Evaluating the Effect of Changes in Exchange Rate and Inflation on Return of Stocks in Companies Operating in Margarine Industry Accepted in Tehran Stocks Exchange

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Two economic variables namely exchange rate and inflation are considered among the potential factors creating risk for stocks of companies actively operating in the margarine industry. The present research's main objective is to study the effect of these two variables i.e. the exchange rate changes and inflation on companies actively operating in this industry. In doing so, the time period of 1991-2004 was studied. The selected variables are the fluctuation of exchange rate, inflation rate and stock return of companies actively operating in the margarine industry these variables were calculated seasonally. The relationship between the variables were studied by two delayed and concurrent models in order to estimate the given model's coefficients, the regression under regular squares minimum method was used. The results indicate that there is a positive delayed relationship between the fluctuations of exchange rate and stock return. Also, it was found that there is a reverse relationship between inflation rate and real stock return and there is a positive relationship between inflation in the past season and the stock return of companies operating in the field of margarine industry too. As a result, the stocks of the above-mentioned companies were at risk of exchange rate fluctuations and inflation. So, if the companies operating in this industry are willing to finance themselves through share issuance, they inevitably have to create attractions for their shares.

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