FIN630 - GDB # 01 Spring 2013

Semester Spring 2013

Graded Discussion Board
INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT (FIN630)
Concept to be Tested: “Fundamental Analysis”


Discussion Question
Mr. Ali is just 25 years old. He is a bank employee and is quite satisfied with his salary and job. He got a share of 1.5 million rupees in his father’s inheritance. Out of this amount, he wants to invest 0.5 million rupees in stock market. He doesn’t need this amount in near future.
Mr. Amir is 45 years old. He has 0.15 million rupees to invest. He may need this amount after one year for his medical treatment but at present he wants some increase in his income.
There are two types of stocks available. These both stocks are of same category and intrinsic value of both is Rs.60.
Stock particulars
Stock A
Stock B
P/E Ratio
0.8
1.6
ROE
0.75
2.5
Dividend yield
35%
0
Market value
Rs.45
Rs.85


Required: As Mr. Ali and Mr. Amir both are new in the stock market, they need your support in the investment decision. What you will suggest? Which stock they should select and why? Support your advice with logical comments.
Note: Your discussion should not exceed 180 words.



Note:
For acquiring the relevant knowledge, do not rely only on handouts but watch the course video lectures and read additional material available online or in any other mode.
Important Instructions:
§ Your discussion must be based on logical facts.
§ The GDB will open and close at above specified date and time. Please note that no grace day or extra time will be given for posting comments on GDB.
§ Use the font style “Times New Roman” and font size “12”.
§ Your answer should be relevant to the topic i.e. clear and concise.
§ Do not copy or exchange your answer with other students. Two identical / copied comments will be marked Zero (0) and may damage your grade in the course.
§ Books, websites and other reading material may be consulted before posting your comments; but copying or reproducing the text from books, websites and other reading materials is strictly prohibited. Such comments will be marked as Zero (0) even if you provide references.
§ You should post your answer on the Graded Discussion Board (GDB), not on the Moderated Discussion Board (MDB). Both will run parallel to each other during the time specified above. Therefore, due care will be needed.
§ Obnoxious or ignoble answer should be strictly avoided.
§ You cannot participate in the discussion after the due date via email.
§ Questions / queries related to the content of the GDB, which may be posted by the students on MDB or via e-mail, will not be replied till the due date of GDB is over.

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