NSE Share Prices

Capital Market Concepts Explained


A short-term speculator who would sell shares on account in the hope that they would fall in value so that they could be bought at the end of the account more cheaply leaving the investor with a profit at the end of settlement day.

Bid-Ask Spread

This is the difference between the price that the market-maker/broker is willing to pay for a share or a bond and the price at which the marketmaker/ broker is willing to sell the same share or bond.

Bid Price

The price at which a market-maker/broker is willing to purchase a specified quantity of a particular share or bond.

Blue Chip Company (Share)

This is a well-established company with considerable assets whose share investors regard as low risk investment.


This is a financial security issued by a company or financial institution or by the government (as investment to individuals, commercial banks and other institutional investors) as a means of borrowing long-term funds. Bonds are normally issued for a fixed number of periods and are repayable on maturity. The practice is to issue bonds in units of a fixed nominal face value and bear a fixed/floating nominal rate of interest. Issued bonds can be bought and sold on the stock market, e.g. EADB bonds.

Bonus Issue

Is also known as script issues or capitalization issue. These are additional hares issued to existing shareholders without further payment on their art. It involves capitalization of reserves i.e. turning the reserves into fully paid new share capital. The capitalization of reserves is attractive in the case of non-distributable reserves such as share premium or a evaluation reserve arising on the upward revaluation of assets. n efficient markets, the effect of a bonus issue on a share price is egligible because the total market value of the company remains nchanged. It remains unchanged if the fall in the market price per share compensate for the increase in the number of shares resulting from a CAPITAL MARKET CONCEPTS EXPLAINED bonus issue. At times the fall in share price will be less than expected. first, because this happens if the bonus issue increases the marketability of a share; secondly if the bonus issue is accompanied by the news tha thave a favorable impact on the share price even in the absence of a bonus issue; third if the company announces that the same level of

dividend will be maintained after the bonus issue; and fourth is that capitalization of revenue reserves is normally followed by increase in the level of fixed capital thus lowering the financial risk of the company.

Book Value of Equity

The sum of cumulative retained earnings and other balance sheet entries lassified under shareholders funds (ordinary) such as ordinary shares and share premium.broker an agent or middlemen who facilitates the buying and selling of shares and bonds for investors.


This means a short-term speculator in the market. A bull buys particular shares in the hope that their price will rise and so they could be sold before the end of the period’s account so as to earn a profit. A stale bull buys shares, but the rise in price he hoped for fail to materialize. He may then sell off his position at a loss or carry his position into the next accounting period hoping that the rise in value will have occurred by the end of the period.

Call Market

A share or/and bond market in which trading is allowed only at certain specified times. At those times, investors interested in trading this particular share and/or bonds are physically brought together and a

market-clearing price is established.

Capital Markets Authority (CMA)

A government agency established by the Capital Markets Authority Act of 1989 that facilitates, regulates and oversees the activities of the capital markets. The objectives of CMA are:

The development of all aspects of the capital markets with particular emphasis on the removal of impediments to, and the creation of incentives for longer term investments in productive activities;

To facilitate the existence of a nationwide system of stock market and brokerage services so as to enable wider participation of the general public in stock market;

To create, maintain and regulate a market in which securities can be issued and traded in an orderly, fair, and efficient manner, through the implementation of a system in which the market participants regulate themselves to the maximum practicable extent;

To protect investor interests;

To operate a compensation fund to protect investors from financial loss arising from the failure of a licensed broker or dealer to meet his contractual obligations

To develop a framework to facilitate the use of electronic commerce for the development of capital markets in Kenya

Capital Gain (Or Loss)

This is the difference between the current market value of an asset and the original cost of the asset.

Capital Markets

These are financial markets in which financial assets with a term-tomaturityof typically more than one year are traded.

Trading Account

This is an account maintained by a investors with his/her brokerage firm in which deposits (cash and proceeds from security sales) must fully cover withdrawals (cash and the cost of security purchases).


This is a technical analyst who primarily relies on share prices and volume charts when evaluating shares and/or bonds.

Closing Price

The price at which the last trade of the day took place in a particular security (share/bonds).

Convertible Bond

A bond which may at the holder’s option be exchanged for other securities, often the security is ordinary shares.


