Research
NSE All-Share Index & NSE 20-Share Index
 NSE All Share Index NSE 20-Share Index
Financial News Headlines
Market Summary
Corporate Actions
annex Alfa
Alternative Investment Market Segment (AIMS)
Means a market segment for which securities of issuers that satisfy the eligibility requirements prescribed under regulation 7(1) of the Capital Markets (Securities) (Public Offers, Listing and Disclosure) Regulations, 2002.

Annual General Meeting (AGM)
A once-a-year gathering of shareholders of a company. At the AGM, shareholders vote on important corporate issues, and the company management reports on how the company did during the previous year.

Annual Report
This document gives detailed information on a company's financial health for the past year. Along with detailed financial statements, a company's annual report will also include a description of the company's operations for the year. A company is required by law to mail an annual report to all of its shareholders.

Asset
Anything owned by a company, individual or mutual fund that has either commercial or monetary value or can be exchanged for other items of value

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

Auditors
These are accountants who are hired by a company to examine its financial statements and the documents that support those statements. This examination is called an "audit." An accountant is someone who keeps or examines the financial records of a company or individual. Auditors are not employees of the company that has hired them.
annex Bravo
Bad Delivery
Means a delivery that:
(i) Does not comply with the delivery requirements under the Settlement rules and is not approved for registration by the Exchange; or
(ii) Is rejected by the registrar as not complying with the Requirements

Bare Trustee
Means a trustee who has no beneficial interest in the subject matter of the trust.

Bear
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.

Bearer Security
Means a security the title to which is transferable by delivery (with or without endorsement) of the certificate representing such security.

Bidding Advance
Refers to the allowable margins within which a trader may move the price of a security up or down during trading.

Bid-Ask Spread
This is the difference between the price that the market- broker is willing to buy for a share or a bond and the price at which the market-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.

Block Trade
A block trade shall constitute the sale of shares whose value exceeds Kshs. 50 million and which constitutes less than or equal to 15% of a company’s total voting shares; or is less than Kshs. 200 million and which constitutes more than 15% but less than 25% of the company’s total voting shares.

Blue Chip Company (Share)
This is a well-established company with considerable assets whose share investors regard as low risk investment.

Bonds
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 scrip issues or capitalization issue. These are additional shares issued to existing shareholders without further payment on their part. It involves capitalization of reserves i.e. turning the reserves into fully paid new share capital.

Book-entry Security
Means a security standing to the credit of a securities Account which is transferable by way of book-entry in the Record of depositors and includes a security in a securities account that is in suspense.

Book Value of Equity
The sum of cumulative retained earnings and other balance sheet entries classified under shareholders funds (ordinary) such as ordinary shares and share premium.

Broker
A member of the exchange who facilitates the buying and selling of shares and bonds for investors.

Bull
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.

Bull Market
This term usually refers to the stock market. It is a period during which stock prices are generally rising.

Buying In
Means the buying effected by a securities exchange, according to the rules of the securities exchange, of securities that a seller has failed to deliver on a day fixed for settlement.

Balance Sheet
A financial statement that lists the total value of (a) everything a company owns (also called as assets), (b) the company's debts (which are called liabilities) and (c) the value of stockholders' stock on a specific date. It is called a balance sheet because assets must equal the sum of the company's liabilities plus the value of stockholders' stock.

Bear market
This term usually refers to the stock market. It is a period during which stock prices are generally falling.

Benchmark
For a mutual fund, it is the index used to compare the fund's performance with the broader market. This index is an unmanaged group composed of either stocks or bonds, which tracks the performance of those securities (another name for a stock or bond is a "security"). Generally, a mutual fund will compare its performance with a broad-based index, which is an index composed of securities from a variety of industries. If a mutual fund is focused on a particular sector or industry, it may use an index focused on that sector as one of its benchmarks. A mutual fund can compare its performance to more than one index. A fund's benchmarks are listed in its prospectus. It is not possible to invest directly in an index.
annex Charlie
Capital appreciation
An increase in the price of a stock, bond or other asset.

