A project report on construction of balanced portfolio comprising of equity a...
Tinuoye Olajumoke Fatima
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CHAPTER ONE
1.0 INTRODUCTION
A GENERAL DESCRIPTION OF THE AREA OF STUDY
The growth of the capital market and the development of an
economy move in the same direction and they appear to be
inseparable.
Most market economic Endeavour to put in place stable
and active capital market. The existence of such market services
(inter) allows us a link between the surplus and deficit unit of the
economics.
Since mobilization and allocation of savings are crucial in
the development process, it obvious that the capital market is
vital to the economic development.
However, capital market in most development economic are
largely rudimentary and inefficient in the light of those
inadequacies and given recent economic and political
development sweeping across the globe and which are certain to
have effect on capital market with a view to national economic.
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This project work is designed to examine in-depth the decay of
the 1903.
Secondly this paper is aimed at critically assessing the
Nigeria capital market with a view to identifying operational short
coming and recommendation solutions.
The Nigeria capital market has been nursed from infancy to
dalliance and still growing with deregulation, industrialization,
privatization and commercialization and necessities by the
structural adjust programme (SAP) bound within the part few
year in term of capitalization and size
The number of the market has most then tripled during the
past years. The door to the profession of securities dialing has
opened more widely.
The practice has become more in other words: the Nigeria
capital has grow basically through government initiative. Thus, a
large number of the present listed company did so in compliance
with government polities the capital market has none the less,
witnessed some impressive growth.
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The number of listing for instance rose from 1961 to 2005
as at the endue 2005 of which in represented equities
government stocks and industrial with the indication of interest
in the capital market by more state administration, this has
been increase through the utilization at the market by more state
government in 1986. Measured by market capitalization Nigeria,
capital market has also shown remarkable improvement from
40.6 million in 1970 to 4.5 billion in 1980 and more increase in
yearly basis.
Trading activities and institutional development also were
boasted significantly stock broking firms record the fasted growth
moving from only 3 in 1961 to 10 in 1980 and 63 as at 1987. The
past decades also saw the expansion of the stock exchange
trading floors and increase primary market activities.
The security and exchange commission on its part
intensified its surveillance to prevent market abase and other
malpractices which may adversely affect capital market
development. It drew upset of rulers and regulations which are
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approved by federal government to guide the activities which are
seen as a major in addition it registration activities which are
seen as a major tools for investors protection had already been
initiated.
As at the same time the commission came into existence,
the level of market capitalization was 4.5 million while today the
stock market is reporting a market capitalization of about
trillions. The tremendous increase in the level of the market
which has already been dispensed with past administration
through various amendment in the nation investment and the
new drive for foreign private capitalization of over 20 billion in
the elevate ahead to be able to achieve this level of growth the
right environment must be created in the capital market
particularly the management techniques adopted in the market.
There is also need to reign exchange market (financial
commercial, foreign exchange market etc.) so that the practice in
consistent with the nation long term economic objective in any
sector of the economy are not allowed to slow down our rate of
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development. Therefore, the capital market is expected to play
more significant role as a source of fund for economic recovery
and growth. This project work is therefore expected to x-ray the
potentials if the market in accelerating economic growth and
development is of the nation during the decade ahead
1.2 STATEMENT OF THE PROBLEM
In spite of the growth of the capital market over the past
forth—three years. There is still much in efficiency in the capital
market which deserves to be remedies.
The growth has been essentially government include
through the two indigenization exercise of 1992 to 1997 and the
on-going privatization and commercialization programme and the
provision of the trusted investment act 1962 and the insurance
act 1979 which required pension fund in quoted security.
The market has therefore not really come age having failed
to claim their dividend and share certificate. Changes in address
and other relevant information are not usually reported to the
registration adding to the financial burden of quoted companies
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which are now required to publish the list of owner of unclaimed
developed and share certificate in booklets accompanying actual
report.
Infrastructural inadequacy is major hindrance to capital
market development in information discipline need to be enforced
and better stranded proscribed in the maintenance of the register
of numbers of quoted companies.
