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You are Here : Home > Investor Education > Glossary

Glossary to investment terminology : D

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This is a long term debt instrument issued by companies for a fixed rate of interest over a stipulated period. They can be secured against assets held by the company or can be unsecured, backed only by the integrity of the borrowing company. Interest is paid at specified dates regardless of whether the company registered profits or not. Convertible debentures can be either fully or partly converted to ordinary shares after a stated period of time.

Declaration Date
The declaration date is also known as the announcement date. It is the date on which the next dividend payment is announced by the board of directors of a listed company.

This is when the price of a share drops in value on a given trading day, closing at a lower price than that which it opened at.

Defensive Stock
These are shares of companies that have maintained a record of stable earnings and continuous dividend payments even through periods of economic downturn. They tend to fall less in a bear market and therefore provide a safe return to an investor's money.

This is the removal of a company's name from the official list at the Nairobi Stock Exchange so that it can no longer be traded. This happens when the company for which the stock is issued is not in compliance of the listing requirements at the exchange.

Dematerialized Securities
These are securities that have been prescribed by the central depository and the physical certificate is no longer recognized as all its transactions are computerized and entered into a ledger.

A derivative is a financial instrument which derives its value from an underlying asset such as stocks, bonds, commodities or currencies.

Dilution of Equity
This is a decrease in the ownership value of a share as a result of increasing the number of shares. An increase in the number of shares can be brought about by issuing new shares; when convertible bonds (or debentures or any other long term loans) are converted to shares; or after the issue of a bonus. Dilution lowers the book value and earnings per share.

This is the difference between a bond's face value and its current market price, if lower.

Discretionary Account
This is an account that an investor opens with a stockbroker that authorizes the stockbroker to buy or sell shares or any other securities he may select at his discretion on behalf of the investor.

This is limiting investment risk by purchasing different types of securities from different companies representing different sectors of the economy.

This is the portion of the listed company's profits that is paid directly to shareholders. The dividend is usually quoted in shillings per share and is declared and approved at the annual general meeting of the company. The board of directors decides the dividend to be paid out. A listed company is under no legal obligation to pay dividends. It is also referred to as Dividend per Share, DPS.

Dividend Yield
This is the return on the money invested in a security. It is simply the dividend quoted in terms of a percentage of the current market price. For example, if the dividend declared is KES 1.00 and the closing price of the share is KES 20.00, then the dividend yield is 5%.

Dollar Cost Averaging
This is investing a fixed amount of money in a specific security at regular set intervals over a period of time. The investor buys more shares when the price is low and buys fewer shares when the price is high. This results in a lower average cost per share.

Dry Run Portfolio
It is also known as paper trade. It is an imaginary portfolio of shares, constructed and monitored regularly by an investor over a period of time without actually buying the shares. The investor acquires experience on the ups and downs of the stock market at no financial cost or risk. With time, the investor garners enough confidence to actually invest in the stock market.