Capital Gain
The profit you make when you are able to sell an investment for more money than you paid for it.

Capitalization or Bonus Issue
Is an issue of fully paid shares capitalized from the issuer’s share premium, capital redemption reserve fund or reserves (or combinations thereof) to existing shareholders of the issuer in proportion to their shareholdings at a specific date.

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

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-to-maturity of typically more than one year are traded.

Capital Markets Authority (CMA)
A government agency established by the Capital Markets Authority Act of 1989 that regulates the Issuance of Shares and Bonds in both the primary and secondary market in Kenya.

CDS Rules

Means operational and procedural rules issued or to be issued by a central depository for the purpose of ensuring orderliness, efficiency and security in the operation of a central depository as approved by the Authority.

Certificate
Means any document that is, or is a document of title to a security.

Capital loss

The money you lose when you sell an investment for less money than you paid for it.

Capitalization of Loans Into Shares
Shares may also be issued to convert a loan in the balance sheet into permanent capital; ie to effect repayment of the debt owed by the company by the issue of shares.

Capitalization or Bonus Issue
Is an issue of fully paid shares capitalized from the issuer’s share premium, capital redemption reserve fund or reserves (or combinations thereof) to existing shareholders of the issuer in proportion to their shareholdings at a specific date.

Cash Account

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

Central Depository
"Central depository" means a company approved by the Authority under section 5 of the Central Depositories Act, 2000 to establish and operate a system for the central handling of securities Whereby all such securities are immobilized or dematerialized and dealings in respect of those securities are effected by means of entries in securities accounts without the physical necessity of certificates; or which permits or facilitates the settlement or registration of securities transactions or dealings in securities without the physical necessity of certificates; and to provide other facilities and services incidental thereto.

Central Depository Agent
In relation to any central depository, means a person appointed under section 9 to be an agent of that central Depository.

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

Commission

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

Convertible Bond
A bond which may at the holders option, be exchanged for other securities, often the security is ordinary shares.

Coupon Payment
Periodic payments of interest on bonds.

Cum Dividend

This is the period in which shares of a company are trading on the stock market before the dividend payment date has expired.

Current account
The type of account at a bank that lets you use money you have deposited in the account by writing checks. When you want to buy something, you write a check in the name of the company or individual, who in turns presents it to the bank. If there is money in your account to cover the check, the bank will either move your money into the other person's account or give that person cash. If there is not enough money in your account, the bank will not pay the check and will give the check back to the person marked "insufficient funds." This is also known as "bouncing a check." Many banks charge you a fee for bouncing a check. In addition, the person you wrote that check to might not accept a check from you again.

Commercial Paper

When a company or corporation wants to borrow money for a short period of time, it might issue commercial paper. Commercial paper is an unsecured promissory note stating that the money borrowed will be paid back by a certain date. Simply defined, a promissory note is like an "IOU"- a written promise to pay back money borrowed. Commercial paper is one of the investments that may be found in the portfolios of money market funds.

Consumer Price Index (CPI)
The ratio of the current value of a basket of goods and services to the value of the same basket of goods and services in a previous year.

Convertible Securities
Are securities, which are convertible into or exchangeable for other securities, or securities accompanied by warrant or options to subscribe.

Credit Risk
The possibility that the issuer of a bond will not be able to make interest payments or pay back the face value of a bond to bond holders.

Custodian
Someone who maintains assets for the benefit of another person, usually a child who is not old enough to be considered legally an adult. In Kenya, 18 is the age at which you are considered an adult, and is also known as the "age of majority." Individuals who are younger than their the of majority are also called "minors." When an individual is considered a minor, a custodian protects, manages and maintains assets until the individual reaches the age of majority. Then the individual becomes responsible for those assets.
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Diversification
The strategy of investing in a number of different securities or assets (things like stocks, bonds, real estate, cash or art). While this strategy does not assure a profit, it is designed to reduce the effect of market ups and downs.

