The study in economic factors

by | Aug 16, 2021 | Assignment

Provide a 16 pages analysis while answering the following question: The study in economic factors affecting on the value of Stock Exchange of Thailand Index (SET index). Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is required. Ross states that the theory predicts the returns on assets and the other risk factors. The theory allows determining the relationship between return of a portfolio and return of an asset. The theory has been applied to determine macroeconomic factors to determine stock through examining seven macroeconomic variables that are risk premium, industrial production, inflation, market return, consumption, and oil prices. The results depict a positive relation between macroeconomic variables and stock return. The fundamental concept in arbitrage pricing theory is the ‘law of one price’ that is, that the two assets cannot be sold& different prices. The theory determines simpler version than the Capital Asset pricing model in which one operating system affects the returns. Arbitrage pricing theory determines investor’s preference towards risks. Azzez & Yonezawa (2006) study investigates the empirical evidence for the pricing of macroeconomic factors in the Japanese Stock market using APT model. The model determines pre- and post- bubble period of the stock market and determine the relationship between the macroeconomic factors and stock returns (Azeez & Yonezawa, 2006).The study of Zhu (2012) illustrates the impacts of macroeconomic factor (returns of the energy sector in Shanghai. The main objective of the study id to determine the influence of macroeconomic factors on the stock market, it focuses on the exchange rate, industrial production, bonds, exports, imports foreign reserve and the unemployment rate (Zhu, 2012). Quantitative methodology was adopted to conduct a study, and the data was gathered from secondary sources such as, National Bureau of Statistic of China, People’s Bank of China for a consecutive period of 2005-2011. Arbitrage Pricing Theory has been applied to determine the returns of assets and risks.

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