Thesis Abstract

The abstract section is as follows This research project aims to investigate the effect of the Nigerian macro economy on the determination of share price values in the country's stock market. The Nigerian economy is known for its volatility and susceptibility to various external and internal factors, which can significantly impact the stock market. The study will focus on analyzing key macroeconomic indicators such as GDP growth rate, inflation rate, interest rates, exchange rates, and government policies to understand how these factors influence share prices. By employing a quantitative research methodology, the study will collect historical data on the selected macroeconomic variables and share prices from reputable sources such as the Central Bank of Nigeria, Nigerian Stock Exchange, and World Bank databases. Statistical tools such as regression analysis will be used to examine the relationship between macroeconomic variables and share price movements. The research will also explore the impact of market sentiment, investor behavior, and external shocks on share price determination. The findings of this study are expected to provide valuable insights for investors, policymakers, and financial analysts in Nigeria. Understanding the dynamics of how macroeconomic factors affect share prices can help investors make informed decisions, mitigate risks, and maximize returns in the stock market. Furthermore, policymakers can use the research findings to design effective economic policies that promote market stability and sustainable growth. Overall, this research project contributes to the existing literature on the Nigerian stock market by offering a comprehensive analysis of the relationship between the macro economy and share price determination. The study's results will add to the body of knowledge on the factors influencing stock market performance in emerging economies like Nigeria. By shedding light on the interplay between macroeconomic indicators and share prices, this research aims to enhance the understanding of market dynamics and improve investment decision-making processes. In conclusion, this research project holds significant implications for stakeholders in the Nigerian financial market. By examining the effect of the macro economy on share price determination, the study seeks to provide practical recommendations that can help investors navigate the complexities of the stock market and achieve their financial goals.

Thesis Overview

INTRODUCTION

Stock market reacts in response of various factors ranging from macro economic, political and socio-cultural behavior of any country. Like any other stock market the Nigerian Stock exchange also reacts either positively or negatively by a number of factors occurring within or without the macroeconomic system. A stock exchange is an organized institution where the securities of joint stock companies are traded freely and the prices are determined by the forces of supply and demand. In simple, it is a place where buyers and sellers come together to exchange their holdings (shares, bonds, derivatives etc.) during on business hours.

Investment in equity shares in the stock exchange is one of the major avenues of investment that yields considerable returns to investors. It is also a source of finance for the capital requirements of firms. Returns from such equity investments are subject to vary owing to the movement of share prices, which depend on various factors which could be internal or firm specific such as earnings per share, dividends and book value or macro economic factors such as crude oil price/subsidy removal interest rate, GDP, inflation, government regulations and Foreign Exchange Rate (FOREX). Share price is used as a benchmark to gauge performance of a firm and its variations as an indicator of the economic health or otherwise of a firm hence the need to be conversant with the factors that could adversely affect share prices.

However, this study will provide an overview of the Nigeria macro economy and its effect on bank share value. This study will also make use of Capital Asset Pricing Model CAPM couple with the use of past stock market price and dividend payout to determine the value of the bank stock. The valuation from this analysis in this study will form a basis for signifying if the stock is overpriced or under priced. Recommendations will also be made on if the bank stock should or shouldn’t be bought for more or less.