THE EFFECT OF INFLATION, BI RATE, AND RUPIAH EXCHANGE RATE ON STOCK RETURNS AND ITS EFFECT ON RETURN ON INVESTMENT (Study on Manufacturing Sector of Industry listed in Jakarta-Indonesia Stock Exchange period 2010-2014)
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This study aims to determine the relationship of economic variables among others are inflation, BI (Bank of Indonesia) interest rates, Rupiah to US Dollar foreign exchange rates on stock returns in order to obtain the findings whether the stock returns in the manufacturing sector in Indonesia Stock Exchange (IDX) is affected by inflation, BI interest rates, and Rupiah to US Dollar foreign exchange rates in order to get a solution to the stock returns when economic variables get turbulence. Data analysis in this study is performed using causality-verificative technique using Equation Structural Modeling (SEM). The results showed that inflation partially affects the stock returns, interest rate has no effect on stock returns, and Rupiah exchange rate affects the stock returns. Inflation, interest rate and exchange rate simultaneously affect stock returns as well as the impact on Return On Investment.