Impact of Risk Free Rate on Stock Market Return: A Case Study of Karachi Stock Exchange

Posted: 11 Jan 2009 Last revised: 3 Jun 2009

See all articles by Dr. Safdar Husain Tahir

Dr. Safdar Husain Tahir

Division of Finance, Lyallpur Business School, Govt. College University Faisalabad

Date Written: January 8, 2009

Abstract

The current study looked at the relationship between risk free rate and stock market return. A five year monthly basis time series data from 2003-2007 of T-bills and KSE-100 index were taken for research study. For the analysis of data, simple regression model approach was applied. Stock market return was taken as dependent variable whereas Risk free rates as independent variables. Pearson Correlation Matrix was also obtained through correlation model. The results suggested that risk free rates had no effect on dependant variable. Furthermore, no correlation between risk free rate and stock market return was found. Consequently, a bivirate relationship cannot exist between risk free rate and stock market return, indicating that the stock market return is a function of more variables than risk free rate.

Keywords: relationship, risk free rate, stock market return

Suggested Citation

Tahir, Dr. Safdar Husain, Impact of Risk Free Rate on Stock Market Return: A Case Study of Karachi Stock Exchange (January 8, 2009). Available at SSRN: https://ssrn.com/abstract=1324656

Dr. Safdar Husain Tahir (Contact Author)

Division of Finance, Lyallpur Business School, Govt. College University Faisalabad ( email )

Jinnah Block New Campus
Jhang Road Faisalabad
Faisalabad, Punjab 38000
Pakistan
+923017091244 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
2,099
PlumX Metrics