dc.contributor.author | Olweny, Omondi T | |
dc.date.accessioned | 2013-05-12T09:55:34Z | |
dc.date.available | 2013-05-12T09:55:34Z | |
dc.date.issued | 2003 | |
dc.identifier.uri | http://erepository.uonbi.ac.ke:8080/xmlui/handle/123456789/22403 | |
dc.description.abstract | Valuation of common stock is very important yet a very complex process. The stock
requires a deeper analysis compared to preferred stock or debts. The major techniques of
valuation of common stock are:
(i) Relative valuation models which is based on the earnings power of the firm, the book
value and sales.
(ii) The discounted cash flow techniques, where the value of stock is estimated based
upon the present value of some measure of cash flow including dividends, operating cash
flow among others.
The study was conducted to establish the reliability of the dividend discount model
(which is based on the discounted cash flow techniques) on the valuation of common
stock at the Nairobi Stock Exchange. Data was collected in form of share prices, market
indices and dividend per share from the Nairobi Stock Exchange secretariat, and were
used to predict share prices for each of the eighteen companies studied. Market model
was used as a model of equilibrium to provide a link between the expected values which
are non observable and real values that were used in testing the model. Predicted share
prices were compared with the actual prices by computing the differences between them.
The differences were then subjected to t-test. The test of significance showed that out of
the eighteen companies studied; only three showed that the differences were significant.
I therefore concluded that the dividend discount model is not reliable in the valuation of
common stock at the Nairobi Stock Exchange. | en |
dc.description.sponsorship | The University of Nairobi | en |
dc.language.iso | en | en |
dc.subject | The dividend discount model | en |
dc.subject | Nairobi stock exchange | en |
dc.title | The dividend discount model:It's reliability on the valuation of common stock at the Nairobi stock exchange | en |
dc.type | Thesis | en |
local.publisher | School of Business | en |