A Comparison of Value and Growth Strategies at the Nairobi Stock Exchange.

Abstract

When people invest in common stocks they give up current consumption in hope of attaining increased future consumption. They expect to collect dividends and eventually sell the stock at a profit. A common stock is a type of security, which represents a commitment on the part of a corporation to pay periodically whatever its board of directors deems appropriate as cash dividend. Although the amount of cash dividend to be paid during the next year is subject to some uncertainty, it is generally relatively easy to accurately predict. However, the amount for which a stock can be bought or sold varies considerably, making the rumual return difficult to accurately predict. This means that investors buy stock because they expect an increase in their wealth; this increase in their wealth has two components -that is, the dividend received and the I increase in the value of the stock (capital gain). The percentage change in the investor's wealth from the beginning to the end of a period is known as the rate of return or simply the return....................................................................