7silkn_ - PORTFOLIO MANAGEMENT
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PORTFOLIOMANAGEMENTAssignment-Version52.pdf
HIGHER COLLEGE OF TECHNOLOGY
DEPARTMENT: BUSINESS STUDIES
Final Examination:
Assignment Based Assessment Semester: II A. Y.: 2019 / 2020
Advanced Diploma
Start Date: Friday, 1 May 2020 Time: 12:00 PM
Due Date: Sunday, 3 May 2020 Time: 12:00 PM
Student Name
Student ID
Specialization ACCOUNTING
Section 1, 2 & 3
Level ADVANCED DIPLOMA
Course Name PORTFOLIO MANAGEMENT
Course Code BAFI 3200
For official Use Only
Question No. Max.
Marks Obtained Marks
Question
No.
Max.
Marks
Obtained
Marks
1 10 1 10
2 10 2 10
3 10 3 10
4 10 4 10
5 10 5 10
Grand Total
Marks 50
Grand Total
Marks 50
First Marker: Second Marker:
Date: Date:
Guidelines for Students to Submit the Assignment:
1. The final assessment for semester 2, 2019-20 will be done through comprehensive assignment for a maximum of 50 marks. The schedule of the final assessment is
available in the college website. https://www.hct.edu.om/about/the-
college/announcements/final-assessment-timetable-041620
2. All the students are expected to have only one assignment at one time. In case, if
the students have more than one assignment on the same day, please report to the
exam committee through the following mail id. [email protected] as soon as
possible.
3. All students are given 48 hours to complete and submit each assignment from the
day, date and time the assignment is uploaded. Students are advised not to wait till
the last moment of the deadline to submit the assignment.
4. The students can check the assignment anytime and any number of times from the
opening of the assignment. The answer to the assignment need to be uploaded in
e-learning within 48 hours.
5. The answer to the assignment can be uploaded only one time. No requests for
resubmission of the assignment will be entertained.
6. The students may contact the following mail Ids if they face any difficulties while
related to final assignment.
For Academic related support :
Business Courses
For Technical Writing 1
For Technical Writing 2
For Technical Communication
@hct.edu.omecot-ramil
For issues related to e-mail accounts and
Microsoft Teams
Any issues related to E-Learning Moodle [email protected]
Any other IT Troubleshooting [email protected]
7. Students may contact their respective lecturer through college email (within the
48-hour period given) if they have any doubts and clarifications on the
assignments.
8. Students should be aware that this assignment is an independent assessment.
Students are not allowed to get help from any other person during the assessment
period.
9. Student assignment will be checked for plagiarism through Turnitin software. This
assignment will be assessed as per the College Assessment Policy. Student will be
investigated in case of plagiarism as per the College policy and procedures. The
maximum acceptable similarity index is 25%.
10. In case the students face any technical issues regarding the submission of
assignment, the answer to the assignment can be mailed to the concerned lecturer
within the 48-hour period using college email.
11. Any assignment submitted after the 48-hour period will not be considered for
evaluation.
12. The assignment should be submitted only with the file in MS Word document. No
other format is acceptable at all (e.g. pictures, JPEG, PDF, etc).
13. The students need to answer the assignment in the prescribed number of words as
mentioned in the assignment.
14. The students need to follow the following format while preparing the assignment:
i. Font Style: Times New Roman
ii. Font Size: 12 point for body and 14 point for Headings
iii. Line Spacing: 1.5
iv. Margin: 2.54cm (One inch) on all the sides
v. Page Number : At the bottom right hand corner of each page
vi. Colour: All words should be in black colour
15. Students who will fail to submit their assignment as per the deadline given are
required to make an online appeal along with the valid excuses as the guidelines
which will be announced through the college website or e-learning portal within
three days from the date of submission deadline.
