# The Performance Of Exchange Rate And Share Price Essay

Length: 702 words (2 double-spaced pages)

Rating: Better Essays

#### Essay Preview

4. Results and Discussion
Figure 1: Exchange Rate (LNER) and Share Price (LNSP) from Q2 2009 to Q4 2015

Figure 1 illustrate the performance of exchange rate and share price (both are in the natural logarithm form) from the second quarter of 2009 to the fourth quarter of 2015. Based on the figure alone, no decisive conclusion regarding the correlation of the two variables could be formed as there is no consistent trend throughout the period. Table 1 shows that the correlation between share price and exchange rate is 0.3009 when the ordinary covariance analysis is applied to the data series. This suggests the variables are positive correlated over the period but the relationship is relatively weak. However, a positive correlation between the variables indicates a negative comovement between them as the exchange rate is recorded in terms of the number of Australian dollars per US dollar.
Table 1: Result of Correlation Test between LNER and LNSP

4.1 Ordinary Least Square (OLS) Regression
4.1.1 Level Series
When the OLS regression is applied to the equation 1, the result is reported in Table 2. From the table, the t-statistic of intercept and share price are -12.5814 (p = 0.0000) and 12.9807 (p = 0.0000) respectively. These indicate that both explanatory variables are statistically significant and the probability of the coefficients equal zero are very small. Similarly, the F-statistic of 168.4987 (p = 0.0000) suggests that all slope coefficients (excluding the constant) are not equal to zero. Notably, the coefficient of the share price is positive (β1 = 0.3307). As discussed earlier, the exchange rate is written in terms of the number of Australian dollars per US dollar. As a result, an increase in the exchange rate in the model i...

... middle of paper ...

...0.0000) respectively while the Durbin-Watson statistic becomes 2.0425. The higher adjusted R-squared value indicates that more dependent variable is explained by the explanatory variables in the first differences regression compared to the level series regression. In addition, as the Durbin-Watson statistic closes to two, this suggests that there is no autocorrelation in the model. Moreover, the value is higher than the adjusted R-squared value so the regression on the first difference series is probably not spurious.
Therefore, the significant coefficients in the regression model may suggest there is positive relationship between the first difference series of the Australian exchange rate and the Australian share prices. Similar with the level series, this evidence is required to be handled with caution.
Table 3: Results of OLS Regression on First Difference Series

## Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

## The Impact of Financial Performance of the Company on its Share Price; Evidence from Pakistan Stock Exchange

- In a great majority of instances, the shareholder returns (positive/negative) for any period are associated with “financial performance” (positive/negative) patterns of a company in relation to earlier plausible expected patterns for that period, and/or trading by corporate insiders or market abuser in the stock exchange. These two schools of thought have their impact on the share prices (increase/decrease) that can also observed in Pakistan at KSE. The jumps in stock prices are inter-temporally clustered....   [tags: Economics]

Better Essays
2285 words (6.5 pages)

## The Foreign Exchange Rate On International Trade And Cross Country Investment

- 1 Introduction The foreign exchange rate is the rate when domestic currency (for example, Chinese yuan) is used to exchange foreign currency (for example, us dollar). Volatility of exchange rate has been Kamble and Honrao (2014) defined as ?the risk associated with unexpected movements in the exchange rate.. The volatility of exchange rate has great impacts on international trade and cross-country investment. The increased importance being attached to exchange rate is a result of the globalisation of modern business, the continuing growth in world trade relative to national economies, the trend towards economic integration and the rapid pace of change in the technology of money transfer....   [tags: United States dollar, Currency]

Better Essays
4586 words (13.1 pages)

## Essay about Price Escalation and Its Properties

- International marketing concepts International marketing is an exceedingly difficult and challenging activity for a multinational corporation (MNC) marketer. According to Cateora, Gilly, and Graham (2013), “international marketing is the performance of business activities designed to plan, price, promote, and direct flow of the companies goods and services to consumers of users in more than one nation for profit” (p. 10). International marketing strategies and its efficiency assists in the expansion of an organization....   [tags: international marketing, pricing, goods]

Better Essays
1825 words (5.2 pages)