This is the fee an investor pays to a stock broker for services rendered in the trading of securities.

Coupon Payment

Periodic payments of interest on bonds

Date of Record

The date that is established by a company's board of directors, on which the shareholders record are determined for the purpose of allocating bonuses or dividends.


This is a person who facilitates the trading of financial assets by maintaining an inventory in (or stock of) particular shares or bonds. The dealer will buy from and sell for this inventory, profiting from the

difference in the prices at which he or she is willing and able to buy.


This is a means of financing companies through fixed interest loans secured against the company asset. A debenture is a borrowing instruments used by companies. Some debentures are irredeemable

(perpetual) but most of them mature and are redeemed. As a debenture holder you are paid fixed rate of interest, which must be paid before a dividend is paid to the shareholders. The advantage of debenture to a company is that they carry lower interest rates than e.g. bank overdrafts and are usually repayable long time into the future. The interest on debentures is a loss which is tax deductible.


The process of removing a security’s eligibility for trading on an organized securities exchange

Depository (CDS)

This is a centralized depository for securities registered in the name of member firms. Member’s security certificates are immobilized and computerized records of ownership maintained. This permits electronic transfer of the securities from one member to another when trades are conducted between the member clients.

Discretionary Order

Under a discretionary order to buy or sell shares/bonds, the broker is permitted to specifications for the clients order.


The process of adding securities to a port in order to reduce the portfolio's total risk


A payment made by a company to its shareholders for providing share capital. Dividends are paid out of distributable profits and are paid in proportion to the number of shares held. The directors have a right to recommend payment of dividends or not. The directors may pay an interim dividend before the year then recommend a final rate of dividend per share for approval by shareholders at the annual general meeting.

Dividend Cover

This is a measure of the extent to which after tax earnings, cover dividends paid. It expresses profit as a multiple of dividends paid.

Dividend Yield

This is dividend paid per share expressed as a percentage of current market price per share. This is comparable to quoted yields on or investments such as Government stocks. As the level of ordinary dividends can be varied by the company the dividend yield is normally heavily influenced by market's expectation of future growth in dividend itself and in the share price. Some investors think that a high dividend yield is a signal that the shares are a good buy. This is not always true. Companies with high dividend yields tend to have a low share price because the market has considerable doubts about the future of the company and its ability to maintain, let alone increase the dividend level in future. High dividend yield is in most cases accompanied by high risk.

Earnings Yield

This is earnings per share as a percentage of current market prices per share. Earnings yield is useful in estimating share prices.

Net Asset Value per Share (NAV) or Book Value per Share

This is the net tangible assets attributable to the ordinary shareholders divided by the number of shares in issue. NAV is of little use in investment decision as in most cases it will usually be well below the value calculated using earnings yield. However NAV is fairly descriptive in the case of property companies which tend to have low earnings compared with their asset value.

Equity Valuation Ratio (EVR)

This is market share price divided by net asset per share. Equity Valuation Ratio of less than one suggests that the current market share price is below the net assets. Companies with low EVR are normally subject of take over by predators.

Ex Dividend Date

The date on which ownership of a share is determined for purposes of paying dividends. Investors purchasing shares before the ex-dividend date receive the dividend in question. Investors purchasing shares on or after ex-dividend date are not entitled to the dividend.

Fail To Deliver

This is a situation in which a sellers broker is, unable to deliver the traded security to the buyers broker on or before the required settlement date.

Financial Analysts

An individual who analyzes financial assets in order to determine the investment characteristics of such assets and to identify mis-pricing among those assets

Financial Security

This is a financial security issued by a company as a means of raising long-term capital. Originally, purchasers of shares pay money into the company’s bank account and in return receive a share certificate signifying their ownership of the shares and have their ownership recorded in the company's share register.

Fill or Kill Order

A trading order by an investor to the broker which is cancelled if the broker is unable to execute it immediately

Flat Yield Or Current Yield

This is used to describe a yield calculation which does not take account of the redemption value of a bond.

Floating Rate

A rate of interest of a financial asset that may vary over the life of the asset, depending on changes in a specified indicator of current market interest rates. For example the Central Bank of Kenya as a fiscal agent of Republic of Kenya issues bonds at an interest rate determined by adding a 0.25% premium above the 12 weeks moving average rate of the 91 days bill as at the interest payment week.

