Unit:1

Unit:1

Unit 1:

What are the functions of the JSE and what are the factors that influence the decision to invest?

 

INTRODUCTION

The Johannesburg Securities Exchange/JSE plays an important role in the economy of the country as it offers investment opportunities for businesses and individual. Many public companies issue shares through the JSE as they do not need to pay back the capital amount or make interest payments. They use funds received from the selling of shares to expand and for finance projects It must be noted that this content has reached maturity as many candidates perform well in this topic even though some still write vague and incomplete responses. Investment
decisions factors enable investors to make informed decisions on the best investment option. Learners should be able provide a detail explanation on how each factor influence the decision to invest. The 2020 and 2022 national and diagnostic reports on learner performance reported the following misconceptions and errors:

  • Many candidates performed well on the functions of the Johannesburg Securities Exchange even though some provided vague and incomplete responses.
  • Candidates could only name factors that should be considered when making investment decisions but could not explain the meaning of each factor.

LEARNING OUTCOMES At the end of this Unit, you should be able to:

  • Outline the functions of the JSE.
  • Explain factors that must be considered when making investment decisions.

 

Important points to consider when teaching functions of JSE
  • Explain the meaning of “securities” e.g. a security is any financial instrument/asset that can be traded financial asset that can be traded
  • Explain the functions of the JSE with special reference this institution gives businesses and investors are the opportunity to invest
  • Learners must be encouraged to wrote full sentences on the functions of the JSE to obtain two marks for each fact
  • Take note of the following revised fact on the functions of the JSE:
    o Raises primary capital by encouraging new investments in listed companies.
  • Share the above mentioned common errors and misconceptions that were committed by the 2020 and 2022 cohort on the functions of the JSE so that they do not repeat the same error.
  • Make learners aware on how they will be marked when this content is assessed using the following action verbs:
    o Outline : do not split ticks
    o Explain : split ticks
    o Advise : No splitting ticks
  • Learners must advised that only public companies can issue shares through the JSE as this institution only lists public companies.
  • Note: Learners will not be awarded marks for saying “ the JSE sell shares” as shares can be bought through stockbrokers and public companies.
  • Download a video on the functions of the JSE using the links below:
  • Guide learners how this video can be used to enhance better understanding in this topic.

https://www.youtube.com/ watch=vw3lKE7braE

https://www.youtube.com/watch?v=QIYbnwi_eJk
Assessment on the functions of the JSE

o Name the institution that allows investors to buy shares
o Quote the functions of the JSE from given scenarios
o Outline the functions of the JSE
o Explain the functions of the JSE
o Advise businesses on the functions of the JSE

  • Take note of how the above questions are scaffolded from low order to high order questions.
Important points to consider when teaching factors that must be considered when
making investment decisions

  • Explain the importance of doing research on investment opportunities before making an investment decisions.
  • Project the investment SIX investment decision factors that are stated in the 2021 exam guidelines page 19 and 20.
  • Explain the meaning of each factor influence the decision to invest by giving an example of each
  • Ensure that learners do not confuse liquidity with liquidation as this error is persistent regardless of the recommendations made in the national diagnostic reports on learner performance.
  • Make a clear distinction between the difference between return on investment and investment period to avoid learners confusing these concepts with reference to the following facts:
    o Return on investment is influenced by the risk factor e.g. the higher the risk ,
    the higher the return on investment.
    o Investment period is influenced by the period of investment e.g. the longer
    the investment period the higher the returns.
  • Emphasis the types of shares when explaining “risk” as one of the investment decision factors as this content will be covered later in this chapter.
  • Ensure that taxation as the investment decision factor is explained in context e.g. how it affects the decision to invest
Assessment on the functions of the JSE
  • Name factors that must be considered when making investment decisions
  • Identify factors that must be considered when making investment decisions from given scenarios/statements
  • Discuss factors that must be considered when making investment decisions