Babcock Journal
of
Management
& Social Sciences
Volume 1. Number 2. June, 2003
© Faculty of Management and Social Sciences, Babcock University, 2003
AII rights reserved.
No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronics,
mechanical, photocopying, recording or otherwise, without the prior
written permission of the copyright holder.
Published in June, 2003
ISBN978-36837-3-X
Printed by:
EMAPHINE REPROGRAPHICS LTD.
4, Adeola Street, Somolu, Lagos, Nigeria.
Tel: 08023266681
EDITORIAL BOARD
G K. Afolabi
M. B. Adegboye
S. A. Owolabi
A. D. Aina
S. A. Adebola
G. N. Okezie
-
Editor-in-Chief
Chairman
Associate Editor
Associate Editor
Associate Editor
Editorial Secretary/Business
Manager / Associate Editor
EDITORIAL AD VISERS
Prof A. Soyibo, University of Ibadan, Ibadan
Prof O. Ojo, Obafemi Awolowo University, Ile-Ife
Prof J. A. Ayoade, University of Ibadan, Ibadan
Prof P. E. Oribabor, Obafemi Awolowo University, Ile-Ife
Mr. Layi Afolabi, Wema Bank PLC, Wema Building, Lagos
EDITORIAL CONSULTANT
Prof J. A. Kayode Makinde, Babcock University, Ilishan-Remo
EDITORIAL COMMENT
VISION STILL AFLAME
In the month of September, 2002, the maiden Edition of Babcock Journal
of management and social sciences (BJMASS) was published. The
positive, critical reception of that publication challenged us into the
second edition enterprise.
Like Nigeria which concluded elections into the second civilian
democratic transition on the 4th of May, 2003, we are focused on
continuity in:
-
Contributing to the current quality of academic knowledge and
skills;
Improving the socio political status of the 21st century Nigeria
and
Providing concepts for re-engineering the socio – Political and
economic development of Nigeria
We again wish to confirm that the views and opinions of the contributors
not necessarily those of Babcock University Administration.
Dr. Gabriel K. Afolabi
Editor-in-Chief
Babcock Journal of
Management and Social Sciences
Volume 1. Number 2. June, 2003
Section One:
Political Leadership, Dialectics of Politics and Broadcast Research
1.
Towards the search for sustainable political leadership in Nigeria: A Biblical Option
Sampson M. Nwamoah................……………………………………..
2.
The Dialectics of Politics and Governance in Nigeria's Fourth Republic
- Solomon O. Akinboye...….....................................................................……….
3.
Broadcast Research and its Developmental Role in Mass Communication.
- Olufemi Onabajo..................................................................................……….
Section Two:
Empiricism, Labour Remuneration and Corporate Planning.
4.
An Empirical study of the Optimum Hospital Bed Capacity in the Lagos
State Health Care Delivery System A Geodemographic Perspective
- Solomon A. Adebola...............................................................................………
5.
The Beneficial and cost implications of an improper increase in Labour
Remuneration in the Nigerian Economy - Iwarere Henry Taiwo.........................
6.
The impact of Corporate Planning on the Financial Performance of
the Beverage Industry in Nigeria - O.I. Nwazue.................................................…
1
8
26
33
50
59
Section Three
Management Information System, Small/Medium Scale Industries and Employee's
Productivity.
7.
The Development of a Computer - Based Management Information System Model for
Secondary School Administration in Ogun State - Ajayi Olutayo B..................……. 69
8.
An Assessment of Small and Medium Scale Industries Performance in
Nigeria - J. A. Bamiduro.....................................................................................……. 77
9.
Motivational effects on the Employee's Productivity
- Stella Ogechukwu Okezie......................................................................................
87
Section Four
Research Supervision, Port folio formation and Environmental Degradation.
10.
Issues in the effective supervision of students' Research Projects
- Olawale J. Omotosho...........................................................................................
11.
An Empirical Investigation into the Portfolio formation and Diversification
Potentials of the Nigerian Stock Exchange - Jackson O. Olujide..........................
12.
Environmental Degradation in Nigeria : Trade - off for Poverty
Alleviation - Adeyinka Sunduv Okude...................................................................
96
108
118
An Empirical Investigation into The Portfolio Formation and
Diversification Potentials of The Nigerian Stock Exchange
Jackson O. Olujide*
Knowledge based strategies assist individuals in decision making situation where straight
forward enumeration of solution possibilities tends to be complex and difficult. In this
study, a strategy for portfolio formation and diversification is examined and it has as it's
main objectives the examination of covariance of securities as a framework for portfolio
formation and diversification of quoted securities on the Nigeria stock exchange.
