JEFMS Journal

ABSTRACT:

The Global economy has experienced various shocks and effects of different impacts. These include war, corruption, civil unrest, politics, piracy, terrorism to name but just a few. These have had a great influence on the global economy such that with the many austerity measures that have been undertaken in the past four years the world at large has not been able to mitigate these influences. Most of the great economies have not recovered yet and if they have it fluctuates. This research generally investigated the sector shock effect on the Global economies by modelling the returns and risks of a sample of major stock indices which were variants since they have been known to capture changes in many economies which may result from social, economic or political happenings. The research then determined a model that could evaluate the effect of various happenings on the averaged Global economy. The multi sector cost of returns was found to be 0.078 or 7.8 % and the multi sector total risk 0.20 or 20.12 %, which is very high 20.12 %. The results then clearly indicated very high risks and low returns during tumultuous times of global happenings.

KEYWORDS:

Global economy. Multivariate, Share index, Shocks.

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