## Analysis of UBS Stock Price Essay

- BS Analysis UBS Financials The table below presents a few of the most important financial key statistics of UBS as of 11 Mar 2014 (currency in USD). Income Statement Revenue (TTM) 33.43B Revenue (Quarterly YOY Growth) 1.95% EPS Diluted (TTM) 0.8985 Net Income (TTM) 3.651B Profitability Profit Margin (Quarterly) 14.50% Dividend Dividend Yield 1.36% Dividend 0.28 Current Valuation Market Cap 80.45B Enterprise Value 64.84B Price to Book Value 1.494 P/E (TTM) 23.6 EPS (TTM) 0.89 Other Beta 1.79 Figure 1 - UBS Financial Key Statistics UBS Strategy & Achievements Given the changing operating and regulatory environment and the issues encountered as described in section 2 above, UBS has...   [tags: UBS Financial Case Study]

Better Essays
1285 words (3.7 pages)

## Stock Price Valuation and Beta Calculation Essay

- There are many choices in the market for the investors to generate more money and income with the capital that they able to invest. These tools are categorized into many different types of market such as equity market, bond market, and mortgage market, according to their characteristics. The markets are well-growing and establishing all around world due to the people’s awareness of investment, the globalization, the governments’ policies, and the change of technology. Equity market is one of the well performing markets....   [tags: Finance]

Better Essays
1265 words (3.6 pages)

## Essay on Impacts of Devaluation on Export Performance

- Ethiopian is a low income country (World Bank [WB] 2012 ) where Agriculture plays a vital role in the economy contributing 42 percent of Gross Domestic Product (GDP), 80 percent of employment and 90 percent of total export earnings (Ministry of Finance and Economic Development [MoFED] 2011). In an effort to remove the vicious socio-economic circle, the Federal Democratic Republic of Ethiopia (FDRE) government developed a Growth and Transformation Plan (GTP) in 2009 with priority export orientated agricultural development to lead industrialization (MoFED 2010 P....   [tags: Economics]

Better Essays
1406 words (4 pages)

## Questions On Exchange Rate Fluctuations Essay

- (c) A consideration of the key risk factors that are relevant to the decision whether to undertake the investment, with suggestions on how these risks might be managed. 1. Exchange rate fluctuation risk Exchange rate fluctuations come in three forms, which is economic exposure, transaction exposure and translation exposure. Exchange rate movements will lead the cash flows become more volatility. First, “Economic exposure – This is lesser known than the previous two, but is a significant risk nevertheless....   [tags: Management, Risk, Exchange rate]

Better Essays
1742 words (5 pages)

## Canada Is The World 's Third Largest Economy With A Normal Gdp Close Essay

- By 2015, Canada is the world 's eleventh-largest economy with a normal GDP close to US \$1.79 trillion. High-resources and trade-depended are the major factors in Canada’s economy. Canada had a good performance in stabilizing economy growth. Canada adopted a floating exchange rate for 42 out of the last 50 years. (6)During the past several years, the topic of Canadian Government is that if they should continue a floating exchange rate or retook a fixed exchange rate. Exchange rate presents a rate that one currency can be exchanged to another, and it can be divided into fixed exchange rate and floating exchange rate....   [tags: Foreign exchange market, Inflation]

Better Essays
1039 words (3 pages)

## Essay about The Impacts of Devaluation on Export Performance: The Case of Ethiopia

- Agriculture plays a vital role in the Ethiopian economy, contributing 42 percent of Gross Domestic Product (GDP), 80 percent of the employment and 90 percent of total export earnings (Ministry of Finance and Economic Development %5BMoFED%5D 2011; Diao et al. 2010). In 2009 with an effort to remove the vicious socio-economic circle, the government of Federal Democratic Republic of Ethiopia (FDRE) developed a Growth and Transformation Plan (GTP) with a priority to export orientated agricultural development led industrialization (MoFED 2010 P....   [tags: Economics]

Better Essays
1263 words (3.6 pages)

## Essay on Mutual Fund Cash Flows And Stock Market Performance

- Mutual Fund Cash Flows and Stock Market Performance* During the decade of the 1990’s through the year 2001 there were some major shifts in the deployment of investment assets. Based on a variety of measures, mutual funds grew dramatically as vehicles for investing in portfolios of stock. Specifically net cash flows into equity funds grew from \$13 billion in 1990 to \$310 billion in the year 2000.1 During that same period the number of equity funds rose from 1,100 to 4,395, while the number of accounts in those funds increased from 22 million to 162 million....   [tags: Economics Stock Investment Cash Analysis]

Free Essays
1802 words (5.1 pages)