Results show that returns on securities for African Petroleum Plc., Mobil oil plc in the
petroleum industry, Nigeria Breweries plc, Guinness Nig. Plc in the brewing industry and
UACN Plc., and UTC Plc, in the commerce sector fovary and correlate positively. The
only exception to this are the securities of Trade Bank plc and Omega Bank Plc, in the
banking industry that correlate and covary negatively. This means that securities of
different companies in each of the petroleum, commerce and brewing industries should
not make up the entire investment portfolio because they covary positively and positively
covaried and correlated securities tend to increase or average risks. Result further
indicate that securities of companies across these industries are negatively covaried and
correlated. Negatively covaried securities reduce rather than average risk and are
therefore suitable candidates for portfolio diversification.
These results show that the behaviourial tendencies of the Nigerian Stock Exchange
reflect those of highly industrialized economies of Europe and America.
Introduction
Individual investors must have a rule or objective that guides his/her investment
activities. Economists have traditionally, though not always begun with an assumption
that firms seek to maximize the returns of share holders wealth. But when risk is
considered, the return stream becomes two-dimensional. Returns (i.e profit) on
investment can be characterized in terms of their expected value (i.e their average level)
or their variance (predictability). The objective of the individual shareholder therefore in
investing in a firm operating under uncertainty must be to specify how he/she feels about
more (or less) risk versus more (or less) expected returns. Thus, shareholders trade off
risk and expected returns in evaluating various investments.
While shareholders may put extraordinarily high return on their investments,
they however view fluctuating returns with concern and therefore may seek to avoid very
risky situations even when the expected return to shareholders is sufficient to compensate
them for the risk. Even investors with poorly diversified portfolios prefer to avoid
significant uncertainty about their primary assets' earnings. The scenario described above
is rooted in the principle of risk reduction through
*Dr Jackson O. Olujide is a Lecturer in the Department of Business Administration,
University of llorin, llorin, Kwara State. Nigeria.
108
BJMAS VOL. 1 NO. 2 JUNE 2003
109
portfolio formation and diversification and is the major concern of this paper.
Portfolio formation and diversification have normally been associated with
financial asset (security) and financial securities-primarily ordinary shares and bonds are
usually analyzed to discover the income potentials of such assets and in the process the
attendant risks on such security holdings are assessed.
To date, much of the research effort on portfolio formation and diversification
have been limited to the industrialized economies of Europe and America Markowitz,
1952; Fisher and Lories 1968; 1970; Merret and Sykes, 1966; Evans and Archer(1968
etc). A few research may have been undertaken in the newly industrialized economies of
Asia and America but none has been undertaken in the underdeveloped, high risk
economies particularly in Africa. This geographic limitation has therefore eliminated the
illuminating and enriching insights that could have been gotten from underdeveloped
economies whose market environments are culturally, politically and economically
different and with different degrees of risk.
In the light of the foregoing therefore, this study is designed to provide empirical
data and to shed some light on the portfolio theory's diversification principle in the
context of Nigeria's capital market.
Objectives of the Study
The primary objective of this study is to assess the profit potential of a strategy
of portfolio diversification of quoted securities on the Nigeria Stock Exchange. In
carrying out this objective the study in specific terms examines the following issues:
An examination of the return potentials of quoted securities on the Nigerian
Stock Exchange;
The determination of the correlation and covariance among quoted securities;
and The determination of the relationship between risk and return on these securities.
Methodology
The sample for this study was constituted by selecting two companies each from
the industrial classification of banking, brewing, commerce, and petroleum marketing. A
total of eight(8) companies were thus selected.
Data on these companies were collected through the secondary source and were
obtained from the Daily Official List Booklet (1993-1999) of the Nigerian Stock
Exchange. Data obtained were analyzed using simple averages and percentages, standard
deviation and analyses of correlation and covariance.
Results and Discussion
Tables I, II and III (see annex) supply information on the following:
shareholders annual returns;
average returns, standard deviation of returns form the average, and the relative
risk/return; and
correlation and covariance of all selected securities.
Shareholders Annual Returns. Average Annual Growth . Standard Deviation and Relative
Risk/Return.