Daily Trading Summary Schedule
Is a schedule in which all transactions dealt by a member In a trading session are record.

Dealing in Securities
Means making or offering to make with any person, or Inducing or attempting to induce any person to enter into or to offer to enter into-Any agreement for or with a view to acquiring, disposing of, subscribing for or underwriting securities; or any agreement the purpose or Intended purpose of which is to secure a profit to any of the parties from the yield of securities or by reference to fluctuations in the price of securities.

Debenture
In relation to loan securities means, debenture or Debenture stock which in addition to any other security in Respect thereof, are secured by a charge over the whole or substantially the whole of the assets and undertaking of the Borrowing or guarantor companies.

Debt Securities
Means debentures, bonds, notes, or other similar instruments representing or evidencing indebtedness whether secured or otherwise.

Delivery
Is the process of transferring documents of title, duly executed transfer forms stamped by the Exchange, together with such other documents as may lawfully be required by the Exchange and the registrar, on or due date, for purposes of registration.

Delivery vs. Payment
Means presentation of the transfer documents against payment for the securities at the Exchange.

De-Listing
Means removal of a security or a company from the Official List of the Exchange.

Dematerialization Date
In relation to a dematerialized security, means the date prescribed in A Central Depository Under Section 24 As being the last day on which a certificate representing such security shall be recognized as prima facie evidence of share ownership under the Companies Act.

Dematerialized Security
Means a book-entry security which has been prescribed b the central depository under section 24, whereby the underlying physical certificate is no longer recognized as Prima facie evidence of ownership under the Companies Act, on or after the dematerialization date.

Depositor
In relation to any book-entry, means a holder of a securities account.

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

Dividend
Dividends are paid out of distributable profits and a paid in proportion to the number of shares held.

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 prices per share.
annex Echo
Ex – Dividend
This is the period in which shares of a company are trading on the stock market after the dividend payment date has expired.

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

Eligible Security
Means a security which has been prescribed by a Securities exchange to be immobilized with a central Depository under section 13.

Equity Securities
Means ordinary shares, rights or interests (whether Described as units, shares or otherwise) and rights or Options to subscribe for any of the foregoing.

Exchange
Means Nairobi Securities Exchange Limited.

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 predator.

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.

Earned Income
Income - Expenses = Earned Income or Profit
This generally refers to companies. It is the sum of the money a company earned minus the money it has spent. Earned income is a positive number. If a company spends more money than it earned, then the sum is known as a "loss."

Equity, equities (plural)
Another term for stocks or ownership interest in a corporation.
annex Foxtrot
Financial Analyst
Also called an industry analyst. A person in a financial organization who studies a number of companies, generally in one industry, and makes recommendations about which stocks to buy or sell.

Fiscal year
An accounting period consisting of any 12 consecutive months. A fiscal year can be the same as a calendar year (January through December) or different from a calendar year. For example, a fiscal year can begin in July 1st of one year and end on June 30th of the following year.

Fixed deposit
A special type of deposit account, generally at a bank, which offers a higher rate of interest than a regular savings account. With a fixed deposit, you agree to deposit a specified amount of money for a certain period of time with a fixed rate of interest. When that time is up, you can receive the money you invested plus the interest earned. However, you can't remove money from a fixed deposit before the time period is up without paying a penalty.

Failed Delivery
Refers to failure to deliver documents of title by the stipulated time.

Financial Institution
Means a financial institution as defined under the Banking Act.

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.

Fixed Income Securities
Include debentures or debenture stocks, secured or Unsecured, within the meaning of the Companies Act, securities of the Government of Kenya, securities Guaranteed by the Government of Kenya, corporate bonds and commercial papers.

