2:12 KB question-4 - Saved The Suban-6 index is a fictitious index and is used by many investors to monitor the general behaviour of the stock market. Its value was set equal to 100 on 1 January 1975 (based on the stock prices below). In the table below we have the value of the stocks composing this index for 1 January 2014 and 30 June 2014. Stock 1 12 3 4 5 6 1 January 1975 240 630 450 150 320 80 Closing market value of stock 1 January 2014 30 June 2014 460 430 1120 1150 990 980 420 360 700 650 320 290 Calculate the value of the index for 1 January and 30 June 2014. b) Compare the value the value of the index on those two dates with the original base of 1 January 1975. (50 words) c) Given the evolution of the index between 1 January 2014 and 30 June 2014, would you qualify that market as a bull or bear market? What is the return for six months and what would be that return on an annualised basis. d) Can you list a real stock index which is calculated using the same method as above? How do we call such indexes? What are the disadvantages of using such a method? Can you name an alternative method which is better? (75 words)