CH3

Question 1

Uses of share price indices

Answer 1

1. To forecast the economic cycle
2. The timing of purchases and sales
3. To evaluate the performance of a portfolio
4. To quantify risk
5. To determine speculative activities

Question 2

expected upswing =

Answer 2

increase in prices

Question 3

methods to calculate a share price index

Answer 3

1. Price weighting
2. Equal weighting
3. Market capitalization

Question 4

index base value =

Answer 4

100

Question 5

disadvantage of the price weighting technique

Answer 5

high priced shares carry a greater weight than cheaper shares.

Question 6

price weighting index in south africa

Answer 6

Financial mail index

Question 7

Equal weighting index in SA

Answer 7

Rand Daily mail index ( RDM Index)

Question 8

Rand Mail Index ( equal weighting ) and Financial Mail index ( price weighting) were converted into?

Answer 8

The JSE Actuarial index series ( market capitalization)

Question 9

3 Types of of price movements

Answer 9

1. Primary
2. Secondary
   Short term

Question 10

RSI > 30

Answer 10

Share is oversold

• Buy signal

Question 11

RSI > 30

Answer 11

Share is overbought
- sell signal

Question 12

common RSI period

Answer 12

14 days