Chapter Four

Question 1

What happened in 1881?

Answer 1

Kimberly Stock Exchange

Question 2

What happened in 1888?

Answer 2

Johannesburg Stock Exchange

Question 3

What happened in 1889?

Answer 3

“Trading between the chains”

Question 4

What happened in 1903?

Answer 4

Hollard Street

Question 5

What happened in 1978?

Answer 5

Diagonal Street

Question 6

What happened in 1984?

Answer 6

Founding of Developement Capital Market

Question 7

What happened in 1989?

Answer 7

Founding of Venture Capital Market

Question 8

What happened in 1996?

Answer 8

Electronic trading system

Question 9

What happened in 2000?

Answer 9

Sandton

Question 10

What happened in 2001?

Answer 10

Control of South African Futures Exchange

Question 11

What happened in 2003?

Answer 11

Alternative Exchange

Question 12

What happened in 2005?

Answer 12

JSE incorporated

Question 13

What happened in 2009?

Answer 13

Control of the Bond Exchange of South Africa

Question 14

What happened in 2016?

Answer 14

JSE moves from T+5 system to T+3 system

Question 15

What is the role of the JSE on the Primary Market?

Answer 15

Creation of new capital

Question 16

What is the role of the JSE on the Secondary Market?

Answer 16

Trading of existing capital

Question 17

What instruments are traded on the Primary Market?

Answer 17

Rights issues, and new listings

Question 18

What instruments are traded on the Secondary Market?

Answer 18

Existing shares, bonds, and debentures

Question 19

How is the price of shares determined on the Primary Market?

Answer 19

The issuer

Question 20

How is the price of shares determined on the Secondary Market?

Answer 20

Supply and demand

Question 21

Name 3 requirements for and Active Secondary Market

Answer 21

Information on companies and markets freely available
Many potential buyers/sellers
Low transaction costs

Question 22

What is the issued share capital for Main Board and AltX companies respectively?

Answer 22

R50 million and R2 million

Question 23

What is the number of shares issued for Main Board and AltX companies respectively?

Answer 23

25 million and n/a

Question 24

How many years of audited financial statements must a Main Board company provide?

Answer 24

3 years

Question 25

What must the last audited profit before tax be for a Main Board company?

Answer 25

R15 million

Question 26

What are the audit and profit requirements for an AltX company?

Answer 26

Produce profit forecast for remainder of the financial year in which the company lists, as well as one for the next financial year

Question 27

What percentage of equity must be held by the public for both Main Board and AltX companies?

Answer 27

20%

10%

Question 28

If a Main Board company does not meet the profit before tax requirement, what can be done?

Answer 28

Have a issued share capital of R500 million or more

Question 29

There are two further requirements for AltX companies/ What are they?

Answer 29

Appoint designated advisor

Directors must complete the Induction Programme

Question 30

Name 4 advantages of listing for Shareholders:

Answer 30

More tradable shares
Shares more easily accepted as guarantee
Higher market price
Easier to valuate

Question 31

Name 5 advantages of listing for Companies:

Answer 31

Status and prestige
Publicity
Easy/cheap capital
Easier mergers/takeovers
Prevention of hostile takeovers

Question 32

Name 5 prerequisites for brokers on the stock exchange:

Answer 32

Over 21
Pass examination of the South African Institute of Stockbrokers
Be a member of the Institute
May not be expelled from the JSE or any other financial market
Must pay entrance fee and annual subscription

Question 33

Members of the JSE have . . .-capacity:

Answer 33

Dual