CHAPTER ONE

1.0              INTRODUCTION

1.1              BCKGROUND OF THE STUDY

The stock market commonly known as the stock exchange is encompassed in the capital market.

It can be describes as a place where savers and investors are brought together to trade on securities and sources of finance. It has basically, the same functions as any other financially institution which comprises the financial system.

The stock exchange plays an important role in the development of our economy. A developed financial system they say is a developed economy. The primary aim of every nation I believe is to improve the standard of living existing in the country. How does this need relate to the stock exchange and its activities? Has it been successful in this particular area? It should be borne in mind through that the economy of any country is a very complex issue especially in the case of Nigeria. Since its establishment which was necessary due to same pressing factors, the economy has undergone a lot of drastic changes.

As will be discussed later, the impact of the stock exchange in the business world of Nigeria has in some way benefited the country. Whether it has done so successfully or not will be determines not just over its short history but also in the future years to come.

Although other means of raising fund exists, the stock exchange no doubt adds more sophistication and thus efficiency which is necessary for every developing country in this case Nigeria.

The project has been embarked on mainly to give a general idea on the life of the exchange and its operating. It also hopes to point out certain deficiencies associated with it and the viewpoint of different individuals, firms and companies on it. In doing so, this project has been divided into different chapters, each discussing a vital point or aspect.

This first chapter centers mainly on the purpose of this study, it’s objectives, significance and limitations associated with it. It will help to highlight certain problems relating to the exchange and it use.

The next chapter is just a simple discussion the stock exchange. It is the literature review of this project. It tells us what different author’s have said in relation to his topic and also their point of view on this topic.

Chapter 3 is a brief arration on how the research on this project has been carried out the difficulties encountered and what type of facts and sampling I have based this project on. The last two chapters on the other hand is detailed analyzed here are data got from the general public form this I was able to draw some conclusions and deduce certain facts which have all been summarized in the last chapter.

Various means have been embarked on to make this project possible. It has been worthwhile through because as a friend put it, no person can hope too carry out an effective influential and flourishing business if he is not well versed on the financial market.

1.2       STATEMENT OF THE PROBLEMS

This importance of a developed economy, can never be over emphasized. An efficient stock market goes a long way in carrying out this functions. This fact is not withstanding, we fined out that a lot of people in this country are not even aware of the stock market, it’s functions and how it can facilitate the development of the economy. In an under developed economy like ours, the need for this market is paramount of the economy is expected to be improved upon .

Another problem associated with the stock exchange is that of development. Trading on the exchange has not been as extensive as was expect. The development of the economy cannot be ensured of the market itself is not only developed. In this problem if it is not checked well, not only defeat the goals of the market as an outlet for finance. This is a major set –back in the development of the economy. It is obvious that the establishment of the stock exchange is at stake and if nothing is done now, it could gradually be eroded.

1.3       PURPOSE/OBJECTIVE OF THE STUDY

The objective of this project is to present a through study of the stock exchange and to throw more light on its importance in the business world.

The main objective thus are:

To bring closer to have the reality of the stock market by:

i.          showing it’s development

ii.         It’s functions and importance;

iii.        It’s impact in he business world and the development of the economy.

·         To light the deficiencies of the market.

·         To find possible solutions to these deficiencies.

·         These objectives I believe should serve to inform fellow users of the market to the deficiencies that exist there and possible solutions so as to improve on the deficiencies.

1.4              RESEARCH QUESTION

i.                    Is stock exchange market closer to individuals?

ii.                  How closer is the reality of the stock market in it’s development to Nigerians?

iii.                Has the market imparted in the business world and development of the economy.

iv.                What do you think is the deficiencies of the market?

1.5              RESEARCH HYPOTHESIS

(a)                Ho: Use of stock exchange is not extensive due to ignorance especially on the part of individuals.

H1: Use of stock exchange is extensive due to ignorance especially on the part of individuals.  

(b)               Ho: Stock exchange market has not imparted in the business world and development of the economy.

H1: Stock exchange market has imparted in the business world and development of the economy

HYPOTHEIS TWO

Ho: Stock exchange market has not imparted in the business world and development of the economy and development of the economy.

H1: Stock exchange market has imparted in the business world and development of the economy.

Responses

0

E

(o-e)

(o-e)2

(o-e)2

o-e

Yes

45

26

19

361

13.88

NO

7

26

-19

361

13.88

52

27.76

At degree of freedom (Df)     = (c-1) (R-1)

                                                            = (2-1) (2-1)

                                                            = 1x1 = 1

1 at 51 level of significance = 3-84

Decision

Since calculated X2 value of 27.76 is greater than the table  value X2 of 3.84. we therefore reject the null hypothesis (Ho) and accept alternative hypothesis (H1) meaning that stock exchange market has impacted in the business world and development of the economy.

1.6              SIGNIFICANCE OF THE STUDY

This study is important in the sense that it has to do with the economy of this country.

An under –developed stock market we said means an under-developed economy, thus how standard loving. Nigeria’s being conservative people, they need to be encouraged to embark being relatively when compared to the money market, which is also an outlet foe rising funds but short-term ones, confidence in it has to be gradually developed if it is hoped for the market to be a success and for it to carry out it’s functions well. As this study goes a long way  to throw more light on this market and its’ function, it is hoped that an awareness will be instilled in its’ readers and the suggestion put towards considered.

1.7              DEFINITION OF TERMS

For complete understanding of this project, these terms have been defined;

Financial market -                               Market for raising funds, where saving and investment are brought together.

Economic Development-                    To increase or improve on the welfare of a nation through is productive sector.

Securities -                                          Financial instruments/assets trade in the  market to raise fund.

Capital-                                               Funds required to finance production of either goods or services.

Investment-                                         Utilization of capital resources for the maximum reward.

ABBREVIATION

SEC     -           Securities and Exchange Commission

NEO    -           Nigeria Enterprises promotion Acts of 1972 and 1977

NSE    -           Nigeria stock Exchange

SSM    -           Second –tier securities market.

FSM    -           First –tier securities market.

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