In the present area of economic deregulation the price role
of the SEC should be re-examined it is a little in congruous that
an official body should still be fixing price for willing buyers and
services however the immediate challenge lies with market
operators who should prove themselves capable of doing the job
efficiently should the EC hand –off
It has been observed that in discharging its function in this
regard the security and exchange commission appears to have
become more responsive to issue price. Stock brokers can
display greater professionalism in assessment secondary market
issue own as well as in their dealing on behalf of client but SEC
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can be credited for effort made at prodding authorized clerk
especially within the last recent years.
1.3 AIM AND OBJECTIVES OF STUDY
The paper takes a crucial look at the role of the capital
market in Nigeria economy (a case study Nigeria stock exchange).
This study is to examine the role of the stock brokers in
assessing secondary market issue as well as in their dealings on
behalf of client.
Emphasis will also be places on the role of the security and
exchange commission as the apex institution coupled with
liberalization of the nation’s investment policy the privatization of
government holding in commercial establishment and the new
drive for foreign private capital attempt will be make at analyzing
the appraisal and problem encountered by capital market in the
growth and development of Nigeria economy and possible
solutions will be suggested.
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I shall give true and fair views of involvement of the capital
market in Nigeria economics as the will serve as a basis for
future reference.
1.4 METHODOLOGY OF THE STUDY
The approach in this study is mainly description and
analytical. All data and related information have been obtained
from secondary data. All data collected are to be summarized and
compared to give the performance of the capital market in an
attempt to described economic condition in Nigeria for the
purpose of comparing the past and the current situation of the
economy.
Description research is the best choice because it is a pre-
requisite for finding answers to the questions. The problem there
is predication of what the future will be. In conclusion analysis
and interpretation shall be provided for each and every data
used.
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1.5 LIMITATION OF THE STUDY
The project shall be limited to the operations of the capital
market via. The Nigeria stock exchange which is concern with
secondary market issue role of the stock broker in buying and
selling of securities on behalf of their client
Emphasis will also be placed in industrialization
privatization and commercialization program necessitated by the
structured adjustment programme (SAP), this project work
however cannot be completed without placing emphasis on the
role of the security and authority as specific out in the security
and exchange publication.
1.6 PLAN OF THE STUDY
The rest of this study is organized into four chapters.
Chapter two will be developed to review the relevant
literature on the evolution and the development of capital market
nature and focus on regulations and appraisal of the capital
market.
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Chapter three will be on research methodology definitions
of the organization in the capital market and participate in
capital market Source of collecting data and the procedure for
processing data collection.
Chapter four will deal with presentation and analysis of the
data
Chapter five will be devoted to be summary of funding
conclusion and recommendations.
1.7 DEFINITION OF TERMS
Some terms used in the project is hereby defined for easy
understanding of this thesis
BROKERS: an intermediary who buy and sell shares on behalf of
a client in many countries broker may also act as principal in
shares transitions.
ISSUING HOUSE: a merchant bank, stock broking arrange
under writing
QUOTATION: a price made in security by market maker which
has been officially approved
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STRUCTURAL ADJUSTMENT PROGRAMME (SAP): a
fundamental reformation and orientation of the Nigeria economy
introduced in September 1986.
INVESTMENT: it is the act of putting something in the form of
property in the hope that it will yield more property at future.
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CHAPTER TWO
2.0 LITERATURE REVIEW
EVALUATION AND DEVELOPMENT OF CAPITAL MARKET
In order to fully consolidate and appreciated the
significance of the capital market there is need to high light its
historical back ground.
Capital market development in Nigeria dated back to 1946.
When the first government security was fixated through
informally since the necessary facilities for formal market ware
lacking of that time
Earlier in the same year Nigeria local development board
was established to give loans to government and its agencies for
the construction of infrastructure facilities.
The board was short-live and major capital market activity
took place. In year that followed in 1961. Market activities
resumed following the establishment of Lagos stock exchange
(LSE)
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The setting up of the exchange was principally limited by
the business community and some important government
agencies such as the central bank of Nigeria (CBN), the Nigeria
industrial development bank (NIOB) and the federal ministry
finance.
The following objective as start6edin its memorandum and
articles of association
(1) To supervise activities associated will dealing in securities
(2) Facilitate the flow of long-term capital into productive
investment and ensuring fairness of prices at which noted
securities as maintain are traded.
(3) To provide facilitates for trading of securities inception, the
exchange had seven members comprises of four in dials and
three corporate members. Could be expected, activities during
the years of the exchange were low with few listings and
trading as the market perhaps little or was not understood by
the populace the entrepreneur were reluctant to dilute
ownership of their exercise of the 1995.
