A. Explain how market indices can help an investor in his investment decision.

B. What are the main characteristics of the market index used by Jamaica Stock Exchange? Explain how that index differs from that used by the Dow Jones industrial Average.

C. State two (2) uses of market indices.

D. You are given the following information regarding prices for a sample of stocks:

Stock Number of shares Price Per Share

Day 1 Day2

JN 50000 400 450

VMBS 100000 300 360

NCB 80000 540 480

SAGICOR 60000 260 300

i. Construst a price weight index for these stocks and compute the percentage in the index from Day 1 to Day 2

ii. Construct a value weight index for these stocks and compute the percentage change in the index from Day 1 to Day 2.