Quiz # 01
Jan 04, 2022 12:00 AM
Jan 05, 2022 11:59 PM
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Suppose you are working as an IT manager in an IT and electronics company; you are required to write a commercial sales letter to one of your customers (Letter format has been well explained through a template/figure below) using Microsoft Word.
Consider the following requirements while writing the letter:
Insert the system date at the specified location.
Insert a permission request for your team for the installation of the network and UPS.
Insert a table stating the customer’s complete order details.
Thank you for your electronics goods order
Hp Laptop i7
APCSmart-UPS 1500VA 2U Rack Mount
The two person team bearer of this letter is deputed to attend the installattion and networking, work at your premises, kindly extent them necessary and oblige.
Name VU ID
IT Manager, XYZ electronics, Rawalpindi.
Question No 02 8 marks
Write the keyboard shortcut keys for the following actions in Microsoft Word:
Search a document
Justify a paragraph
Decrease font size
Open the Font dialog box
Increase font size
Switch to the next window
Insert a copyright symbol
Assignment #01Marks =20
Risk, Return and Investment Decisions Investment decisions are supported by various factors including investor choice of risk appetite, return on investment and most important the market situation that is backed by supply and demand forces. The supply and demand impact is reflected in the market price of securities and guide investors to take a rational decision.Along with market forces, company specific information is also helpful in determining the fair price of an investment. Rational investor s consider both market and company specific information to choose among different investment options. Following information is available for the three stock and you have to choose the two from the three securities to construct a portfolio.
Required:Calculate required rate of return for three stock using SML Equation,if risk free rate of return is 10%.Calculate Fair value of three stocks using Gordon Growth Model.Based on fair price calculation, identify whether the stocks are undervalued or overvalued, justify your answer with reasoning.Considering the above calculations,if you want to construct the portfolio of two stock from the above mentioned three stock., which two stocks you will add in your portfolio and why?NOTE: Formula and complete working is mandatory in each part, provide complete calculations in order to avoid marks deduction.IMPORTANT NOTE: 24 hours extra / grace period after the due date is usually available to overcome uploading difficulties. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience.
IMPORTANT INSTRUCTIONS/ SOLUTION GUIDELINES/ SPECIAL INSTRUCTIONS DEADLINE:• Make sure to upload the solution file before the due date on VULMS• Any submission made via email after the due date will not be accepted FORMATTING GUIDELINES:• Use the font style “Times NewRoman” or “Arial” and font size “12” • It is advised to compose your document in MS-Word format • You may also compose your assignment in Open Office format • Use black and blue font coloronly RULES FOR MARKING Please note that your assignment will not be graded or graded as Zero (0), if:• It is submitted after the due date.• The file you uploaded does not open or is corrupt.• It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc. • Not submitted as per given format • It is cheated or copied from other students, internet, books, journals etc. Note related to load shedding:Dear students, As you know that semester activities have started and load shedding problem is also prevailing in our country. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current semester, therefore no excuse will be entertained after due date of assignments or GDBs. Best of Luck!!
Required rate of Return of Stock A
r A = r RF + (r M – r RF ) β A
= 10% + (12% - 10%) 0.5
Required rate of Return of Stock B
r B = r RF + (r M – r RF ) β B
= 10% + (13% - 10%) 1.5
Required rate of Return of Stock C
r c = r RF + (r M – r RF ) β C
= 10% + (12.5%-10%) 1
Fair Price of Stock A
Po* = DIV1 / [(r RF + (r M – r RF) A) - g]
= 5/ [(10% + (12%-10%) 0.5)-4%]
5/7%=R s 71.43
Fair Price of Stock B
Po* = DIV1 / [(r RF + (r M – r RF) B) - g]
= 3/ [(10% + (13% - 10%) 1.5) – 6%
= 3/ 8.5%= R s 35.29
Fair Price of Stock C
Po* = DIV1 / [(r RF + (r M – r RF) C) - g]
= 6/ [10% + (12.5%-10%) 1) – 2%
= 6/10.5%= R s.57.14
Stock A is Undervalued as the fair price is more than the market price.
Stock B is Overvalued as the fair price is less than market price.
Stock C is Undervalued as the fair price is more than the market price.
The Stock A and Stock C should be used to construct the portfolio because of two reasons as the beta of Stock A and Stock C is less than Stock B. The required rate of return of Stock A is less than its market rate of return and required rate of return of Stock C is equal to its market rate of return while the required rate of return of Stock B is more than its market rate of return.