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Following the report of a government committee on the
review of the financial system the Lagos stock exchange was
renamed in 1997 o the Nigeria stock exchange (NSE), with two
additional trading floors Port Harcourt and Kaduna.
A year after the establishment of the exchange and ad-10c
capital issue committees was formed in the central bank of
Nigeria to regulate public issues of securities in an effort to
ensure that the capacity of the infact market must not over
burdened, as this might impact negatively on its development.
Improvement in market activities and the indigenization
exercise of the 1970s were the main factors, which marketed the
establishment of a statutory agency for the capital market in
Nigeria. The capital issues commission (cic) was then establish in
1978, superseding the capital issues committee and ht following
mandates.
To determine the price at which share of debenture of a
company are to be sold to the public either through offer for sale
direct issues.
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To determine that timing and amount of subsequent public
issues of shares or debenture by the company and undertake
such other makers incidental or supplementary to the foregoing
as the commission may at its distraction determines.
The CIC, however, had no jurisdiction over private
companies but all public companies (quoted) and quoted) fell
under the preview.
The CIC remained operational until the Securities and
Exchange Commission (SEC) was established by the Securities
and Exchange Commission decrease 1979 (re – enable as
increase and No 29 of 1988) the decrease empowers SEC with
the twin responsibilities of resulting and developing the Nigeria
capital market with ultimate objective of protecting the investing
public and accelerating socio economic development.
According to O.J Adewunmi the Nigeria capital market in
1990s SEC hand book page 52 he quoted since 1986 when the
structural adjustment programme (SAP) was embarked upon, the
federal military government has “conserved’’ and delivered some
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fundamental economic package in an attempt to revive our
economy and put in back of the part of sub = sustainable growth
and development section 6 of the sec decree 1988 specially vests
the Sec function.
(a) Registration of the securities proposed to be offered for sale
privately with the intention that the securities shall be held
ultimately other than those to whom the offer were made
(b) Making surveillance over the securities market to ensure
orderly fair and equitable dealing in securities
(c) Protecting the integrity of the securities market against any
abused arising from the practice of insider trading.
(d) Registration stock exchange of their branches registers
investment adjures, securities dealer and their agencies for
the controlling and supervising of their activities with a view to
maintaining proper standard of conducts and professionalism
in the securities business
(e) Acting as regulatory apex organization for the capital market
including the Nigeria stock exchange and its branches to
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which it would be at liberty to delegate powers has been rapid
growth in the number of stock broking firms and issuing
house. Although, not all of these houses have participate
meaning fully in securities issues, the number continue to
grow significantly.
Thus far we have attempted to trace the antecedent, the
Nigeria capital market admittedly, the development trace here in
retrospect sketchy and has mainly attempted to highlight some of
the relevant milestone in the market evolution and development
process. Furthermore, market operation must strive to generate
awareness among market users in the concepts of efficiency
sector which have tended to depend more on current account
surplus than on capital market issues for their capital needs.
As Okigbo (year) 1981 argues in his book Nigeria financial
system this development cost of fund and resources that absorb
when they predominantly use internal finance for their expansion
schemes.
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On the part governmentally three is the need to create
incentive to induce an increase in the number of equities quoted
in the stock exchange to accelerate the page capital formation
and promote active trading in the stock market. This incentive
could be in form of tax advantages to the company whose
equities are quoted.
In the republic of Korea for instance, taxation and tax
concession are calculated in park according to the distribution of
a companies share holding structure and it is said that fiscal
policies are applied to companies that do not go to public after
the authorities may have demand them so qualified.
2.1 NATURE AND FOCUS OF SECURITY REGULATION
Like any field of human endeavor the securities are the
subject of government regulation security industry is all about
investment; investment is threat of putting in something in the
form of property in the hope that it would yield more property at
a future data.
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However, it is the taking of risk of ten the future data risk
that if thing don’t go well expected the investor would in all
probability lose his money.
Moreover, it is not often that the investor overseas the
investment. In many instance, the invest in venture controlled
and managed by others under tales into the hand of other people
who may not necessary be in control of the venture or not
management i.e. investment in the unit trust.
