Risk and Return on Uganda's stock exchange.

Mayanja, Abubaker B. and Legesi, Kenneth (2007): Risk and Return on Uganda's stock exchange. Forthcoming in: Capital Markets Journal

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.

• Item Type: MPRA Paper
• English Title: Cost Of Equity Capital and Risk on USE: Equity finance; bank finance, which one is cheaper?
• Language: English
• Keywords: Cost of equity capital, Beta, CAPM, Uganda Securities Exchange (USE)
• Subjects: G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment Decisions; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill

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