110
BJMAS VOL. 1 NO. 2 JUNE 2003
The two petroleum companies namely African Petroleum plc., and Mobil Oil Nigeria
plc., fared well in terms of dividend payment, for example Mobil oil paid 68.6k as
dividend in 1 993, 90k in 1 995 and peaked at N3.35 in 1 997. This fell to N2.30 in 1 998
rising to N2.48 in 1999. The average rate of growth in earnings for this company is
60.86% between 1 993 and 1 999. The figures for African Petroleum plc were 30 kobo in
1993 rose to a peak of N2 in 1995 and 1996 and fell to Nl in the last three years of the
period. The average rate of growth in earning is 56.76%.
The dividend pay out for Nigerian Breweries was 83k in 1 993 rose to N 1 . 1 0 in 1994,
N1.50 in 1995 and fell to 85kobo in 1997 and stabilized at Nl between 1997 and 1999.
These figures represented an annual average rate of growth of 24.5%. Guinness Nigeria
Plc., fared better, its dividend was 20kobo in 1 993 and peaked at Nl .80 in 2000
representing an annual average rate of growth of 47. 1 4% (see Table I annex)
The two other sectors banking and commerce did not fare better on this score, for
example Trade Bank plc., returned an annual average rate of growth of 17% while that of
Omega bank was 25.01%. For UACN plc., and UTC in the commerce sector the figures
are 1 0.00% and 9.77% respectively. (The discussion above and results in tables I, II and
III. show that generally the 7- year returns of the eight companies exhibit enormous
yearly variation indicating that the attendant risks in shareholding would be very high.
Table II also gives credence to the fact that petroleum marketing industry is a lucrative
sector as the two companies selected there recorded the highest annual returns but also
variability. Annual rate of growth in returns for Mobil oil is 60.86% with a standard
deviation of 1 07.69% while the figures for African petroleum are 56.76% and 110.41%
respectively. The two companies figures for the relative risk/ return in percentage terms
are 1 .77% and 1 .95% respectively.
Diversification Potentials of the Nigerian Capital Market.
Little is known about the diversification potential of securities quoted on the
Nigerian Stock Exchange, but the theory of security diversification states that discussion
thus far has however, implied that securities in the same industry tend to have returns
which covary positively, the implication of which is that securities of a single industry
should not make up the entire portfolio of securities. If they do, the outcome would be
averaging of risk rather than risk reduction.
Table III gives an idea of the diversification potentials of the quoted securities in
the Nigerian capital market and to compute the annual shareholders' return we apply the
formula.
R
=
P1+D1-P0
P0
R
=
Return on security
P0
=
Price of security at beginning of the year
P1
=
Price of security at the end of the year
D1
=
Dividend declared at end of the year
BJMAS VOL. 1 NO. 2 JUNE 2003
Table III: Shareholders' Annual Returns 1993-1999
Security Industry
1993 1994
1995
1996
No
%
%
%
%
1
Trade Bank Plc
22,1 -77
-0.5
141.9
2
Owena Bank Plc 32.3 19.1
48.2
13.6
3
Nig.Breweries Plc 24.0 53.8
62.0
1.8
4
Guinness Nig Plc 80.0 61.5
68.2
-31.7
5
UACN Plc.,
0.7
-1.9
135.5 -39.7
6
UTC Plc.,
-1.89.9 96.7
-38.8
38.0
7
African Pet. Plc 2.8
40.6
276.7 127.9
8
Mobil oil
4.5
17.0
293.1 91.6
1997
%
-22.6
60.8
-24.9
1.2
51.4
-21.9
-29.9
28.4
1998
%
-10.9
8.1
68.4
72.4
-30.5
-14.7
-10.0
-9.9
111
1999
%
0
-7.0
-13.6
78.4
-45.5
7
-10.8
1.3
Computed from Table 1.
Table III indicates that share of Mobil oil attracted the highest return of 293.1%
in 1995, and offered it's shareholders the largest average yearly return during the period
1993-99. It's stream of return fairly supports the linear relationship which is expected to
exist between risk and return (although some companies defiled this), UTC has the least
variability in shareholder return which is understandable given the company's diversity in
asset risk because is a conglomerate with various activities. It's portfolio of investments is
well diversified such that the total company income which forms the basis for
shareholders returns remain relatively stable.
In terms of risk per unit return UACN plc., fares poorly. For every one percent
return enjoyed by the shareholders of the company, there is the attendant risk of 6.44% on
the shareholders part. In terms of relative risk and stability of earning Owena Bank Plc.,
and Guinness Nigeria Plc top the list. Table IV displays the covariance and the correlation
co-efficient for the different combinations of the eight securities. The formula of
covariance used in this study is as follows .COV.