Fixed Income Securities Market Segment (FISM)
Means a market segment for which fixed income Securities of issuers that satisfy the eligibility requirements prescribed under Regulation 7 (1) (c) of the Capital Markets(Securities) (Public Offers, Listing and Disclosure) Regulations 2002 and set out in the Second Schedule under Part V of these rules are listed.

Foreign Investor
Any person who is not a resident of Kenya.

Foreign Issuer
Any body corporate incorporated outside Kenya and Registered in Kenya.

Flat Yield / 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 2 weeks moving average rate of the 91 days bill as at the interest payment week.
annex Golf
Good Delivery
Refers to the delivery of valid documents for registration of a transfer of ownership and the issuance by the registrar of Title of a document evidencing change or transfer of title.

Guarantor Company
Used in relation to a borrowing company, means a company that has guaranteed or has agreed to guarantee the repayment of any money received or to be received by the Borrowing Company in response to an invitation to the public to subscribe for or purchase loan securities of the Borrowing company.
annex Hotel
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annex India
IAS
Means International Accountings Standards.

Immobilization Date
In relation to any eligible security, means the date specified in the notice given by a securities exchange under section 13 as being the last day on which the eligible security may be traded on the securities exchange unless such security has been deposited with the central depository.

Immobilized Security
Means a security where the underlying physical certificates have been deposited with and are held by a central depository.

Information
Includes data recorded in a form which can be processed by equipment operating automatically in response to instructions given for a particular purpose.

Information Memorandum
Means any prospectus or document, notice, circular, advertisement, or other invitation in print or electronic form containing information on a company or other legal person authorized to issue securities or a collective investment scheme calculated to invite offers from the public or a section of the public to subscribe for the purchase of securities;

Insider
Means any person who is or was connected with a company, or is deemed to have been connected with a company and who is reasonably expected to have access, by virtue of such connection, to unpublished information Which, if made generally available, would be likely to Materially affect the price or value of the securities of the company, or who has received or has had access to such unpublished information.

Introduction
Is a method of bringing securities to listing not involving an Issue of new securities or any marketing of existing Securities subject to compliance with the condition of listing In the relevant market segment.

Investment Bank
Means a non-deposit taking institution licensed by the Authority to advise on offers of securities to the public or a section of the public, takeovers, mergers, acquisitions, corporate restructuring involving companies listed or quoted on a securities exchange, privatisation of companies listed or to be listed on a securities exchange or underwriting of securities issued or to be issued to the public and to engage in the business of a stockbroker or dealer.

Institutional Investor
Means a person resident in Kenya, whose ordinary business is to hold, manage, or invest funds in connection with retirement benefits, insurance contracts, mortgage and saving schemes, and any fund or scheme in the nature of a collective investment or a unit trust.

Investment
The sacrifice of certain present value for future value.

Issuer
Means a company or other legal entity incorporated or established under the laws of Kenya that offers securities to the public or a section thereof whether or not such securities are the subject of an application for admission or have been admitted to listing.

Income statement
A financial statement that summarizes the company's operating results for a specific period. This statement lists a company's revenues (also called income or money earned) and expenses and shows if a company made money (net income) or lost money (net loss) over the fiscal year.

Index, indices or indexes (plural)
An unmanaged group composed of either stocks or bonds set up for the purpose of tracking the performance of those securities. An index is often used as means of measuring market performance.
An index may be broad based, which means it's composed of securities from a variety of industries. For example, NSE – 20 Share Index, NSE All Share Index.
AIG Index -- Internationally; an index can also be composed of securities in one particular sector, country or global region. For example, the Nasdaq Bank Index tracks the performance of bank stocks that are listed on the Nasdaq.
On the other hand an index may be broad based, which means it's composed of securities from a variety of industries. For example the S&P 500 Index is broad-based index for stocks and the Lehman Brothers
It is not possible to invest directly in an index.

Inflation
Generally calculated as a percentage, the sustained increase of prices over a period of time.

Interest
Expressed as a percentage, generally, this is a fee paid by a borrower of money to the lender.