Floor Broker

This is a member of organized security (stock) exchange who assists commission brokers when there are two many orders flowing into the market for commission brokers to handle. There are no floor brokers at NSE.

Fundamental Analysis

This is a form of security (shares/bonds) analysis, which seeks to determine the intrinsic value of securities based on underlying economic factors. The intrinsic values are then compared to current market prices to estimate current levels of mis-pricing.

Index Fund

This is a passively managed investment in a diversified portfolio of financial assets designed to mimic the investment performance of a specified market index. An example is a portfolio consisting of shares

constituting the NSE 20 share index.


Shareholders, directors and managers of a company who own a significant proportion of a company’s shares. It also means anyone who has access to information that is both materially related to the value of a company's securities and that information is unavailable to the general public.

Insider Dealing

It is illegal to deal in shares on the basis of privileged information which has been obtained by virtue of working for a company or for one of its professional advisers. It is equally an offense to receive price sensitive information with a view to making a gain by use of that knowledge.


The sacrifice of certain present value for future value.

Leading Indicators

These are economic variables which have been found to signal future changes in the economy.

Limit Price

The price specified when a limit order is placed with a broker. It involves defining the maximum purchase price or minimum selling price at which the order is to be executed.

Listed Security

A security that can be traded on a stock exchange

Margin Account

This is an account maintained by an investor with a brokerage firm in which shares or bonds may be purchased by borrowing a portion of the purchase price from the brokerage firm or may be sold short by

borrowing the shares or bonds from the broker.

Margin Call

This is a demand upon an investor by a brokerage firm to increase the equity in the investors margin account. The call is made when the investor's actual margin falls below the maintenance margin requirement.

Margin Purchase

The purchase of shares and bonds financed by borrowing a portion of the purchase price from the brokerage firm

Marking To The Market

The daily process of adjusting the equity in an investor's account to reflect the daily changes, in the market value of the investors accounts assets and liabilities.

Market Capitalization

This is the total market value of a security (share or bond). It is calculated by multiplying the market price per unit of the security with the total number of outstanding units of security.

Market Index

This is a collection of shares and at times bonds, whose prices are averaged to reflect the investment performance of a particular market for financial assets. E.g. NSE 20 share index.

Market Risk

The part of shares total risk, which is related to, moves in the market portfolio. This kind of risk cannot be diversified away.

Market Portfolio

This is a portfolio consisting of investment in all securities or in securities representative of the market. The proportion invested in each security equals the percentage of the total market capitalization represented by the security.

Odd Lot

An amount of stock generally from 1 to 99 shares

Open Order

This is a trading order, which remains in effect until it is either filled or cancelled by the investor.

Ordinary Shares (Or Equity)

This is a financial instrument issued to those individuals and institutions who provide long term finance for companies. Ordinary shareholders are entitled to any net profits made by their company after all expenses have been paid. They receive their share of profits in the company in the form of dividends. In the event of the company being wound up they are entitled to any remaining assets of the

business after all debts and claims of preference shareholders have been met in full. Ordinary shareholders, have in most cases, voting right at their company's Annual General Meeting (AGM). The votes are based on the number of shares held.

Over Margined Account

This is a margin account in which the actual margin has risen above the initial margin requirement.

Over Valued Share Or Bond

This is a share or bond whose expected return is less than its normal (equilibrium) expected return.

Pay Order

This is an order by investors to a broker to buy or sell shares. The broker will attempt to fill such an order only during the day in which it was entered.

Perfect Markets

They are securities markets in which no impediments to investing exist. The cited impediments are taxes, transactions costs, and costly information.

Portfolio Manager

A manager who uses the information provided by financial analysts to construct a portfolio of financial assets.

Portfolio Construction

Means the same thing as security selection and is an investment process that involves identifying the proportion of funds to invest in each of the assets.

Preference Shares

This is a financial security issued to those individuals and institutions who provide long term finance for companies. Preference shareholders are entitled to a fixed dividend from a company’s profit, before ordinary shareholders receive anything, and have first claim on any remaining assets of the business after all debts have been discharged. Preference shares can be participating, cumulative and redeemable. It is not a must that a company pays dividends on preference shares.

