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Closing Date: Jan 07, 2020 11:59 PM
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Solution Assignment No.1 Fall 2019
Consumer Banking (BNK603)
The law provides authority to the Banking Mohtasib alone. Hence the complaints handling process is centralized at the Karachi Secretariat. Filing complaints is easy. Mr. Azeem will follow three simple steps:
Mr. Azeem will approach his bank in writing to resolve your complaint stating in the letter that you intend to refer the grievance to the Banking Mohtasib if matter is not resolved to your satisfaction. The bank is allowed a maximum of 45 days to resolve your complaint.
If you do not receive a reply from the bank within 45 days, or find the reply unsatisfactory, you may file a complaint with the Banking Mohtasib on the prescribed complaint form.
Thecomplaintformdulycompleted,signedandattestedbyanOathCommissionershould be attached to your letter of complaint addressed to the Banking Mohtasib and sent to:
Banking Mohtasib Pakistan
5th floor, M R Kiyani Road Karachi.
Mr. Azeem will be required to make sure that all related correspondence with the bank and copies of all relevant documents are also sent to the Banking Mohtasib with an attested Photostat copy of your CNIC duly marked for submission to Banking Mohtasib Pakistan. He is not required to send any original documents.
When a complaint is lodged to the Banking Ombudsman, first of all procedural requirements are confirmed and both parties may be required to provide additional information, if necessary. Informal complaints (i.e. walk in, e-mail, copies of letters or via telephone) are resolved by providing procedural guidance to complainant. In case of formal complaints, the banks are formally informed where necessary. Regarding informal complaints, the law allows to entertain only those complaints, which have been filed directly to Banking Ombudsman and made under oath.
After confirming that all procedural requirements have been met, we may call for additional information from both parties, if necessary, to better understand the issue. If needed, we will visit banks to examine their books, procedures and processes relating to a complaint. The outcome of this will be either:
a) Complaint is found to be unjustified - in such cases we will inform the complainant accordingly and close the case.
b) Complaint is found to be genuine - in such cases we will institute a process of mediation to achieve an amicable resolution between both parties. If the matter cannot be resolved amicably, we will pass a suitable order asking the bank to rectify the situation or make good the complainant’s loss.
Banking Mohtasib will endeavor to resolve most complaints within 2 months. However, depending on complexity, and the state of information and copies of documents provided by the complainant, some complaints could take longer to resolve. Therefore it is all the more important that the Complainant completes the Complaint Form with clarity and attaches copies of all the related documents in the first instance.
The Right to Appeal
The law provides the right to appeal to parties, the complainant and the bank. A complainant, dissatisfied with the decision of Banking Ombudsman, has the right to appeal to the Governor SBP within 30 days from the date of order of the Ombudsman. Moreover, a complainant, dissatisfied with the decision of SBP, has also been given the right to go to a court of law. However, the Ombudsman’s decision would be final, operative and binding upon the bank, if no appeal is filed or SBP does not uphold the appeal.
Guidelines for Standardization of ATM Operations
ATM is among the most important e-banking delivery channels in Pakistan. It is becoming increasingly popular, as it facilitates accountholders to withdraw fast cash anytime, inquire balance, and transfer funds throughout the year. The SBP has issued separate guidelines for all the commercial banks and switch operators in order to curtail any inconvenience to the users of ATM services. The guidelines require the banks having ATMs to:
Carry out cash balancing and reconciliation on every working day at the time fixed by their Head Office, other than the peak hours.
According to the guidelines, a process of “automatic credit” is to be carried out on the basis of verified individual transactions in which a customer’s account has been debited without any cash disbursement.
Moreover, the process of “automatic credit” is to be completed within the timeframe ranging from one to seven business days, depending on the manner of execution of transaction by a cardholder of a bank.
In order to facilitate the customers and meet the objectives of the ATM, banks are also required to develop a detailed documented procedure for automatic credit and carry out training of relevant staff members.
The guidelines necessitate Card Facilitation Centre (CFC) in every bank. CFC is a unit responsible for managing e-banking channels and maintaining database of cases (resolved/unresolved) of its own customers and balance in suspense account. In this regard, every branch ought to report to CFC the details of claims settled, outstanding claims andbalancesuspenseaccountondailybasis,to enablequickresponseofqueries.
It is mandatory for all the banks to identify at least two key personnel of CFC, who would be responsible for responding to the queries of customers, and their contact details are to be made available on website of the bank.
Furthermore, customer must be informed in writing about the amount credited to his/her account by the issuing bank. Besides, the customers are not to be charged for minimum balance when their account has been debited without cash disbursement and time for which the amount remains payable.
For providing secondary evidence to satisfy the customer against cash claims, banks are required to install external camera in ATM cabins in a way that PIN may not be captured.
Moreover, the guidelines obligate all banks to report details regarding the nature of transactions (automatic credit, claims processed or outstanding balance (suspense ATM cash), and total number and amount of actual transactions to the SBP’s Payment Systems Department (PSD).
In addition, every bank is required to develop a numbering sequence for complaints and every complainant is to be issued a reference number.
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.