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Risk and Return on Uganda's stock exchange.

By Abubaker B. Mayanja and Kenneth Legesi

Abstract

Using data from 2003-2007, we calculate the systematic risk and cost of equity for firms listed on USE; Preliminary estimates show that nominal Cost of equity capital reduced over time from 63.24 percent (January 2005 to January 2006) to 18% (February 2006 to March 2007). The efficient frontier shifted below in the period considered to suggest a general lowering of expected returns on portfolios, re-affirming the notion that stock markets lead to reduction in the cost of funds; and thus a viable option to bank finance that at the moment is considered prohibitive with annual percentage rates of between 20-25.

Topics: G11 - Portfolio Choice; Investment Decisions, G15 - International Financial Markets, G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
Year: 2007
OAI identifier: oai:mpra.ub.uni-muenchen.de:6407

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