The investment business especially securities investment
business is very complexes undertaken business that even the
knowledgeable often find it difficult to hold his head above water,
more serious is the condition of the uninitiated ordinary
investors. The ordinary investors therefore need protection this is
because he insolvency or in competency of the people who are
put in charge of handing the savings and investment of others. It
is thus the need to protect the investing public that has primary
meditated the regulation of security business.
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2.2 OBJECTIVES OF THE SECURITY REGULATION
a. To ensure the investors are provided with financial material
concerning securities offer for public sale.
b. Since securities are not used or consumed by it purchase or
the investors but constitutes a form of currency which can be
traded in the secondary market, it is essential that there is a
continuous flow of information about the company or the
entity whose securities are being traded.
c. To safeguard against manipulative and deceptive practice,
there is therefore the need not only to monitor trading in the
market, but also to prohibit misrepresentation, deceit and
other fraudulent practice.
d. To prevent individuals, firms and companies engage in the
securities dealing from taking under advantages of their super
knowledge and access to over reach their less fortunate non
professional customers
e. Finally, it is the objective of securities regulation to person
injured through such violations.
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2.3 APPEAL OF CAPITAL MARKET
In recent times, the market was witnessed considerable
growth in new issue and listings activities as well as in the local
value of market capitalization.
This has resulted from government liberation policies and
programmes increase awareness of the market as a source of
long term funds and (to some extent), the establishment of
second over securities market (55m) in 1985 for the listings of
small, consequently as at the end of July 1997, there were 267
securities listed on the Nigeria stock exchange, 22 federal
government stock and 4
DEFINITION OF CAPITAL MARKET
Capital market can be defined as those institutions that are
concerned with providing long term claims. It is the market
where large companies and public enterprise attracts long term
investment fund through a network of financial institution and
stock broker licenses to perform capital market function in
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acknowledge of the funds mobilized by those institution bond
stock or share and mortgage are issued and traded.
In summary, it is the market for buying and selling of share
public liability company and other stock by doing so, the market
accurately performs the function of financial interdiction where
by the savings of some members of the society are mass and
made available to other member of the society for productive
investment.
ORGANIZATION IN THE CAPITAL MARKET
The capital market is divided into two categories:
a. Primary market
b. Secondary market
PARTICIPANT IN THE CAPITAL MARKET
The participant in the capital market include the stock
broker issuing house, merchant banks, development companies,
securities and exchange commission the CBN and government.
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2.4 STOCK BROKERS (DEALING MEMBERS) OF NSEI
These are dealing member of the Nigeria stock exchange to
break stock and share into liquid cash buy intermediating
between buyers and sellers of securities.
FUNCTION OF THE STOCK BROKERS
a. The acts as adviser to their client in the selection and
administration of their investment objectives and also improve
performance of their port folio
b. They make arrangement for their listing quotation of stocks
and share on the exchange that trading can take place in such
securities. Generally, thus include helping the prospective
company to prepare its prospectus.
c. They such as agent in the buying and selling at securities.
This is their most popular function and the one in which they
are mostly identified in the way. They provide liquidity for the
stock market.
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2.5 ISSUING HOUSES
An issuing house is essentially a company that arranges
the issuance of share of another company. By law a company can
issue its own share but in practice thus in hardly done in
Nigeria, the term issuing house is used to describe the corporate
finance activity of merchant bank and stock brokers. To be
eligible to act has an issuing house a company need in addition
to the expertise an ordinary member of the stock exchange. To e
stock broker, however, the companies need to be dealing member
of the stock exchange.
All stock brokers could act as issuing house if they so
desire use of agreement with this marriages.
FUNCTIONS OF THE ISSUING HOUSE
a. To underwrite the securities it issue for its client that is to sat,
to buy the securities and then to sell them later. However, the
Nigeria issuing houses, hardly ever underwrite the securities
they issue and even when due they hardly ever underrates on
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a firm so then main function of the issuing houses is to
arrange the issues.
b. Issue houses also perform other function ranging from houses
provide the same services and not all issuing houses have the
same skills and experience.
c. Therefore a potential investor is advised to shop around not
necessary on the basis at price and keep his ear to the
ground.
THE PRIMARY MARKET
The Securities and Exchange Commission sit at the apex of
the primary market regulation, the issue of public companies
and all private companies with foreign participation.
