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CAPITAL ASSET PRICING MODEL: EVIDENCE FROM THE NIGERIAN STOCK EXCHANGE

Abstract— This paper critically examines the effect of capital asset pricing model (CAPM) for the Nigerian stock exchange using monthly stock values of 20 listed firms for the period of ten years (January 2006- December 2015) covering the periods and the aftermath of the 2008/2009 global economic crisis. In order to enhance the precision of the beta estimates and reduce the statistical problems that arise from measurement errors in individual beta estimates, the securities were combined into portfolios. This study employed simple ordinary least square (OLS) regression technique and found no conclusive evidence for the application of capital asset pricing model (CAPM) in the Nigerian Stock Exchange.

Keywords— Capital Asset Pricing Model (CAPM), Nigeria Stock Exchange (NSE), Ordinary Least Squares (OLS) and Nigeria.

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