Reference no: EM132788141

Question 1

Roy and John are final year Business Administration students at Ocho Rios Community College. They are interested in researching the Jamaica Stock Market. Their area of focus is the stock market indices. They contact Mr. Wayne Brown, the Marketing Manager of the Jamaica Stock Market, who has committed to meet with them to answer their questions.

A. Briefly discuss THREE (3) uses of security market indicator series. (6 marks)

B. You are given the following information regarding prices for stocks of the following firms:

PRICE Stock Number of Shares T T+1

Scotbank LTD 1000000 60 80

Jetvan Ltd 10000000 20 35

Priceline Ltd 30000000 18 25

i. Construct a price-weighted index for these three stocks and compute the percentage change in the series for the period from T to T + 1.

ii.  Construct a market-value-weighted index for these THREE (3) stocks and compute the percentage change in the series for the period from T to T + 1.

iii. Based on your answer above, which of these indexes BEST illustrates the movement on the stock market. Give reasons for your answer.