Case Study: 1
Dr. Sultan Ahmed Abdullah Al Hasni is a regular investor from the period 22
nd December
2015 till 30 th
April 2020 through Fidelity Investment & Research Company established in
1946 in Boston, United States. During the year 2020, he like to play active role in the
market due to COVID 19 and purchased shares of the following companies (i) 400 shares of
Amazon.com on 27 th
January 2020 at US$ 1828.34; (ii) 350 Shares of Microsoft
Corporation on 27 th
January 2020 at US$ 162.28 and (iii) 227 Shares of Shares of
Starbucks Corporation on 18 th
March 2020 at US$ 56.33. In the month of April 2020, Dr.
Sultan Ahmed Abdullah Al Hasni is selling his shares (i) 400 shares of Amazon.com on
14/4/2020 at US$ 2283.32; (ii) 350 Shares of Microsoft Corporation on 16/04/2020 at US$
177.04 and (iii) 227 Shares of Starbucks Corporation on 16-04-2020 at US$ 73.51. The
commission charged by Fidelity Investment and Research Company and US Market
(NASDAQ 100) is 0.0025 and 0.001 for buying & selling of the shares traded. The
commission value will be paid exclusive of shares purchased and inclusive for the shares
sold by Dr. Sultan Ahmed Abdullah Al Hasni. You are required to calculate the following:
A. Calculate the Buying and Selling activity with commission charged by Fidelity
Investment & Research Company and US Market from Dr. Sultan Ahmed Abdullah
Al Hasni?
a) Amazon.com (2- Marks)
b) Microsoft Corporation (2- Marks)
c) Starbucks Corporation (2- Marks)
B. What is the commission charged by the US Market from Fidelity Investment &
Research Company in buying and selling all three companies shares? (3 - Marks)
C. What is the Portfolio Profit or Loss earned by Dr. Sultan Ahmed Abdullah Al Hasni
in all the company shares? (1 - Marks)
Case Study: 2
Mr. Ali Hussain Al Lawati and Ms. Fakhara Farouq Khamis Al Oraimi are family friends
from the year 1990. In the year 2019, Mr. Ali Hussain Al Lawati joined in Marketing
section and Ms. Fakhara Farouq Khamis Al Oraimi joined in Accounting section in Higher
College of Technology (HCT), Muscat. During January 2020, the subject Portfolio
Management attracted their interest and start investing in three stocks like Google
Incorporation, Yahoo Incorporation and Walmart Incorporation under the help of Dr.
Yousuf Khamis Al Mabsali. As a beginner in Portfolio Management, they are unable to
move further in identifying the initial price of the share (P0). You are required to calculate
and provide the necessary information pertaining to the below question:
A. Google Incorporation expected to sell at USD 1279 at the end of 10 th
year with an
annual dividend of USD 13.87 per share. The required rate of return is 0.16. What is
the present value of the share? (3 - Marks)
B. Yahoo Incorporation hopes to sell at USD 286 at the end of Ninth year with an
annual dividend of USD 10.25 and USD 17.65 for the first five year and thereafter.
