Question $4$

a$)$ Discuss four $(4)$ uses of security market indices.

$(8$ marks$)$

b$)$ Company A$,$ B and C are three multinational companies listed on both the Ghana Stock Exchange $($GSE$)$ and the New York Stock Exchange $($NYSE$).$ Use the table below to answer the following questions.

$\backslash$table$[[,$Time T$,$Time T$+1],[$Stock$,$GSE $($GHS$),$NYSE $($$$),$GSE $($GHS$),$NYSE $($$$)],[$A$,30,2,20,4],[$B$,20,3,40,3],[$C$,10,1,15,2]]$

i$.$ Calculate the price weighted index for GSE and NYSE at both Time $T$ and Time $T+1$ and the percentage change in both indices between Time T and Time $T+1.(4$ marks$)$

ii$.$ If there is a three for one stock split of stock A on GSE and two for one stock split of the same stock on the NYSE, find the new divisor to compute the new price weighted index for GSE and NYSE at time T

$(2$ marks$)$

c$)$ Discuss three $(3)$ shortfalls of price weighted index.

$(3$ marks$)$

d$)$ Discuss three $(3)$ characteristics of a good security market.

$(3$ marks$)$