Abstract:
The purpose of the study was to analyse how volatile the Ghana Stock
Exchange is. The objectives and the research questions of the study were
executed by employing GARCH model to generate volatility of returns of
Ghana Stock Exchange Composite Index (GSE-CI). The study employed
explanatory research design. Secondary monthly data from Ghana Stock
Exchange was used in the achievement of the research objective. The
quantitative approach was employed. Pertaining the specific objective of the
study which sought to examine the nature of the evolution of volatility on
GSE, the study shows that the return of GSE showed an upward trend starting
from 2011 through to 2017. In analysing the effect of the periods of high or
low volatility on Ghana Stock Exchange, the study found that high or low
volatility could serve as a guide to investors to make informed decisions
regarding investment in the Ghana Stock market. Also, the finding of the study
established that the period of low or high volatility of stock returns of Ghana
Stock Exchange is significant in influencing investors decisions as to whether
or not they should put their money in the stock market. The findings of this
study have some implications for both policy makers and investors on the
Ghana Stock Exchange as volatility of return of a listed firms arise from the
fact that returns on stocks may be captured as the true intrinsic value of a firm
and thus the investors might develop interest in investing on the Ghana Stock
Exchange.