This market is concerned with the view issue angle that is
it deals with the issue and sale of new securities. The operator in
this market is the issuing houses such as stock brokers,
merchant bank, commercial bank, mortgage bank, insurance
companies the CBN and government.
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The investors pass on their resources to some of those
institutions, for investment can be inform of (stock brokers and
merchant bank).
The equally issue security of a company previously quoted
on the stock exchange which may in the course of time place
another issue in order to raise to raise an addition funds.
THE SECONDARY MARKET
This is the market for the sale and purchase of existing
share and stock, the central of activities for the secondary
market in sock exchange. It also provides market in which
holders of existing “quoked share” wishing to sell such can make
participants in the market are the stock broker’s insurance and
insurance companies pension fund managers.
TRADING MECHANISM
The trading mechanism that operates on the floor of the
exchange confuse itself to a special system known as the “call
over” system under this system, the brokers or their exchange
about 11:00am.
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All listed securities are individually from the stock
exchange daily official list (SE DOL). As each security is called,
broker indicates their interest to buy or sell by main price.
Depending on the forces of demand and supply and a client
instruction, he will make price either as “bid” or “offer”. If
however, he has both buying and selling instruction, he will
make price the lower one being his selling prices, where both
intentions are made at the same price; this is known as “cash
deal”.
As soon as these is simultaneously a buying, selling
intention for a particular security. After the summation of the
deal, there is an exchange or bargain slip. The bargain slip
represents the basic contractual documents between brokers and
shows the fact of the buying and selling transaction. It is from
the bargain slip that the contracts note are written up.
2.6 THE NIGERIA STOCK EXCHANGE
The Lagos stock exchange as incorporated in 1960 as a
company limited by guarantee. It started in operation in 1961
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due to the acceptable of the recommendation of the bar back
committee which lead to the establishment of the Lagos stock
exchange. The committee was appointed to advice on ways and
means of festering a share market in Nigeria. In 1977 it was
renamed the Nigeria stock exchange (NSE) with two additional
trading floors, bring the total number of floor to three, on each in
Lagos, Port Harcourt and Kaduna.
Memberships of the Nigeria stock exchange are four of
three categories.
a. Founding members, comprising those three individual who
subscribed to the original shares of the institution.
b. Ordinary membership after the establishment of the exchange
in 1961 by subscription to the share
c. Dating members comprise the individual films or corporate
bodies increased by the council of the exchange they are
categories into three
i. Brokers
ii. Jobbers
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iii. Spectaculators
BROKERS
The branches are the linked between the investing
company and the stock exchange. The investors wishing to buy
seller securities do not have direct assessed to the exchange
except through broker.
The broker sells or purchase stock exchange at the best term.
The brokers get in touch with jobbers who specialized in such
securities in which deal is sought.
The broker will approach more than two jobber dealing is
share of the institution requested for.
JOBBER
It is from jobbers that brokers got share quotations two
jobbers can quoted different prices for the same share securities
The two price quoted are the buying and selling prices.
The jobber is prepared to buy share of a particular company at
the lower, quoted price and sell to higher quoted price for a
broker buying, it is prudent of him to buy at the price say 87
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kobo. It means the price quoted in the offer price. A jobber must
ensure that is matches demand for and supply of security at all
times.
SPECULATORS
The main aim of speculator is profit making within a short
period of time this means he buy, share when the price s low and
sell when price is high.
The purpose of transaction in the stock exchange is there
must be perfect flow of information and under perfect market
condition. This possible change in the prices of share and other
securities can change in the near futures. Share are bought now
when the operation are convinced that prices of such share are
likely to rise in the future while share which are likely to failure
sold now.
BEAR
It is one who expected the price of the share to fall in the
future and hence buys the number of those shares, the bear may
not have the money to pay for the share, but whatever difference
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that may arise between now and the data of purchase and
settlement data is settled by the bear.
FUNCTION OF NIGERIA STOCK EXCHANGE
The exchange was established to perform the following
function:
i. To provide business and economic information via the
dually official listing on securities traded on the
exchange.
ii. To facilitate the purchase and sale of ideal and shares
since investors will be confident that they can realize
investment easily.
iii. To prescribe requirement for new listing and to regulate
secondary trading activities of its dealing members.
iv. To acts as a central meeting place for member to buy
and sell existing stock and share and for granting
quotation to new issue through stock and stock making.