Investment advisor
A company or individual providing investment advice for a fee. A mutual fund will hire an investment advisor to manage the fund's assets. That investment advisor will assign specialists called portfolio managers to manage the fund's investments according to the fund's stated investment objective.

Investment Company
A firm that, for a fee, uses the money it raises by selling shares to invest in stocks, bonds or both.

Investment objective
The identified or stated goal - such as growth, capital appreciation or income - that an investor or mutual fund pursues. In the case of a mutual fund, the investment objective is explained in the prospectus.

Investment risk
The possibility of an investment losing money or not gaining as much in price as expected.
annex Juliet
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annex Kilo
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annex Lima
Letter to shareholders
A letter from the company's top executive, which usually provides an overview of the company's performance over the past year and the mission of the company.

Liability
Anything that a company or individual is required to pay back, like a debt or loan.

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

Licensed Full or Associate Member
Means a full or associate member who holds a valid license from the Authority.

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 Company
Means an issuer any part of whose shares have been listed.

Listed Book-entry Security
Means a book-entry security listed on a securities exchange in Kenya

Listed Security
A security that can be traded on a stock exchange.
annex Mike
Main Investment Market Segment (MIMS)
Means a market segment for which securities of issuers that satisfy the eligibility requirements prescribed under Regulation 7 (1) (a) of the Capital Markets (Securities) (Public Offers, Listing and Disclosure) Regulations, 2002, and set out in the First Schedule of Part V of these rules, are listed.

Market Day
Means any day during which a securities exchange is open for business.

Market Segment
Means a separate segment of the Official List established by a securities exchange, with the approval of the Authority, with respect to listings of securities for which specific eligibility and disclosure requirements are prescribed.

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.

Matching
Refers to the process within the Exchange by which the Sale Transfer Form(s) and documents of title are paired with the corresponding Purchase Transfer Form and payment cheque (consideration) for each transaction.

Material Contract
Is any contract the details of which would necessary for the purpose of making an informed assessment of the financial position and prospects of the issuer.

Material Information
Refers to the information that may affect the price of a company’s securities or influence investment decisions. Every company whose securities are traded on a Securities exchange, shall disclose any such material information(See NSE listing Manual)

Member
In relation to -
(a) a securities exchange, means a person who is recognized as a member of a securities exchange; and
(b) a company, means a person who is recognized as a member of a company under the Companies Act;

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.

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.

Monetary policy
This term refers to the actions undertaken by a central bank of Kenya , to influence the availability and cost of money and credit to help promote national economic goals.

Money market
Money market funds generally invest in short-term securities like bank certificates of deposit, commercial paper and government securities (Treasury Bond or Treasury Bill). (A security is another term for a stock or bond.) It is possible to lose money when investing in a money market.

Mutual fund
An investment company that invests in a group of securities, either stocks, bonds, or both, based on a stated investment objective. People can invest in a mutual fund by buying shares, which are units of ownership in the fund. A mutual fund will hire an investment advisor, which is a company that provides investment advice. In turn, that advisor will assign investment professionals known as portfolio managers to manage the fund's portfolio. Since all mutual funds have expenses, all mutual funds charge fees to their shareholders. Generally, fees are deducted from the fund's assets prior to the calculation of an investment return.
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NSE-20 Share Index
This is the geometric Mean of 20 Companies’ share prices listed on the Nairobi Stock Exchange. The constituent counters are Tourism Promotion Services (TPS) Holdings East Africa Holdings (Serena), Bamburi Cement, Barclays Bank (K), British Oxygen Company (BOC) Gases, British American Tobacco (K), Unilever Tea, Diamond Trust Bank, East Africa Breweries Limited, National Industrial Credit (NIC) Bank, Williamson Tea, Kakuzi, Kenya Airways, Kenya Commercial Bank, Kenya Power & Lighting Company, Sameer Africa Ltd., Nation Media Group, Sasini Tea and Coffee Ltd., Standard Chartered Bank (K) Ltd., Total Kenya, Uchumi Supermarkets Ltd.)
Investors often watch the NSE-20 share index to determine how well the Kenyan stock market is doing. When the index is up a lot, for example, that usually means the stock market is doing well. When it's down that often means the stock market is down.

