The role of local and international factors in pricing the risk of international stocks: an analytical study of a sample of common stocks in international stock markets
Keywords:
Local and international factors, pricing international equity riskAbstract
Under the growing of technical knowledge development include modern connection instrument which made as small village . Due to reasons , there was sharp increase fluctuation in economic ,policy and finance, accompanied with the beginning of the 20th century with made from investment environment represent risk factors around it (National and International) face clear threatening to investment activity of local investment because of the effect of high and low returns which the investor hops to obtain due to the acceptance of this risk.
Hence, it is necessary to understand these factors to face problems caused by these risks in general and try to make price for these risks in formal model to ensure and achieve what the investor want to obtain.
It is of importance to know the local capital asset price model (CAPM) which was still represent thinking conclusion about expiratory in risk processing in world form which faces investors individually or finance institutions when multiple risk factors were expanded and affect directly on investment activity and then on investment decision.
This study was conducted to assess on the locally and Internationally,….i.e. Policy, economic and finance (which included the differences in interest rates, exchange prices of currency , inflation states and country private factors and their roles as internal effective factors in the composition of price models which were local model (in their two models ..i.e. (one index or multiple index ) or world model (one index or multiple index) .
Detailed analysis was done to the above two models (local and international) on data that were obtained from international)on data that were obtained from studying samples included market for seven chosen countries of ten companies for each market on restrict looking conditions from the period of March, 2011 till April ,2015 , by using great of finance statistical analysis techniques.
The study was gained to number of conclusions; the most important of them is the presence of different price style components locally risks compared to internationally. The reason for the differences in price risks share resulted from the effect of environment conditions surrounding (Local and International) presented by locally and Internationally risk, this confirm the role of local and International factors in International shares risk price.
The study was concluded with a number of recommendations, the most important of them that Iraqi investor should do with real effort to consume any investment opportunity on local and international levels that he could pick up the efficient and right shares he could introduce to his portfolio with high additional returns with the least risks .
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