Performance of Corporate Bonds, Government Bonds and Equities at the Nairobi Securities Exchange
Oello, Collins O
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Investors are assumed to be rational and risk averse and those investors choose investments in line with their expected return and risk absorption capacity. Investments are then classified into risk classes such as high, low and medium risk. The difference between equities and bond is a critical factor in the portfolio, even though bonds typically yield a lower return than equities in the long run, the inclusion on bonds and other fixed income instruments in a portfolio may help investors hold a diversified portfolio. The purpose of this study was to compare performance of corporate bonds, government bonds and equities trading at the Nairobi securities Exchange. Specifically, the study sought to determine the difference between the return on equities and the return on bonds at Nairobi Securities Exchange (NSE), and to determine the difference between the risk on equities and the risk on bonds at Nairobi Securities Exchange (NSE). The study was adopted descriptive research design targeting firms that had issued bonds on NSE from 2014 to 2016. The study collected secondary data and the analysis was done using SPSS software. The analysed findings were presented in form of Tables and Figures. The study established that there was a difference between the return on equities and the return on bonds at Nairobi Securities Exchange (NSE). This difference was significant because the p value was less than 0.05. There was statistically significant difference between the risk on equities and the risk on bonds at Nairobi Securities Exchange (NSE). The study concluded that the difference between return on equities and the return on bonds at Nairobi Securities Exchange (NSE) was significant. There was significant difference between risk on equities and the risk on bonds at Nairobi Securities Exchange (NSE). The study recommends that investors at NSE should largely invest both in bonds and equities to achieve maximum returns. Before committing their funds in these securities however, investors ought to carry out detailed analysis and comparison. Investors should give risks associated with securities the first priority before investing their wealth in any securities. The study recommends that such asset managers should carry out detailed analysis of the outcomes with deep comparisons for proper decision making and also a policy change in terms of government borrowing which we noted that has overcrowded private companies through offering better returns which is implicated in the reverse yield.
University of Nairobi
RightsAttribution-NonCommercial-NoDerivs 3.0 United States
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