An investigation into the effects of foreign exchange rate risk on stock prices: evidence from Ghana Stock Exchange

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Date
July, 2015
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Abstract
The long-standing argument on the relationship between foreign exchange rates and share prices has permeated through literature in most economies. This study investigates the relationship between share prices and foreign exchange rate using monthly time series data from the Ghana Stock Exchange for the period 2002 to 2010. The objectives were to assess the long-run and short-run impact of foreign exchange rate on share prices on Ghana Stock Exchange. Secondary data on exchange rates and GSE-All share index were gathered from January 1, 2002 to December 31, 2010. The results report a stable long run and a negative short run relationship between the exchange rate and share prices for the period under study. Therefore, it is recommended that Securities and Exchange Commission should employ effective risk management measures that will efficiently help monitor and minimize foreign exchange rate risk in both the case of the firms and the investors respectively.
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A thesis submitted to Department of Accounting and Finance Kwame Nkrumah University of Science and Technology School of Business in partial fulfilment of the requirements for the degree of Master of Business Administration (Finance -Option).
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