AB = ?(RA-RA) (RB-RB) and that for correlation co-efficient is:
N -1 COV. AB were used to compute this table IV from table II
SA-SB
S=
standard deviation
R=
Realized return on securities A&B
R=
Expected average returns on securities A&B
N=
Number of realized returns.
Table IV: Covariance and Correlation Co-efficient for the selected securities.
Part of security returns
1 and 2
l and 3
l and 4
l and 5
Covariance
-341
-473
-1636
-1287
Correlation Co-efficient
-0.26
-0.22
0-66
-036
112
BJMAS VOL. 1 NO. 2 JUNE 2003
l and 6
1 and 7
2 and 8
2 and 3
2 and 4
2 and 5
2 and 6
2 and 7
3 and 8
3 and 4
3 and 5
3 and 6
3 and 7
3 and 8
4 and 5
4 and 6
4 and 7
4 and 8
5 and 6
5 and 7
5 and 8
6 and 6
6 and 8
7 and 8
1251
1934
903
-56
-255
1237
808
697
1455
862
630
411
1685
1253
871
396
-467
-362
2880
4603
5582
2920
3674
11434
0.49
0.31
0.15
-0.06
-0.24
0.81
0.75
0.27
0.57
-.52
0.26
0.24
0.40
0.31
0.31
0.20
-09.10
-0.08
0.97
0.64
0.80
0.58
0.75
0.96
Table IV indicates that out of the 28 correlation co-efficient 9 are negative while
19 are positive. The negative covariance and correlation co-efficient indicate possible
choice securities for portfolio formation.
Two companies each in the industrial classification of breweries, commerce and
petroleum marketing (i.e 3 and 4), (5 and 6) and (7 and 8 receptively) are all positively
correlated. This suggests that the industrial classification is correct. However, the two
companies in the banking sector (1 and 2), have negative correlation returns. This could
be as a result of the fact that either the industrial classification is faulty or the companies
engage in dissimilar activities such that systematic industry factors affect them
differently.
The purpose of table IV is to enable us identify pairs of industrial securities
suitable for inclusion in portfolio and those pairs to avoid. The negatively correlated pairs
are suitable for inclusion in portfolio while the high positively correlated pairs are to be
avoided
BJMAS VOL. 1 NO. 2 JUNE 2003
113
Table V lists the pairs of the companies with high positive and negative
correlation coefficients of shareholders' returns. As pointed out earlier, a well diversified
portfolio should contain securities with negatively correlated returns. This table shows
five securities with high positive return correlations and eight negative return
correlations. For a portfolio of two securities, if the objective is to minimize risk, none of
the five pairs of securities with high positively correlated returns would be eligible for
selection. It is important to point out and note that the two commercial/companies
correlate very positively with the return of Mobil oil plc.
Table V: Pairs of companies with high positive and negative correlation coefficient of shareholder annual returns.
COMPANIES
CORRELATION COEFFICIENT
UACN & UTC
-0.97
UACN & MOBIL OIL
-0.80
UTC & MOBIL OIL
-0.75
OWENA BANK &UTC
-0.75
OWENA BANK & UACN
-0.81
(For high positive correlation co-efficients)
1
Guinness Nig. & Mobil oil
-0.08
2
Guinness Nig. & African Petroleum
-0.10
3
Trade Bank & Nigeria Breweries
-0.22
4
Trade bank & Guinness Nig. Plc.,
-0.66
5
Trade Bank & UTC Plc.,
-0.49
6
Trade Bank & Owena Bank
-0.26
7
Trade Bank & UACN Bank
-0.36
8
Owena Bank & Guinness Nig.
0.24
(for negative correlation co-efficients)
The eight negatively correlated return companies are potential candidates for
portfolio formation and diversification because they reduce total portfolio risk. If we
ignore portfolio return and concentrate on risk reduction, the shares of Trade Bank and
Guinness Nig., Plc are good securities for a two security portfolio. Also, the returns on
the shares of Trade Bank returns correlate negatively with four of the five company
returns while in the case of Guinness it correlates with four indicating that the securities
of Trade Bank and Guinness are high candidates for diversification.
An illustration of the concepts already discussed can be made by computing
portfolio return and portfolio risk for each pair of the highly negatively and highly
positively correlated returns by considering the portfolio made up of UACN and UTC
and another portfolio of Trade Bank and Guinness (Nig.) Plc.,
Table VI shows the marked differences between the risk of the portfolio with
positively correlated returns and the one with negative correlations.