These available for productive investment
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v. To act as a channel for implementing the indigenization
programme by providing facilities to foreign business to
offer their share to the Nigeria public for subscription
2.7 DEVELOPMENT BANK
In Nigeria development bank consist of some bank like
MBCI, NACK, Nigeria bank for commerce and industries NICB,
Nigeria Agricultural commercial bank (NACB), Nigeria industrial
development bank (NIDB): all those institution were set up to
provide capital on a long term basis for the establishment of
industries. NIDB for instance participant directly in may
industries project. In 1977, it had loans out starting to tiling; N
175 million NACB has the largest of 011 with and investment
pass through capital market.
INSURANCE COMPANIES
We have above 79 insurance companies (mostly life) and
130 insurance companies’ brokers operating in Nigeria. Most of
the larger companies are expatriate owned and managed while
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the rest are private Nigeria owned the ownership composition as
follows:
a. Federal or state government owned 12
b. Mixed ownership 60:40 government and foreign 16
c. Private Nigeria largest company in terms of premium is the
national insurance corporation of Nigeria (NICON), which is
wholly owned by the federal government.
Generally, insurance companies to invest 25% of their fund in
real estate for this reason insurance companies collect premium
form its client in invest in the capital market before paying back,
they will have more money to pay back to the client. Thus, in the
capital market the insurance companies now buy, sell
investment to the public.
2.8 SECURITY AND EXCHANGE COMMISSION
The Securities and Exchange Commission (SEC) is the apex
regulatory body of the Nigeria capital market 10 regulatory
supervises and monitors the activities of the capital market. It
was established in April 1976 and SEC decree 1979, it replaced
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the capital issue commission which was established in 1973, the
CIC who superseded the ad-hoc capital issue committee which
came into existence in July 1967.
The Securities and Exchange Commission decree No.29 of
1983 like it predecessor has three main objectives. These are:
a. To protect the interest of investors and there by enhance
b. Their confidence in capital market to ensure orderly, fair and
equitable dealing in securities.
c. To promote the growth and development of the Nigeria capital
market.
FUNCTIONS OF SECURITIES AND EXCHANGE COMMISSION
Section 6 to the decree vest on the commission, the
following functions are:
1. By undertaking such other activities are or expenditure for
giving full effects to the provision of the decree.
2. By creating the necessary atmosphere for the market
3. Reviewing appraising and regulation mergers, acquisition and
all form of business combination
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4. Acting as regulatory apex organization for the Nigeria capital
market including the Nigeria stock exchange and its branches
to which it would be at liberty to delegate power.
5. Protecting the integrity of the securities market against any
abuses arising from the practice of the insider trading.
6. By maintaining surveillances over the securities marked to
ensure orderly fair and equitable dealing in securities
7. By realizing all securities propose to be offered for sale to or
for subscription by the public to be offered privately with the
intention that the securities shall beheld ultimately other than
by those to whom the offer were made.
8. By determine the amount of the price and time at which
securities of a company are to be sold to the public either
through offer or subscription (the commission has increase to
perform this function following the deregulation of the capital
marketing 1998).
Second tier security market (SSM): the NSE to enter for small
and medium size companies who might desired being quoted on
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the stock exchange created the SSM in 1985 either to only large-
scale company has access to this market but it has new being
realized that small and medium, sized projects constituted and
invaluable existence for economic growth in the third would
countries. By his small and now apply to the security market for
public placement.
CERTAIN CONDITION MUST BE FULFILLED BEFORE A
COMPANY IS REGISTERED
1. The organization must be listed liability company
2. All company wishing to be listed must go through stock
brokers
3. The company must submit financial statement for last 3
years and subsequently submit half yearly audited
accounts
4. The company must be sign an undertaking to obey the
rules of the exchange.
5. The amount to be raised by the company must not exceed
N5m
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6. The chief promoter must not have more than 70% of the
equity investment.
7. At least 10% or N50,00 or the equity capital must be made
available to the public.
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CHAPTER THREE
3.0 RESEARCH METHODOLOGY
INTRODUCTION
According to FAGBO HUNGBE research design coaxial be
described as the blue print that allows a researcher to provide
solution to the problem of who study, what to study and how to
generate data in research situation.
