An Investigation of Relationship of Gold Price, Oil Price & Exchange Rate with Stock Price

Abstract

The uncertainty surrounding the investors all around the world and the limited safe investment opportunities that exists today all point towards the need for studying the investment environment and the various variables that play a role in it. This thesis therefore seeks to study the impact of the three of the most important variables that impact the stock prices including exchange rate, gold and oil prices. The study is organized as follows: the first section provides a background about the study and the variables under discussion, the next section presents the existing literature on this issue followed by the research methodology and design section. The study then progresses towards the findings and using four types of statistical analysis, presents a detailed analysis of the data collected in relation with the study of the literature. Lastly, the study concludes with the hypothesis testing whereby all four hypotheses are true i.e. gold prices, oil prices and exchange rate all have an impact on the stock prices in isolation as well as when combined together and while this impact is negative in case of exchange rate and gold prices, the oil prices positively affect the stock prices.