The required rate of return for the Yahoo Incorporation is 15½ per cent. What is
the present value of the share? (3 - Marks)
C. Walmart Incorporation predicted to sell at USD 189 after Eight year with an overall
dividend of USD 72 for eight year. The rate of return is 14¾ per cent. What is the
present value of the share? (3 - Marks)
D. Which company is considered to be the best possible option for investing by Mr. Ali
Hussain Al Lawati and Ms. Fakhara Farouq Khamis Al Oraimi? (.5 – Mark)
E. In case, they purchased 1069 shares of Yahoo Incorporation. What will be the
present value of the shares? (.5 – Mark)
Case Study: 3
Dr. Hanaa Saraj Faqeer Al Balushi joined in Oman Cement as Chief Managing Director
(CMD) in Muscat, Oman on 15 th
September 2007. During the period, Ms. Khawla Ali
Khamis Al Shamsi joined as a Personal Secretary to Dr. Hanaa Saraj Faqeer Al Balushi
and became a Well Wisher and Personal Financial and Investment Analyst to her. The
loyal and dedicated performance of Dr. Hanaa Saraj Faqeer Al Balushi was highly
appreciated in the Annual Meeting by the company and granted OMR 25,000 on 22 nd
December 2012 which can be matured and transferred to Dr. Hanaa Saraj Faqeer Al
Balushi saving account on 1 st April 2020. Due to certain situation, Dr. Hanaa Saraj Faqeer
Al Balushi decided to invest OMR 25,000 on 20 th
April 2020 in her dream companies with
the help of minimal information. As a student of Portfolio Management, you are hired to
help Dr. Hanaa Saraj Faqeer Al Balushi for calculating Variance and Standard Deviation
of all the securities in decision making process. (1.5 × 4 = 6 Marks)
State Probability McLaren Bugatti Rolls Royce Ferrari
Winter 26.7 0.34 44 % 0.23 32¾ %
Spring 34.5 0.46 28 % 26 % 0.08
Autumn 20.8 0.52 13 % 0.33½ 48½ %
Summer ? 0.225 9 % 48 % 0.38
By the time the work was hired from the student, Dr. Hanaa Saraj Faqeer Al Balushi
Personal Secretary Ms. Khawla Ali Khamis Al Shamsi came with SIX securities going to be
performed well after 15 th
May 2020.
Script Name Return σ
Maserati 21.83 % 166.8
BMW 32.69 % 53.25
Mercedes Benz 23.23 % 81.79
Lamborghini 31.75 % 186
Aston Martin 28.52 % 135.75
Bentley 18.91 % 57.5
Based on the above set of information provided by both the parties, you are required to
provide any best FOUR securities can be chosen by Dr. Hanaa Saraj Faqeer Al Balushi for
her investment with justification. (2 + 2 = 4 Marks)
Case Study: 4
Dr. Ahmed Abdullah Al Hinai, Dr. Ahmed Hamood Al Wahaibi, Ms. Basma Sulaiman Al
Harthi and Mr. Mustafa Saif Al Kemyani are close friends completed Advance Diploma
and graduated from Higher College of Technology, Muscat during the period 2019 – 2020.
During the period of study, all of them got motivated and planned to invest OMR 2,500 in
different markets with different structure for earning additional income. Based on the
scenario, you are required to answer the below questions.
A. Dr. Ahmed Abdullah Al Hinai is planning to invest for a period of 1 to 2 years by
following the objective “Higher the Risk. Higher the Return”. So, Dr. Ahmed
Abdullah Al Hinai started discussing with Brokers, Academic, Practitioners and
Policy Makers about the various strategies of investment in the market. After detail
discussion, Dr. Ahmed Abdullah Al Hinai came to a conclusion that investing in
Futures and Options are more fruitful in reaping higher return. Based on the
scenario, you are required to answer the following question.
a) As per the discussion, Dr. Ahmed Abdullah Al Hinai will be investing in which
market? (1 – Mark)
b) Is it possible for investing in forward contracts? In case of investing, what are
the procedures followed by Dr. Ahmed Abdullah Al Hinai? (1 – Mark)
c) What are all the Futures and Option segment followed by Dr. Ahmed Abdullah
Al Hinai in investing in Muscat Securities market? (1 – Mark)
B. Dr. Ahmed Hamood Al Wahaibi is planning to invest OMR 20,000 in Muscat Security
Market (MSM). Due to the busy schedule in his official work Dr. Ahmed Hamood Al
Wahaibi may not spend more time in MSM. In such as case, what are the strategies
has to be followed by Dr. Ahmed Hamood Al Wahaibi for investing. Based on the
scenario, you are required to answer the following question.
