Week 2 discussion 2 Assignment Example | Topics and Well Written Essays - 1500 words

Week 2 discussion 2 - Assignment Example The data above is based on the NASDAQ composite index which represents the overall performance of the stock market in the period of ten years from year 2004 to the end of year 2013. From the data, the changes in the composite index in the 12 months trading have been summarized yearly from the different securities traded. The difference between the opening trading composite index and the closing composite index gives the gain or loss during the trading financial year. From this the percentage amount of gain or loss is derived. Stock market index is very important in many ways as it is used to gauge the economic conditions of a give economy. A worse composite index could mean that the economy is going through recession while a pleasing composite index shows that the economy is doing well. This is because the index comprises of all listed companies and their returns in the securities exchange mainly shows the potential investments from both local and foreign investors in the country. From the data, year 2009 was the best performing year in the ten year period with a percentage return of 43.89%, followed by year 2013 with a percentage return of 38.32%. The great investment returns in the stock market could have resulted from better economic conditions in America’s economy and wide interest from both external and internal investors in the NASDAQ securities exchange. More incentives offered in investing in the stock exchenge like elimination of capital gains tax and investors getting double digits in the stock market could also be a driver in having more returns in the stock market. The worst performing year from the data was in year 2008 with a negative loss in the NASDAQ stock exchange of -40.54%. Worse economic conditions in the United States followed by the general elections in the year can be a big explanation to the stock market performance. This