Document Type : Original Article
Faculty member, Department of Business Administration, Sari Branch, Islamic Azad University, Sari, Iran
Interest rate is a price which is paid for the money and bonds. Interest is the price of money and as such is the reward primarily paid to the lender in order to persuade them to part with their cash. Considering the upward trend of the inflation rate and the relative stabilization of the nominal interest rate in Iran, this question becomes important: how have the stock returns of different industries reacted to these macroeconomic variables? This research examines the effect of the interest rate on the stock returns of 247 listed companies on the Tehran Stock Exchange (TSE). In the present research, the relationships between the two variables are examined on a monthly basis during 2002-2007. Probit models in Stata software were used to investigate the relationship between the stock returns and the interest rate. The results do not show a significant relationship between the interest rate and stock returns.