NSE All Share Index
NASI is market capitalization weighted of all companies listed on the Nairobi Stock Exchange.

Net assets
For a company, net assets are the sum of the total value of everything a company owns (assets) minus the total value of a company's debts (liabilities). In other words:
Assets - Liabilities = Net Assets

Net asset value, NAV
The market value of one share of a mutual fund. A fund's NAV is calculated by adding up the value of all of the fund's securities, subtracting expenses and dividing this sum by the total number of shares owned by the fund's shareholders. Mutual funds calculate their NAVs at least once a day, usually at the close of business.

Net Asset Value per Share (NAV) or BookValue 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 that tend to have low earnings compared with their asset value.

Non-bearer Security
Means a security other than a bearer security.

Notification Date
Means the date on which the notice pursuant to subsection (2) of section 13 is given by a securities exchange.
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Odd Lot
Is a lot comprising less than the minimum tradable board lot for the relevant market segment.

Odd Lots Board
Is the designated board for trading of odd lots.

Official List
In relation to a securities exchange in Kenya, means a list specifying all securities, which have been admitted for listing on that securities exchange.

Offer Period
Means a period not exceeding ten working days or such longer period as the Authority may approve during which an offer for subscription or sale of securities to the public remains open

Offer of Securities
Refers to the offer of securities, which, if accepted, would give rise to a contract for the issue or sale of securities by the offer or by another person with whom the offer or has made arrangements for the issue or sale of the securities or if the offer or invites a person to make such an offer, but not otherwise; and, except where the context otherwise requires,“offer" and "offer or" shall be construed accordingly

Offer to the public
Refers to an offer is made to persons in Kenya which is made to the public. For this purpose, an offer which is made to any section of the public, whether selected as members or debenture holders of a body corporate, or as clients of the person making the offer, or in any other manner, is to be regarded as made to the public; and the terms “public offer” and “public offering” shall be construed accordingly.

Offer for Subscription
Is an invitation to the public by, or on behalf of, an issuer to subscribe for securities of the issuer not yet in issue or allotted and may be in the form of an invitation to tender at or above a stated price.

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

Overbidding
Means a situation where a floor trader halts a transaction that is about to be concluded by offering to buy at a better price that is one spread higher than the price about to be dealt at for at least 50% of the lot on offer, the balance being sufficient to remain as a lot on the board.

Ordinary Shares (Or Equity)
This is a financial instrument issued to those individuals and institutions that 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.
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Payment
Refers to the fulfillment of the buyer’s obligations in a transaction by delivering a completed Purchase
Transfer Form and cheque for the consideration to the Exchange which shall receive value only upon clearance of such cheque.

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

Placing Agent
Means a Member of the Exchange appointed by an issuer to sell the issuer’s securities to members

Principal Officer
In relation to a member means an officer, by whatever name called, whose primary responsibility is the management of the day to day affairs of a Member or Associate Member.

Private Transaction
Means a transaction in a listed security of a non- commercial nature that is carried out outside the commercial trading processes pursuant to Section 31 (1A) of the Act.

Portfolio Manager
A manager who uses the information provided by financial analysts to construct a portfolio (i.e. an investment process that involve identifying the proportion of funds to invest in each of the assets) of financial assets.

Preference Shares
This is a financial security issued to those individuals and institutions that 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 price per share divided by earnings per share. It measures 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.

Prospectus
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.

Proxy
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.

Portfolio
A group of stocks, bonds or other investments owned by a mutual fund or individual investor.

Portfolio manager
The person or group responsible for managing a pool of investments.

