Question

1.1.1 Identify and explain three (3) benefits of investing in global stocks. (9)
1.1.2 Provide four advantages which investors maximize on by investing through the JSE. (4)
1.1.3 Explain the purpose of the JSE in South Africa. (3)
1.1.4 Explain the importance of ‘Indices’ (2)
1.1.5 Determine one shortfall of investing through the JSE.

Answer 1

1.1.1 . The three benefits of investing in global stocks are

• It gives an opportunity for diversifying the assets. This inturn helps to spread the risks involved, in case of an economic fluctuations.
• You are thrown open to a wide variety of choices of companies.
• In relation with the exchange rate you may gain if it is favourable for you.

1.1.2 . Advantages of investing in JSE are

• It helps to tackle price rise in a better way. The return which you receive from investing in share is much higher than the expected price rise.
• Compared to the interest rate of the banks, the shares on JSE has higher returns.
• There is an increase in the value of the shares
• It also gives you an opportunity to diversify assets.

1.1.3 . The main function of JSE is to

• Increasing the pace of economic activities by increasing the availablity of capital.
• Increase the employment opportunities
• Stimulate the creation of income.

1.1.4 . Indices helps the investors to assess the market conditions. The price of stocks are expressed as one with the help of the indices. And this makes comparison of prices during different time periods possible.