1.
2.
3.
4.
5.
114
1.
2.
3.
4.
5.
BJMAS VOL. 1 NO. 2 JUNE 2003
Table VI: Security / Portfolio Returns and Risks
Securities/portfolio
Returns
Risks
(%)
(%)
UACN
10.0
64.40
UTC
9.77
45.65
Trade Bank
17.47
56.08
Guinness Nig. Plc.
47.14
44.12
UACN & UTC
10
55.0
Trade Bank & Guinness 32.2
50.1
Risk/return
(%)
6.44
4.67
3.21
0.94
6.0
2.1
This table indicates that the portfolio of Trade Bank and Guinness Nig. Pic
dominates that of UACN and UTC. A dominant portfolio or security has the highest
return in the same risk class or the lowest risk for a given return level. Alternatively, one
can take a look at the extent of dominance by examining the risk/return ratio (coefficient
of variance). UACN and UTC portfolio has co-efficient of variation of 6% compared to
2.1 % for Trade Bank and Guinness. In other words, the holder of UACN & UTC
portfolio takes about three times the risk of the Trade Bank/Guinness portfolio to
generate one unit of return. The foregoing generally illustrate the benefits of portfolio
diversification and that is risk reduction.
Findings
This study has underscored the benefits of portfolio formation and
diversification in an underdeveloped and highly risky environment. The study found that
the securities in the same industry (except for the banking sector in our case) have returns
that covary positively. This means that securities in the same industry should not make up
the entire portfolio of securities because positively correlated or covaried securities tend
to increase or average risks instead of reducing them. However, negatively correlated or
covaried securities on the other hand were discovered to have the lowest risk levels.
Therefore, negatively correlated or covaried securities which reduce risk are suitable
candidates for portfolio formation and diversification and, in this study, securities across
industries are negatively covaried/correlated so asset holdings should cut across banking
commerce, petroleum and brewing industries.
We have however, noted that there are certain problems which militate against
portfolio diversification and management in the Nigerian environment. These problems
include ignorance and apathy on the part of the Nigerian investors, paucity of securities
in the capital market, inefficient and cumbersome share transfer system, high cost of
listing, poor information disclosure by quoted companies and relatively stringent listing
requirements and over-regulation by the securities and Exchange Commission.
It is our hope that with time these problems will be reduced and the NSE will be
able to attract more participation so that the capital market will become a veritable
vehicle for investment and finance of development programmes.
BJMAS VOL. 1 NO. 2 JUNE 2003
115
Conclusion
This study has demonstrated that efficient portfolio formation and diversification
holds a great promise for survival in a depressed economy such as the Nigeria case.
Inspite of the obvious imperfections in the Nigerian capital market, it has been
demonstrated with eight (8) randomly selected securities that financial assets offer
opportunities for high returns. The average annual returns over seven years for the eight
companies range from a minimum of 9.77% to 60.86%. These figures are far higher than
any return that could have been achieved from a deposit account with a bank. These
securities could have provided a good hedge against inflation over the seven years. Our
findings also conform with what has been found in some mature economic and that is
common shares provide surprisingly high returns even in depressed economics times.
The importance of risk assessment in security holding has also been emphasized
the securities to be included in the portfolio must have negative return correlations and it
is only when this is done that the shareholders can expect to benefit from diversifying his
holdings. The benefits come from total risk reduction.
REFERENCES
Annual Report and Account of the Nigerian Stock Exchange, 1999. Central Bank of
Nigeria-'Economic and Financial Review" vol. 24 No. 1 March, 1986.
Evans, J.H. and Archer, S.H. (1968):"Diversification and the Reduction of Dispersion: :
An empirical Analysis" Journal of finance, Page 761-767.
Fisher, L. arid Lories, J.H.(1968) "Rates of return on investment in common stocks:
1926-65: Journal of Business, vol. 41, No.3.
Fisher L and Lories, J.H. (1970) Some Studies of Variability of returns on instrument in
common stocks". Journal of Business, vol 43, No 2, Hickman, W. B. (1958):
"Coipoiate. Bond Quality and investor experience, Princeton Princeton
UniveisityPress.
Kamarer, D. L. (1965): "For long term investment: Stocks or Bonds" in H.K.U. and A.J.
ZakortecL, "Element of investment, selected readings New York.
Markowitz, H. (1952): "Portfolio Selection: Journals of finance, vol vii, pp 13-25 Merret,
A.J. and Sykes, (1966): "A Return of Equities and fixed interest securities pp.
