NB: SOLVE QUESTION (e)

You are a researcher with an investment bank. Your company is planning to develop its own stock market indexes to track the performance of its portfolios. So far, the company has portfolios which consist of the equities of companies in the following sectors of the economy

• Financial

• Manufacturing

The manufacturing category includes all companies that are non-financial. You have been asked to prepare stock market indexes based on the following

• Price-weighted with the divisor being the number of companies in the category

• Value-weighted with the issued shares being the number of issued shares of the company on first listing with the denominator adjusted for new entrants each time a new company gets listed

• Equally-weighted

You are required to prepare a report for the company. The report should have the following features:

1. Beautiful back-page with appropriate title
2. Executive Summary
3. Table of Content
4. Introduction in terms of what the document is about

The introduction should talk about the following

1. Background of the report
2. Scope and objective of the report
3. Sources of information in preparing the report
4. Structure of the report

5. Analysis of the trend in the various indexes calculated for the financial companies

This should discuss the following (in very brief)

1. Trend in the form of a graph in each of indexes you have calculated
2. Calculation of returns on the indexes and an analysis or explanation of the trend in the indexes and returns

6. Analysis of the trend in the various indexes for the non-financial companies.

This should discuss the following (in very brief)

1. Trend in the form of a graph for each of the indexes you have calculated
2. Calculation of returns on the indexes and an analysis of explanation of the trend

7. Advice in terms of your view and observation on the analysis as to which category has performed well over the period.