a) What are the opportunities for Dr. Ahmed Hamood Al Wahaibi to get nominal
rate of return? (1 – Mark)
b) How to get nominal rate of return without sparing any time in the Muscat
Security Market? (1 – Mark)
c) “Don’t Trust Money. Keep your Money in Trust”. How these quotes synchronize
to the Dr. Ahmed Hamood Al Wahaibi? (1 – Mark)
C. In the year 22 nd
December 2016, Ms. Basma Sulaiman Al Harthi has invested OMR
2,500 in Bank Muscat for a period of 5 years with a saving certificate entitling that the
bearer has mentioned that Ms. Basma Sulaiman Al Harthi will receive an interest rate
of 4.5 per annum on 22 nd
December 2021. On 28 th
April 2020 due to COVID 19, she
wishes to get back her commercial instrument from Bank Muscat. Under this
scenario, you are required to answer the following question.
a) What is the name of the instrument issued by Bank Muscat? (0.5 - Mark)
b) Does there any other banks has the responsibility to issue the above side
instrument in Oman? (1 – Mark)
c) Is there any penalty charged by Bank Muscat from Ms. Basma Sulaiman Al
Harthi? (0.5 - Mark)
D. Mr. Mustafa Saif Al Kemyani came to knew from Times of Oman and Oman Daily
Observer about the issue of share from Bank Dhofar and Dhofar Insurance at the
rate of 0.500 Bz. and 0.300 Bz, respectively. So, Mr. Mustafa Saif Al Kemyani
invested OMR 125 and OMR 70 in both the companies. Under this scenario, you are
required to answer the following question.
a) Under which market Mr. Mustafa Saif Al Kemyani planning to invest OMR 125
and OMR 70? (0.5 - Mark)
b) What is the method employed by Bank Dhofar and Dhofar Insurance in issuing
money from the public? (0.5 - Mark)
c) What are the procedures followed by Mr. Mustafa Saif Al Kemyani in selling the
purchased shares? (1- Mark)
Case Study: 5
Dr. Bassam Hamdan Al Tabash working as a Senior Research Analyst in Ministry of
Manpower, Oman from 1 st March 2009 till 19
th April 2020. During the period, Dr. Bassam
Hamdan Al Tabash made an investment analysis for Oman Oil, Shell Oil and Al Maha Oil.
The results of the analysis are as follows. The market price of the risk and their sensitivities
for Oman Oil, Shell Oil and Al Maha Oil stocks are given below. On 20 th
April 2020, the
Ministry of Manpower gave OMR 50,000 to Dr. Bassam Hamdan Al Tabash to deposit in
Bank Nizwa, Al Khuwair Branch at a Risk-less (Rf) rate of return at 0.005 % p.m.
Factors Market Rate of Risk Sensitivity
Export 17 % 4.21
Import 12½ % 2.19
Forex Rate 0.095 1.86
Inflation 3.25 % 1.05
Gross Domestic Product (GDP) 0.135 3.72
Purchasing Power Risk 8¾ % 2.72
The probabilities of getting a return on Oman Oil, Shell Oil and Al Maha Oil is given
below for your reference
Probabilities Oman Oil Shell Oil Al Maha Oil
0.335 0.195 0.18 22.50%
27% 20½% 18¾ % 0.1831
0.21 0.075 0.09 7.25%
18.5% 0.363 24 % 18¼%
A. Based on the above details, you are required to calculate the Arbitrage Pricing
Theory (APT) Model? (4 Marks)
B. Identify, which company stocks “Oman Oil, Shell Oil and Al Maha Oil” are
considered to be the better place of investment under APT Model? (1 Marks)
C. Calculate Capital Asset Pricing Model (CAPM) for Oman Oil, Shell Oil and Al
Maha Oil with β value of 2.273, 2.981 and 0.91 by stating the better place of
investment? (3 Marks)
D. In case the Shell Oil E (R) on a stock is 33.4 per cent; Beta (β) = 2.1 and Rf = 14.92
per cent. What must be the return on the market? (2 Marks)
