be irregular (Keith
1996). There is a more regular volatility of  interest rate associated with  the business cycle. The expansions and contraction that the economy experience overtime. For instance, short- term interest rate rise in expansions and fall in recessions. Long-term interest rate do not appear to be the term cyclical volatility of interest rates which refers to the variability of interest rate over periods that correspond to the length of the typical business cycle.

THE IMPACT OF INTEREST RATE ON INVESTMENT DECISION IN NIGERIA. AN ECONOMETRIC ANALYSIS TWO

 

1.2     Statement of the Problem

The financial systems of most developing countries (like Nigeria) have came under stress as a result of the economic shocks of the 1980s. The financial repression,  largely  manifested  through  indiscriminate  distortions  of  financial prices including interest rates, has tended to reduce the real rate of growth and

the real size of financial system, more importantly,

THE IMPACT OF INTEREST RATE ON INVESTMENT DECISION IN NIGERIA. AN ECONOMETRIC ANALYSIS1

CHAPTER ONE INTRODUCTION

1.1      Background of the Study

Investment is the change in capital stock during a period. Consequently, unlike capital, investment is a flow term and not a stock term. This means that capital is measured at a point in time, while investment can only be measure over a period of time.

Investment plays a very important and positive role for progress and prosperity of any country. Many countries rely on investment to solve their economic problem such as