Information and indices

Question 1

FTSE 100 index

Answer 1

weighted by market cap

Question 2

DJIA index

Answer 2

weighted towards price

Question 3

EU Benchmark regulation

Answer 3

> used to determine the amount payable under a financial instrument or financial contract or the value of a financial instrument
used to measure the performance of an investment fund for the purpose of:
tracking the return
defining the asset allocation or a portfolio
computing the performance fees
recent amendments to this regulation provide for standardised provisions to deal with a replacement benchamrk

Question 4

free float shares

Answer 4

shares available to be bought by the public

Question 5

directors shares

Answer 5

not free-fold
held long term and not short term

Question 6

firms with low levels of free float shares

Answer 6

more volatile share price that may distort index

Question 7

free float index

Answer 7

weighting reflect the nmber of free float shares available

Question 8

simple arithmetic index (price weighted)

Answer 8

B*(Sum(Pnew)/Sum(Pbase))
> equally weighted
> Nikkei 225 and Dow Jones

Question 9

geometric index

Answer 9

measures the rate of change in the prices of the constituents
GI = sqrt^n(P1P2…Pn)
> only base price changed
> less sensitive
> always less than or equal to arithmetic index
> FT 30 ordinary share index

Question 10

market value weighted index (arithmetic)

Answer 10

B((SumNnewPnew)/(SumNold*Pold))
FTSE 100
FTSE 250
FTSE All share
FTSE actuaries 350

Question 11

S&P 500

Answer 11

market cap weighted arithmetic index

Question 12

DAX 30

Answer 12

market cap weighted arithmetic index

Question 13

CAC 40 (french)

Answer 13

market cap weighted arithmetic index

Question 14

SBF 250

Answer 14

250 FRENCH BLUE CHIP FIRMS

Question 15

Eurofirst indices

Answer 15

market cap weighted arithmetic index
derivative index by tracking liquid assets

Question 16

eurotop 100

Answer 16

market cap arithmetic mean
FTSE Eurotop 100
traded on Euronext Amsterdam and ICE Futures Europe

Question 17

STOXX inidices

Answer 17

market cap weighted arithmetic

Question 18

Nikkei stock avg

Answer 18

unweighted arithmetic index

Question 19

S&P CNX Nifty

Answer 19

market cap weighted arithmetic index

Question 20

FTSE actuaries UK giilts

Answer 20

based on a range of 12 indices
> 7 conventional gilt indices
> 5 index linked gilt
> price reflects an equally weighted portoflio
> less than 5
> 5-15 yrs
> 15
> 25 yrs redemption
> real yields 0% - 5%

Question 21

index-tracking portfolio

Answer 21

has a smaller number of securities than the index
lower maintenance costs
poor returns in a bear market
need to change the portfolio if the characteristics of the market change

Question 22

Peer group comparisons

Answer 22

compares performance to the
performance of a set of other managers chosen from a broad range of
managers

Question 23

The median manager:

Answer 23

Where the performance is compared to the median
manager of a number of similar managers

Question 24

Two-horse race

Answer 24

Where the performance of a fund is compared to just one
other manager – usually the closest competitor

Question 25

Benchmark indices

Answer 25

• Specified in advance
• Appropriate to the investments and investment style
• Measurable with available historic data
• Unambiguous and clearly defined
• Investable (free float indices)
• Stable with a low turnover