This chapter will layout the broad method employed by the
researcher to obtained relevant data for the research study. The
chapter will outline the research population being studied, the
brief outline of the chapter, the nature and sources of data, the
procedure and administration of data collection instrument
analysis of data and method of data analysis.
3.1 RESEARCH POPULATION
According to OWANOA “the term population is social
research defined all the members of the target group with a
geographic area as specified by the aims and objectives of the
study being conducted. Population of this research project
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considered of the Nigeria stock exchange (NSE), the student and
the public.
3.2 BRIEF OUTLINE OF THE CHAPTER
This chapter will be devoted to research methodology
definition of capital market organization in the capital market.
Participants in the capital market the sources of data method of
collecting data and procedure for data collected.
3.3 SOURCES OF DATA
The sources of data for the research study was the primary
source of data the primary source of data used here, waste one
extracted from the publication of the secondary sources was
collected from Nigeria stock exchange hand book journals of
different kind and financial Journals.
3.4 PROCEDURE AND ADMINISTRATION OF DATA
COLLECTION INSTRUMENT
In all a total of thirty (30) questionnaires were administered
and after which the will filled questionnaires were collected. The
questionnaires were distributed in following manners.
40. - 40 -
3.5 ANALYSIS OF DATA
The analysis of data would be through
(a) The simple percentage method: this will be employed in
analyzing closed ended questions and by the chi-square (x2)
statistical analysis method: which will be used in testing the
hypothesis formulated.
The chi-square techniques test whether the observed
frequencies are sufficiently used to the expected ones to be likely
to have null hypothesis (HO):
Null hypothesis HO: where Oi and Eii are observed and the
expected frequent alternative hypothesis (Hi) Oi=Ei
The null hypothesis will be tested by xss= E(Oi-Ei)2
E
Where:
Oi= observed number of cases categorized
Ei= expected number of cases in the category under Ho
E= direct one to sum overall (x) categories
41. - 41 -
DECISION RULE
If calculated value is greater than critical value reject null
hypothesis, but if otherwise accept null hypothesis. Hypothesis
will be tested at 5% level of significance. The degree of freedom is
denoted with D.F and calculated as F=10=1 where n is the
number of observation.
3.6 METHOD OF DATA ANALYSIS
The research collected all the data through the personal
interview and answering the question is prepared to the staff of
PZ Nigeria plc.
The personal interview was carried out through the
personal interaction with the staff of the firm which helps to
collect some useful information on the project work. In this
method of personal ninterview effort was made to present data
collected and analytical explanation of how each hypothesis was
measured.
The presentation and analysis of data collected shall be
made through the use of table. The data needed employee were
42. - 42 -
both interview questionnaire which shall be in table form this
was achieved in the time of the questionnaire presented of the
form as regarded the area of interest during the course of the
study.
POPULATION SAMPLE SIZE PERCENTAGE %
1. Top/middle level of
officers
12 40%
2. Low level officers 5 17%
3. Student 5 17%
4. Shareholder/public 8 26%
Total 30 100%
43. - 43 -
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA
4.1 BRIEF INTRODUCTION OF THE CHAPTER
In this chapter, an attempt was made to show trends and
Patten of association and relationship among the data collected.
The presentation and analysis will be in tabular form.
4.2 PRESENTATION AND ANALYSIS OF DATA
Data is defined as quantitative information analysis can be
defined as the breaking down and ordering of quantitative
information gathered through research work. It also involved
searching of trends and pattern of association and relationship
among the group of data. Data tabulation is the process of
treating data for further analysis by the use of tables.
