Financial Markets
Senior 6 · Entrepreneurship
Financial Markets
Lesson 3 of 4
35 min
An investor on Rwanda's capital market can take one of three positions. As a shareholder, she owns part of a company and shares in its profits and losses. As a bondholder, she lends to a company or the government and is paid interest. As a unit holder in a fund, she joins a pool whose managers buy many securities on everyone's behalf. Each position has its own return, risk and rights, and each can be measured with a few simple ratios.
Definition
Share (equity, stock): a unit of ownership in a company. Ordinary shares carry a vote and a right to dividends declared after all other claims. Preference shares carry a fixed dividend paid before ordinary dividends, usually without a vote.
Example: owning 1,000 of a company's 1,000,000 ordinary shares means owning 0.1% of it.
Definition
Dividend: the part of profit paid to shareholders. Capital gain: the rise in a security's price between buying and selling.
Definition
Bond: a loan to the issuer, who promises to pay interest (the coupon) at fixed dates and repay the face value at maturity. Treasury bonds are issued by the government through BNR; corporate bonds by companies. A green or sustainability-linked bond raises money for projects with environmental or social goals.
Definition
Collective investment scheme (unit trust, fund): a pool of money from many investors, managed by professionals and invested in many securities. Each investor owns units, valued at the net asset value (NAV) per unit. Real estate investment trust (REIT): a fund that owns income-earning property. Exchange-traded fund (ETF): a fund whose units trade on an exchange like shares, often tracking an index.
| Feature | Ordinary share | Preference share | Bond | Unit in a fund |
|---|---|---|---|---|
| Holder is | An owner | An owner with priority | A lender | A member of a pool |
| Income | Dividend, if declared | Fixed dividend | Fixed coupon | Grows in the NAV or is paid out |
| Vote | Yes | Usually no | No | No say in the securities chosen |
| Repayment | None: sell to recover money | None, unless redeemable | Face value at maturity | Units sold back to the fund |
| If the issuer fails | Paid last | Before ordinary shares | Before all shareholders | Loss limited to the failed holdings |
| Risk | Highest | Medium | Low (government) to medium | Depends on the fund |
The sketch shows the general rule, not exact positions: the more an investment's return can vary, the higher the return investors expect for holding it.
Worked example 1: measuring a share
Kivu Mills PLC (an illustrative company) has a share price of Frw 400, earnings per share of Frw 50 and a dividend per share of Frw 24. A year later the price is Frw 440.
Dividend yield: . P/E ratio: : investors pay 8 francs for each franc of yearly earnings. Payout ratio: of earnings paid out.
Total return for the year:
After 5% withholding tax on the dividend (a listed share, resident investor), the dividend is francs and the return .
Worked example 2: a Treasury bond
A 5-year Treasury bond has a face value of Frw 1,000,000 and a coupon of 12% a year, paid in two halves (illustrative terms).
Coupon: francs a year, as two payments of Frw 60,000. With 5% withholding tax (maturity of at least 3 years), the investor receives francs a year.
Bought on the market at Frw 960,000: current yield , above the coupon rate because the price is below face value.
Why prices and yields move in opposite directions: if new bonds start paying 14%, no one will pay Frw 1,000,000 for a bond paying only 12%; its price falls until its yield matches the market. A bondholder who must sell before maturity can therefore lose money even though the government never misses a payment.
Worked example 3: a unit trust
RNIT Iterambere Fund, Rwanda's first collective investment scheme, began in 2016 with units at Frw 100. In 2026 the NAV per unit had risen to Frw 274, and the fund managed more than Frw 86 billion (CMA, 13 July 2026).
Total growth: .
Average yearly growth over about 10 years:
Buying in 2026: Frw 50,000 buys units. Past growth does not promise future growth.
Warning
A high dividend yield is not always good news. A yield can be high because the share price has collapsed on bad news, and the next dividend may be cut. Always look at earnings, the payout ratio and the company's prospects, not at the yield alone.
Capital Market Authority of Rwanda, "Rwanda's Capital Market Introduces Real Estate Investment Trusts (#REITs)". Note how a REIT lets many small investors share the rental income of property none of them could buy alone.
Practice
Sources and credits
Written by Ganzaa: the comparison table, the risk and return sketch, the worked examples and the practice items. Kivu Mills PLC and the bond terms are illustrative (2026).
