Portfolio Management

9th October 2016

FIN 4080 PORTFOLIO MANAGEMENT HOMEWORK 1

NAME: SUSAN MUKITE NAMIINDA   ID: 2B5039

Describe the definitions of the following five indexes: Nikkei225, TOPIX, S&P500, Dow Jones Industrial Average, and one stock market index from your country or region.

Nikkei225

Nikkei225 index (Nikkei in short) is a widely respected and leading stock index in Japan. It consists of the top 225 blue-chip companies in Japan trading in the Tokyo Stock Exchange, and is weighted by each stock’s price. The companies included in the index are reviewed every September and the changes are revised in October.

TOPIX

The TOPIX (Tokyo Stock Price Index) is an index of all companies listed in the Tokyo Stock Exchange. The firms are part of the “first section” (a group of all large firms) of the Tokyo Stock Exchange, and the stocks are weighted according to their total market capitalization. The larger components have higher percentage weightings, while the smaller components in the index have lower weights. TOPIX is used as a benchmark for investment in Japanese stocks.

S&P500

The S&P (Standard & Poor’s) 500 index is an index that includes the top 500 stocks of U.S companies. The index is weighted by the market value of these stocks and reflects performance of large cap ("large market capitalization”) U.S companies. The 500 companies are picked by the S&P Index Committee and economists, and the index acts as a benchmark of the general U.S stock market.

Dow Jones Industrial Average

Dow Jones Industrial Average (founded by Charles Dow in 1896) is a weighted average of the value of one share each of 30 of the biggest companies in the U.S. that are traded in the New York Stock Exchange and NASDAQ. It sometimes acts as an indicator of the general direction of the economy.

NSE 20-Share Index

The NSE (Nairobi Stock Exchange) 20-Share Index is a price-weighted index that represents the average of the shares of 20 public and listed blue-chip companies in Kenya. The companies in the index are selected based on a weighted market performance for a one year period and the composition is reviewed from time to time. The index is used to track performance of the Nairobi Stock Exchange equities market.