Undergraduate Honors Thesis Projects

Date of Award

Spring 4-21-2021

Document Type

Honors Paper

Degree Name

Finance-BA

Department

Business, Accounting, & Economics

Advisor

Brian Day, CPA

First Committee Member

Dr. Dennis Whalen

Second Committee Member

Dr. Halard Lescinsky

Keywords

Finance, Federal Reserve, Money Supply, Interest Rate, Economics

Subject Categories

Finance and Financial Management | Higher Education

Abstract

With the growing age of the tech economy, post housing crash financial market, and unprecedented challenges like a global pandemic with a death toll in the millions, major financial institutions in the United States have been forced to reconsider many aspects of the old ways of doing things. The most influential institution in the U.S., the Federal Reserve (the Fed), has become more involved with the financial markets over the past several decades. Using a sample of 134 publicly-traded companies, I analyzed variables to assess the effects of the Fed’s new influence on market expectations from the past ten years. These variables include the money supply and the Federal Funds Futures, two variables that have become major hints in economic and market expectations. The other two variables, the stock market and a dummy variable for non-large-cap companies, account for asset pricing factors in the study. The results show there is a significant effect on a stock’s annual rate of return by variables the Fed controls.

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