21-33 ' :
Nwankwo. G.O. (1980): "The Nigerian Financial System", Macmillian Press Limited,
London.
Okereke-Onyiuke, N. (1984): "Costs of Capital: The Nigerian Experience". The Nigerian
Stock Exchange Hand Book, vol. 2 25-28.
Olowe, R.A. (1997): "Financial Management, Concepts, analysis and capital investment,
Briety Jones Nigeria Limited
116
BJMAS VOL. 1 NO. 2 JUNE 2003
Rachmar, D. J. "Business today" 4th editions Random House inc. N.Y pp 381-386.
Umoh, P. N.(1984): "Investment, Management Evaluation and the Nigerian Experience".
Nigerian Journal of financial management vol. 3 number of 2,
Van Home, C.J. and Wachowicz, S.M. (1992): Fundamental of financial management 5
edition, prentice-hall international editions.
ANNEX
Table I: Price and Dividend of Selected Securities
Trade Bank Plc
(P0)
(Pi)
(Di)
Owena Bank Plc
(P0)
(Pi)
(Di)
Nigeria Breweries Plc
(P0)
(Pi)
(Di)
Guinness Nig. Plc
(P0)
(Pi)
(Di)
UACN Plc
(P0)
(Pi)
(Di)
UTC of ig Plc
(P0)
(Pi)
(Di)
1993
(N)
1994
(N)
1995
(N)
1996
(N)
1997
(N)
1998
(N)
1999
(N)
1.02
1.17
0.075
1.17
0.85
0.10
0.98
0.85
0.125
0.86
1.95
0.13
1.95
1.10
0.13
1.38
1.10
0.13
1.10
1.05
0.05
0.53
0.58
0.121
0.58
0.57
0.121
0.77
1.20
0.121
1.25
1.30
0.12
1.30
1.97
0.12
1.97
1.99
0.14
1.99
1.70
0.14
8.12
9.24
0.83
9.25
13.13
1.10
13.20
19.89
1.50
19.89
19.40
0.85
19.30
13.50
1.00
13.50
21.74
1.00
21.00
17.14
1.00
3.00
5.20
0.20
5.22
8.03
0.40
8.07
12.92
0.65
12.88
8.15
0.65
8.15
7.60
0.65
7.60
12.50
0.60
12.50
20.50
1.80
6.72
6.35
0.42
6.35
6.03
0.20
6.03
13.60
0.60
13.60
7.40
0.80
7.40
10.50
0.70
10.50
6.70
0.60
6.35
3.05
0.60
1.14
1.01
0.08
1.01
0.91
0.20
0.91
1.70
0.09
1.70
0.90
0.14
0.89
1.14
0.14
1.14
0.75
0.14
0.75
0.50
0.14
BJMAS VOL. 1 NO. 2 JUNE 2003
African Petroleum Plc.,
(P0)
(Pi)
(Di)
Mobil Oil Plc.,
(P0)
(Pi)
(Di)
117
4.94
4.78
0.30
4.78
5.92
0.80
6.00
20.60
2.00
20.62
45.00
2.00
45.00
30.55
1.00
30.55
26.50
1.00
26.50
22.63
1.00
7.48
7.13
0.686
7.13
7.44
0.90
7.53
27.60
2.00
27.63
49.60
3.35
50.00
61.90
2.30
61.90
53.75
2.00
53.75
51.95
2.48
NOTE: P0
Pi
Di
Means price at the beginning of the year
Means price at end of the year \
Means dividend declared at the end of the year.
SOURCE:
Daily official list of the Nigeria Stock Exchange (NSE) (1993-1999).
Table II:
SHAREHOLDERS AVERAGE RETURNS TOTAL RISK AND
RELATIVE RISK FOR THE SELECTED COMPANIES
Secu- Industry/ Company
Average growth Standard (%) Relative
rity No.
Returns(%)
Deviation (SD) risk/Return
1993-1999 (96)
(SD/R) %
1
Trade Bank Plc
17.47
56.08
3.21
2
Owena bank Plc.,
25.01
23.62
0.94
3.
Nigeria Breweries Plc
24.5
37.85
1.54
4
Guinness Nig Plc.,
47.14
44.12
0.94
5
UACN-Plc.,
10.00
64.40
6.44
6
UTC Nig. Plc
9.77
45.65
4.67
7
African Pet Plc,
56.76
110.41
1.95
8
Mobil Oil
60.86
107.69
1.77
COMPUTED FROM TABLE 2.