VALUE OF TRANSACTION ON THE NIGERIA STOCK
EXCHANGE 1967-2008
YEAR GOVERNMENT
SECURITY
INDUSTRIAL/EQUTY TOTAL
1967/67 11,467,380 1,039.036 12,506.416
1968/6 13,692,680 2,450.924 16,143.604
1968/70 15,692.680 1,121.630 16,846.430
1968/71 11,704 800 675.616 12,380.97
1968/73 17,330,820 102,294 17,433,114
1968/74 14,634.480 221,800 15,856.280
45. - 45 -
4.3 ANALYSIS OF DATA
Using correlation analysis
The analysis of the data presented will base on the last
Five (5) year i.e. 2004-2009
Period
year
Government
stock
Industrial X2 Y2 Xy
N billion (x) Stock n
billion(y)
2004 0.008 28 0.000064 784 0.224
2005 0.024 57 0.0000516 2349 1.368
2006 1 59 1 3481 59
2007 0.28 120 0.0784 14400 33.6
2008 0.3 225 59 65,025 1785
2009 7 225 59 65,025 1785
8.612 744 60.169 134,083 1,940.8
NE Xy-E X EY
R= (nex2- (ex)2) (n ey-(EY)2)
(5x1946.8-(8.612x74)
R= (5x60.169)-8.6122) (5x134083-7442)
(670,415-553 5336)
R=226.68 x 116 879
= 9734-637.288
= 2649413.7
46. - 46 -
r = 9096.7
= 51472.3
r = 0.18
INTERPRETATION
This indicate that there is moderate level of correction exist
between the government and industrial stock in the capital
market.
Therefore, we concluded our analysis base on the data
presented earlier that has the government stock improved so at
the same time the industrial stocks improved.
47. - 47 -
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 SUMMARY
The summary of this project work will over the chapter one
to four. Chapter one place emphasis on the problem inherent in
the capital market which deserve to be remedied the aims and
objectives of the study. The methodology of research and
research and delimitation of Nigeria stock exchange
Chapter two briefly explored the growth of capital market which
hesitated in setting up of regulatory body like the capital issue
commission (1973). The Nigeria stock exchange (1977) re-enacted
1988 to therefore the market which include the stock brokers/
issuer if house merchant banks development banks. Nigeria
stock exchange the CBN and government
Emphasis was placed on trading mechanism that operate
on the floor of the exchange where by all listed securities on the
stock exchange daily official were offered to the public at different
price for subscription.
48. - 48 -
Chapter four place emphasis on the presentation on data
analysis of the same in tabular form
5.2 CONCLUSION
The Nigeria capital market has witnessed a burst in the last
decade and it was the absent that the market will become more
dynamic in the year head. In my view the Nigeria capital market
has a great potilnticy but its failure growth and develop,
developmentwill depend large on the degree of freedom permitted
in dealing in the market place among player especially in pricing
of securities, the tightening and maintenance of struck discipline
with regard to ethnical and the institution of the production of
while tax in centered to stock market operation to enhance
development in the decade ahead.
5.3 RECOMMENDATIONS
To improve the operational efficiency of the capital market,
the following suggestions were advocated
(1) Market operation especially issuing house should prove the
pricing function should SEC hand over the pricing impart.
49. - 49 -
(2) Great discipline and better standard should be enforced
through most importantly training and human development of
all sectors of capital market.
(3) Information facilities especially information technology which
is dependent on the effinicing of NEPA, NITEL, NIPOST Etc
should be improve upon in the regards effort of fully automate
the market and abolish the call-over system presently applied
should begin to receive adequate attention.
(4) Share price movement and a dynamic secondary market
pricing policy should be encourage in face liberal pricing
policy that would yield reasonable capital gains to
entrepreneurs seeking quotation should be adopted.
(5) The issue of unclaimed divided should be given due
consideration. All prospective invest into which divided are
directly paid into this would go a long way to reduce the
problem of unclaimed dividends.
(6) The issue of 5% ownership and widespread ownership
especially as 16 affects privatize issue should be revisited. The
50. - 50 -
capital market should been seen and practically allowed to
become into industrialist institution in veritable medium for
capital mobilization opposed to wealth distribution.
(7) Capital market committee and association of various market
operations should be encouraged by the SEC.
(8) The information of investment trust in which oversea investor
can also invest should be seriously, considered schemes
should be implemented without any further delay.
(9) The liquidity ratio of the market should be improved
deliberately may be through a mandating provision of under
writing commitment to respective issuing houses.
(10) The issue of unclaimed dividend should be given due
consideration as regards there dividends are directly paid into.
51. - 51 -
BIBLIOGRAPHY
Alle Q.I and Anao (1996): the Nigeria stock exchange Lagos
Page 34-37 business time Monday September 1998
Vol 23, No 37 page 3 fact and figure on the Nigeria capital
market (1993 edition).
Facts books Nigeria stock change (2005)
Okigbo P.C (1981) Nigeria financial system structure and
growth London Longman
SEC annual report and account (1991)
Securities Law report (vol 1, 2, 1992)
