This research aims to explain the return and risk premium using an APT model from the Indonesian stock market. The study uses a two-stage regression model. This study uses a sample of stocks included in the Kompas100 index. The stocks included in Kompas100 represent the market capitalization value from the Indonesian stock market. The originality of this research is the inclusion of foreign macro-factors and the use of surprise or unanticipated factors in the Pre-specified Macro-economic Arbitrage Pricing Theory Model. The results prove that there is a multi-factor APT model consisting of The risk premium for inflation, the risk premium for interest rates, and the risk premium for foreign macroeconomic factors represented by the Dow Jones index and the Shanghai index. The results of this study further strengthen the theory and previous research on the multi-factor APT model.
Purpose – The study aims to identify production function equation between labour and capital also optimal cost of labour and capital of the cooperatives. In order to raise the level of this research to be international, this study compares two countries, namely the Philippines and Indonesia by applying performances of cooperatives in both countries.
Methodology/approach – Cobb Douglass production function equation of labour and capital is applied in this research. Optimal cost using partial differential equation also used between cost of wage of labour and cost of capital. Cooperatives in 15 regions in Philippines and 33 provinces in Indonesia were the object of the research
Findings – Philippines has an increasing scale of return because the value of the constant is greater than one, on the other hand Indonesia has a declining scale of return. However, the two countries have in common that capital is correlated with cooperative output, while labour is not correlated with output significantly.
Novelty/value – This study highlights the important of the use of economic analytical of the capital and labour to the cooperatives in Philippines and Indonesia. Both cooperatives have significant correlation between output and capital, but did not correlate significantly to labour.
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