The Effects of Exchange Rate and Interest Rate on the Stock Returns of Private Banks in Tehran Stock Exchange

The stock exchange market and its fluctuations are because of several important factors such as major economic variables and interest rate and exchange rate volatility. In this paper we want to investigate the effects of these variables on the stock market. Accordingly, the research tries to analyze the effects of interest rate and exchange rate volatility on the private banks’ stock return. The results of regression model showed that there is a positive and significant relationship between the interest rate and the private banks’ stock returns. Moreover, the results of research show that there is a significant and negative relationship between foreign exchange rate and the stock returns in Tehran stock market.