Exchange Traded Funds and the Liquidity of the Component Stocks

Kwararafa University Journal of Management Sciences (KUJOMS) 1(1) pg. 1 – 14, 2015

21 Pages Posted: 24 Jul 2020

See all articles by Abdul Adamu

Abdul Adamu

Department of Business Administration, Nasarawa State University Keffi

Friday Wada

affiliation not provided to SSRN

Peter Ogwuche Iduh

Kwararafa University, Wukari

Date Written: 2015

Abstract

This study examined the liquidity of Exchange Traded Fund and its component stocks on the Nigerian Stock Exchange (NSE). The data for this study was the daily opening price, day price, and volume traded for the ETF and the first 10 most capitalized stocks of NSE 30. The data were analyzed using descriptive statistics and Amihud’s measure of illiquidity. The results show that the component stocks are more liquid than the ETFs and it was recommended that the regulators should educate the investors and their agents on the likely benefits of investing in ETFs rather than the individual component stocks.

Keywords: Exchange Traded Fund, component stocks, liquidity

JEL Classification: G23

Suggested Citation

Adamu, Abdul and Wada, Friday and Ogwuche Iduh, Peter, Exchange Traded Funds and the Liquidity of the Component Stocks (2015). Kwararafa University Journal of Management Sciences (KUJOMS) 1(1) pg. 1 – 14, 2015, Available at SSRN: https://ssrn.com/abstract=3639477

Abdul Adamu (Contact Author)

Department of Business Administration, Nasarawa State University Keffi ( email )

P.M.B. 1022
Nasarawa state
Keffi, Nasarawa State 1022
Nigeria

Friday Wada

affiliation not provided to SSRN

Peter Ogwuche Iduh

Kwararafa University, Wukari ( email )

P.M.B.1019
Taraba state
Wukari, Taraba State 00234
Nigeria

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