Price to Earnings Ratio

The market rice per share divided by earnings per share. It’s measured in relative terms, how expensive or cheap a particular share is.

Price Relative

The price of a share in one period divided by the price of the same share in a previous period.

Private Placement

This is the direct sale of newly issued shares direct to one or a small number of large institutional investors.


This is the official selling circular that must be given to potential purchasers (subscribers) of new shares or bonds and is registered with both NSE and CMA.


The signing by a shareholder of a power of attorney, thereby authorizing a designated party to cast all the shareholders votes on any matter brought up at the company’s AGM.

Rate of Return on a Share

This is the percentage change in the value of an investment in a share over a specified time period. The total return includes dividends.

Redemption yield

This takes into account not only the annual interest receivable but also any capital profit/ loss on redemption of the security.

Reverse Yield Gap

This arises whenever the yield on gilt exceeds the yield on shares as a result of high inflation and high interest rate. The normal situation is that the yields on shares should be higher than the yield on bonds because the shareholders need to be compensated for additional risk that they bear.

Right Issue

This is when a company sets out to raise additional funds from existing shareholders. It is the most popular method of raising new equity capital for cash. It is an offer to existing shareholders to subscribe cash for new shares in proportions to their existing holdings. If a company is to issue

additional shares, the existing shareholders have a right to take up the shares before any of the shares are offered to non-shareholders. Right issues are popular because they are offered to existing shareholders at a price slightly below the current market price. This mean that the existing shareholders can buy the share cheap and sell at a higher current market price; and that their relative voting rights remain unchanged despite additional share issue. The issuing company benefits in terms of

relatively low issue costs because in most cases no prospectus is required, the administration is simpler and underwriting costs can be relatively low. If the shareholder is not interested in taking up the new

shares, he may sell the right.


The uncertainty associated with the end-of period value of an investment in an asset or portfolio of assets.

Risk Averse Investor

An investor who prefers an investment with less risk over one with more risk on investments that offer same (identical) return.

Risk Premium

The price or compensation for assuming additional risk. Investors tend to avoid risk unless they are rewarded for assuming additional risk.

Risk-Neutral Investor

This is a kind of investor who has no preference between investments with varying levels of risk assuming that the investment offers the same expected return.

Risk Seeking Investor

Is an investor who prefers an investment with more risk, assuming that both investments offer the same expected return.

Risk Tolerance

This is the trade off between risk and expected return as demanded by a particular investor,

Risk less Asset

An asset whose return over a given holding period is certain and known at the beginning of the holding.

Risk Free Borrowing

This involve of borrowing funds that are to be repaid with a known rate of interest.

Risk Free Lending (Investing)

This involves investing in a risk free asset.

Round Lot

This is the sale or buying of an amount of shares generally equal to 100 shares or a multiple of 100 shares.


A method of governmental regulation where the rules and the standards of conducts in stock exchanges and related markets are determined by firms that operate in the same markets; but this is subject to the supervision of various government agencies. CMA encourages market players to make their own rules, but ensure firms follow their rules.


This is a financial instrument issued by companies and the government as a means of raising capital and borrowing money. The most commonly used financial securities are Shares, Stocks, Debentures, Treasury Bills and Bonds. The security can later be sold and brought on either money market (if for short term) and Stock Exchange (market).


These are individuals and institutions that have contributed funds to finance a company in return for shares in that company. They can be ordinary or preference shareholders.

Share Certificate

This is a document which is issued to a shareholder in a company, which serves as a proof of ownership of shares in a company.

Share Capital

The amount of money employed in a company that has been subscribed by the shareholders of the company in the form of ordinary shares (equity) and preference shares. Share capital is a permanent source of finance for a company as long as the company is in existence.

Share Split

A share spit is where the total nominal value of the share capital remains unchanged but the existing shares are cancelled and replaced by a larger number of new shares with a smaller nominal value. For example a company which currently has 2,000 shares of Ksh. 10 each i.e. total nominal value of Kshs.20,000 can prefer a lower nominal value of Kshs. 20 per share thus ending up with 1,000 shares instead of 2,000. This involves reduction in the face (nominal) value of the company's shares and simultaneous exchange of a multiple number of new shares for each existing share.

