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Indices(Aangepas)

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Indices,[object Object],What is an index?,[object Object],The primary purpose of an index is to reflectmovementsin theunderlying market accurately,[object Object],A price index expresses how much the prices concerned have changedduring the day, week, month, year etc,[object Object],Indices are produced primarily for the use of analyzing investment strategies and as a measure of portfolio performance for professional investors such as pension funds, insurance companies and other institutional investors,[object Object]
Indices,[object Object],Price on the first day set as 100 = basis index,[object Object],Prices over next 4 days expressed as relative indices to the basis price,[object Object]
Indices,[object Object],Single stock index,[object Object],Price index value = Share Price / Divisor,[object Object]
Indices,[object Object],What was the % movement in the share price from the 1st of Jan to the 4th?,[object Object],Composite indices,[object Object],consist of share prices of more than 1 share,[object Object]
Indices,[object Object],Market-value (Capitalization) weighted index,[object Object],Weights shares according to their total market capitalization,[object Object], Is the most important type,[object Object],All major indices are Ex. S&P 500,[object Object],Price-weighted index,[object Object],Weights shares only according to share prices,[object Object],Equally-weighted index,[object Object],Weights each share in the index equally,[object Object]
Indices,[object Object],Market-value weighted index,[object Object],Market capitalization,[object Object],Share price x Total Shares Issued,[object Object],Companies are weighted according to their market cap with respect to the total market,[object Object],Example: ,[object Object],Company A has a total market cap of R1,000,000,[object Object],The market as a whole has a market cap of R20,000,000. ,[object Object],Then company has a weight of (1,000,000/20,000,000) X100 = 5% in the index.,[object Object]
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