Business Studies
Investment: Securities
Functions of the Johannesburg Securities Exchange (JSE)
The financial sector in South African is one of the more vibrant and sophisticated
sectors in the world economy today.
The Johannesburg Securities Exchange (JSE) provides listed companies with the
ability to acquire financial resources to start or expand business operations.
The following are some of the functions of the JSE:
Serves as a barometer/indicator of economic conditions in South Africa.
Keeps investors informed on share prices by publishing the share prices daily.
Acts as a link between investors and public companies.
Shares are valued and assessed by experts.
Factors that should be considered when making an investment
decision
Return on investment
Refers to the amount of money the investor gets in addition to the original
investment amount.
Will be higher if the risks involved in the investment are high.
Will be lower if the risk involved in the investment is low.
The return on investment after deduction of tax should be higher than the general
increase.
, Risk
The risk linked to investment opportunities refers to the doubt/uncertainty that
exists regarding the extent of any gains/losses that an investor could make.
Different investment opportunities have different risks linked to them.
Certain shares do have a low risk over an extended investment period.
Shares with higher risks have a greater potential for higher returns.
Investment period
The Investment period refers to the duration of the investment from the initial date
of investment until its termination.
The investor will be able to access his/her investment within a short period if the
investment is of a short-term nature.
Higher returns accrue to the investor with long-term investments.
The choice of the investment period will depend on the personal circumstances of
the investor.
Inflation rate
Inflation refers to a general increase in the price of goods and services over time,
while the value of money decreases as a result thereof.
The higher the inflation rate, the lower the purchasing power of money.
Investors seek those investments in which the return on investment is higher than
the inflation rate.
The value of certain assets like property increases as inflation increases, thus
providing investors with a higher rate of return.
Investment: Securities
Functions of the Johannesburg Securities Exchange (JSE)
The financial sector in South African is one of the more vibrant and sophisticated
sectors in the world economy today.
The Johannesburg Securities Exchange (JSE) provides listed companies with the
ability to acquire financial resources to start or expand business operations.
The following are some of the functions of the JSE:
Serves as a barometer/indicator of economic conditions in South Africa.
Keeps investors informed on share prices by publishing the share prices daily.
Acts as a link between investors and public companies.
Shares are valued and assessed by experts.
Factors that should be considered when making an investment
decision
Return on investment
Refers to the amount of money the investor gets in addition to the original
investment amount.
Will be higher if the risks involved in the investment are high.
Will be lower if the risk involved in the investment is low.
The return on investment after deduction of tax should be higher than the general
increase.
, Risk
The risk linked to investment opportunities refers to the doubt/uncertainty that
exists regarding the extent of any gains/losses that an investor could make.
Different investment opportunities have different risks linked to them.
Certain shares do have a low risk over an extended investment period.
Shares with higher risks have a greater potential for higher returns.
Investment period
The Investment period refers to the duration of the investment from the initial date
of investment until its termination.
The investor will be able to access his/her investment within a short period if the
investment is of a short-term nature.
Higher returns accrue to the investor with long-term investments.
The choice of the investment period will depend on the personal circumstances of
the investor.
Inflation rate
Inflation refers to a general increase in the price of goods and services over time,
while the value of money decreases as a result thereof.
The higher the inflation rate, the lower the purchasing power of money.
Investors seek those investments in which the return on investment is higher than
the inflation rate.
The value of certain assets like property increases as inflation increases, thus
providing investors with a higher rate of return.