Profit
Income - Expenses = Profit (or Earned Income)
A sum of the money a company or individual earned minus the money spent. Profit is a positive number. If a company spends more money than it earned, then the sum is known as a "loss."
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Quoted
In relation to a security other than a listed security, means a security issued outside of Kenya but traded on a securities exchange.
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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.

Record
Includes a record in writing

Record of Depositors
Means a record provided by a central depository to an issuer under section 36 which contains the particulars specified in subsection(3) of the said section.

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

Registrar
Has the meaning assigned to it in Section 2 of the companies Act.

Related Company
Means a holding company, a subsidiary of another company or a subsidiary of the holding company of another company.

Redeem
To sell mutual fund shares back to the fund for cash.

Registrar of Companies
The firm hired by a company or a mutual fund to keep the official record of its registered shareholders. This record includes a shareholder's name and address and the number of shares owned. The registrar also handles the administrative work involved with the purchase and sale of shares.

Reinvestment
To use dividends and capital gains distributions used to purchase more shares.

Rights issue
A rights issue is an issue of shares to existing shareholders in proportion to their existing shareholding.
Rights issues are usually used when the company wishes to raise further capital from its existing.

Shareholders
A shareholder who is provisionally allocated shares under a rights issue may sell his/her right to acquire the shares by renouncing their allotment in favor of another person.

Representative
Means a representative of any person licensed by the Authority who is in the employment of the licensed person and who plays a critical role in that company, and includes a trader, director, general manager, analyst, or any other person employed by the licensee who plays a critical role.

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.

Rights offer
Is an offer to existing shareholders of securities to subscribe for or purchase further securities in proportion to their holdings made by means of the issue of a renounce able letter or other negotiable document which may be traded (as “nil paid” rights) before payment for the securities is due.

Ruling Price
Means the closing price at the last trading session at which that security was traded before the day on which an announcement is made.

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

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.

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 investments offer 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.
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Securities Account
Means an account established by a central depository for a depositor for the recording of book-entry securities and cash balances, in respect of dealings in such securities by the depositor.

Securities exchange
Means a stock exchange or an approved securities Organization.

Selling Out
Means the selling effected by a securities exchange according to the rules of the securities exchange, of securities which a buyer has failed to accept and to pay for when delivered on a day fixed for the settlement.

Settlement
Refers to the fulfillment of the obligation arising from a transaction including payment to the seller and delivery of documents evidencing title to the buyer.

Scrip Dividend
Refers to new shares, which a shareholder elects to receive in lieu of a cash dividend where the shareholder is given the right to make such an election.

Sponsoring Stockbroker
Means a member of the Exchange appointed by an issuer in accordance with Rule 4. of the
listing manual.

Substantial Shareholder
Means any person who is the beneficial owner of, or is in a position to exert control over, not less than fifteen per cent of the shares of a body corporate.

Slip Number (transaction number)
Is the unique individual number appearing on the trading summary, by which transactions are identified?

Special Boards
Are boards other than the normal boards including, prompt lot board and foreign investors board. These boards are set up for a specific purpose. Their rules shall differ in some or all respects from the rules governing the normal boards.

Special Lots
Are lots other than normal board lots and include lots governed by special rules.

Stock Market
Means a market, or other place at which, or a facility by means of which -
(a) Offers to sell purchase or exchange securities are regularly made or accepted;
(b) offers or invitations are regularly made, being offers or invitations that are intended or may reasonably be expected to result, whether directly or indirectly, in the making or acceptance of offers to sell, purchase or exchange securities; or
(c) information is regularly provided concerning the prices at which, or the consideration for which, particular persons or particular classes of persons, propose, or may reasonably be expected to sell, purchase or exchange securities.

Self-Regulation
A method of governmental regulation firms determine where the rules and the standards of conducts in stock exchanges and related markets that operate in the same markets; but this is subject to the supervision of various government agencies. Capital Market Authority encourages market players to make their own rules, but ensure firms follow their rules.

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 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 company can grant a share option to its workers as a means of improving their motivation and
Loyalty to the company.