Share Consolidation

This is the reverse of share split. The total nominal capital remains the same, the number of shares in issue decrease and the nominal value per share increases from say Kshs. 5 to Kshs. 10 per share.

Share Option

This is a contractual right to buy a share in a company at a predetermined price within a predetermined period. An example of a share option is a right issue. A share option can be granted by a company to its workers as a means of improving their motivation and loyalty to the company.

Special Offering

This is a transaction involving a large block of shares on an organized stock exchange whereby a number of brokers attempt to execute the order by soliciting offsetting order from their customers.


An investor in securities whose primary objective is to make profit from purchases and sales of shares and bonds.

Spot Price

The purchase price of an asset in the spot market.

Spot Rate

The annual yield-to-maturity on a pure-discount security.


This is a financial security issued by a company or the government as a means of raising long-term capital. In USA stockholders are the equivalent of shareholders and are the owners of the company. In UK and a number of commonwealth countries, stock is a form repayable, fixed-interest debt and the stockholders are therefore creditors not owners of the company.

Stop Limit Order

This is a trading order that specifies both a stop price and a limit price and if the share price reaches or passes the stop price then a limit order is created at the limit price.

Stop Order or Stop Loss Order

This is a trading order that specifies a stop price, i.e. if the share or bond price subject is the transaction reaches or passes the stop price, then a market order is created.

Subscription Price

This is a price at which holders of rights are permitted to purchase shares in a right issue.

Supply To Sell Schedule This is a detailed list of the quantities of a security that an investor is

prepared to sell at alternative prices.

Take Over

This is a decision by an individual or firm to acquire controlling interest in a company. Related to takeover is a target firm, which is a firm that is the subject of a takeover.

Trading Halt

This is a temporary suspension in the trading of a security on an organized stock exchange.

Street Name

This is an arrangement between an investor and a brokerage firm where the investor maintains an account in which the investor's securities (investment in shares and bonds) are registered in the name of brokerage firm.

Transfer Agent

This is a designated agent of a company usually a bank, which administers the transfer of cornpany's shares between old and new shareholders.

Treasury Bills

This is a redeemable financial security, normally with a life of three months, and is issued by the Central Bank on the behalf of the government. They are issued to raise finance for the government to cover budget deficits and as a means of controlling the money supply and level of interest rates. Government departments with temporary cash surpluses can purchase the Treasury Bills. The vast majority of Treasury Bills are sold at periodic tender auctions to discount houses and other financial institutions. Treasury bills bear a nominal face value which is repaid in full on redemption, but the price paid at the time of issue to the issuer depends on the outcome of a competitive tender with different bidders bidding against one another. The Treasury Bills can then be discounted (sold) in the discount market to other buyers, who in most cases are commercial banks. Commercial Banks hold Treasury Bills as part of their liquidity base to support their lending decisions.


This is an organization, in most cases, a bank which serves as the representative of debt holders (creditors). The trustee acts to protect the interest of bondholders by facilitating communication between them and issuing organization.

Unit Investment Trust

This is an unmanaged investment company with a finite life that raises an initial sum of capital from investors and then uses the proceeds to purchase a fixed portfolio of securities.


This is a trade in a share made at a price higher than the price of the previous trade in that same share.

Value Weighted Market Index

Is market index in which the contribution of a security to the value of index is a function of the securities market capitalization.

Voting Bond

Is a bond that gives its holder a voice in management of the issuer.

Wash Sale

Is the sale and subsequent purchase of almost identical security solely for the purpose of minimizing taxation.


This is return on a financial security expressed in money terms then related to the current market price of that security. Yield can refer the interest rate payable on the market price a bond (interest yield) or

dividend rate pay on the market price of a share dividend yield or earnings per share related to the market primary of the share (earnings yield).-

Yield Gap

This is the difference between the yield on established undated or long dated gilt-edged bonds and the average yield on shares. For ample if the average yield on shares is 25% the yield on long dated gilt-edged bond is 18% then the yield gap is 7%.

Yield Curve

This is a curve that shows the relationship between similar assets with different terms to maturity. A normal yield curve would be upward sloping.

Zero Plus Tick

This is a trade in a security made at a price equal to that of the previous trade in that security but higher than that of the last trade in the security but at a different price.