Document Type

Dissertation

First Faculty Advisor

Ramirez, Andres

Keywords

Middle East; Stock; Exchange; NYSE; coefficient; variation; Investing; portfolio

Publisher

Bryant University

Abstract

The goal of any investor is to obtain the highest possible return for his or her money. However for years, the debate has continued; stocks, bonds, mutual funds; which of these financial instruments will produce the greatest gain to give the investor the highest profit? Historically, stocks have been known to provide investors with high returns. With the world becoming increasingly globalized, international markets have proven to offer investors more options to help diversify their portfolios. The Middle East has been known as a region of recent economic growth and stability. Three prominent examples of such are Kuwait, Israel, and Jordan. With GDP growth steadily rising and purchasing power in the hundreds of billions, the Middle East has been seen as a region of growing economic stability and rapid development. For example, Egypt alone has grown by almost 7.2% in 2008, ranking among the fastest growing GDPs in the world; according to data gathered by the World Bank. Jordan also ranked high growing by over 7% in GDP each year since 2006 until 2009 (World Bank, 2011). Although these countries may not be in the list of top ten fastest growing economies, they still have shown recent leaps in overall economic stability and growth in comparison to years prior. Economists have speculated that financial stability and infrastructure follow a growing economy. With the rapid economic growth of such countries as Kuwait, Jordan, and Israel, it is only logical that investment opportunities present themselves. Although this is a logical conclusion, much research on the stock exchange of these countries is somewhat limited. These stock exchanges have the potential to give any investor the diversification he or she desires as well as a similar, if not a higher return than those of England, Japan, and the United States due to the similar coefficients of variation. The coefficient of variation, defined as the degree of variation from one series of data to another, can give an investor a more accurate idea of how much risk is assumed per unit of return. This calculated statistic is a more accurate indicator than return or standard deviation alone because it places the degree of variation in context to the data. In investment terms, the coefficient of variation measures how much risk is being assumed by the investor in relation to how much return he or she can possibly receive. The coefficient of variation for the Israeli, Jordanian, and Kuwaiti stock exchanges will allow them to rival the competitiveness of stock exchanges that are more well known.

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