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

Stock
This is a financial security issued by a company or the government as a means of raising long- term capital. Stock is a 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.

Savings account
A basic savings account is one that generally has a low minimum balance, and interest is paid on all amounts deposited. You can take the money out of your savings account any time you want.

Security, securities (plural.)
A general term for stocks, bonds and other investments.

Capital Markets Authority
Also known as the CMA, this is the primary Kenya government agency responsible for protecting investors and making sure that securities markets operate fairly and honestly. The CMA is also responsible for regulating the day-to-day operations and disclosure obligations of mutual funds , stock brokers and other securities.

Share
A unit of ownership of a company or a mutual fund.

Shareholder
An investor who owns shares of a mutual fund or shares of stock in a company.

Share split
An increase in the number of outstanding shares of a company's stock, such that proportionate equity of each shareholder remains the same. This requires approval from the board of directors and shareholders. A corporation whose stock is performing well may choose to split its shares, distributing additional shares to existing shareholders. The most common stock split is two-for-one, in which each share becomes two shares. The price per share immediately adjusts to reflect the stock split, since buyers and sellers of the stock all know about the stock split (in this example, the share price would be cut in half). Some companies decide to split their stock if the price of the stock rises significantly and is perceived to be too expensive for small investors to afford. also Take, for example, a company with 10,000 shares of stock priced at Ksh50 per share. The market capitalization is 100 × Ksh50, or Ksh 500,000. The company splits its stock 2-for-1. There are now 20,000 shares of stock and each shareholder holds twice as many shares. The price of each share is adjusted to Ksh25. The market capitalization is 20,000 × Ksh25 = Ksh 500,000, the same as before the split.

Statement of cash flows
A financial statement that shows how much money a company has coming in and going out.

Stock
A share of ownership in a corporation.

Stock exchange
The marketplace in which shares of stock are traded, for example the Nairobi Stock Exchange (NSE), New York Stock Exchange (NYSE), American Stock Exchange (AMEX), Over-The-Counter (NASDAQ).

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Total return
A measure of investment performance over a period of time. It is usually expressed as a percentage. For a mutual fund, total return is made up of two things: the change in the fund's share price and the money the fund earns from dividends and capital gains.

T
Used in reference to a transaction is the day the transaction is effected on the trading floor.

Trading board
Means the boards on the trading floor on which bids, offers and sales on listed securities are recorded during trading sessions.

Trading Floor
Is the physical place within which transactions in securities are carried out at the Exchange.

Transaction across books
Is a transaction where a member represents both
the buyer and the seller in the same transaction.

Trading Zone
Is the area, on the trading floor between the rails next to the boards and the first row of counters.

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.

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. In Kenya over 90% of Treasury Bills are held by Commercial Banks and Financial Institutions.

Trustee
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.

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Underselling
Is a situation where a floor trader halts a transaction that is about to be concluded by offering to sell at a price which is a spread lower than the price about to be dealt at for at least 50% of the lot on offer, the balance being sufficient to remain as a lot on the board.

Underwriting
Means the purchase or commitment to purchase or distribute, by dealers or other persons approved by the Authority of any securities that have not been subscribed during the offer of securities to the public by the issuer.

User
Means a central depository agent, an issuer, a securities exchange or such other person as may be prescribed by the Authority, who may be given access to a computer system of a central depository.
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.

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Voting Bond
Is a bond that gives its holder a voice in management of the issuer?

Volatility
A type of risk associated with investing, particularly in stocks or the stock market in general. It refers to the fact that some security prices will rise and fall more rapidly over short periods of time.

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Withholding Tax
Withholding tax on dividend income is 5% for Locals and 10% for non-residents Capital Gains Tax was suspended since 1985 Withholding tax on interest income from listed corporate bonds and Government of Kenya treasury bonds is 15%
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Yield
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 example 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.
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Zero coupon bond
A fixed-income security that does not pay interest and is sold at a deep discount from it.