X`KASBIT

Spring 2024
Assignment 1
Course Supervisor: Dr. Israr Ahmed Date of Assignment: March 29, 2024
Course: Business Finance Date of Submission: April 19, 2024
Class: BBA Max. Marks: 15
Name: _______________________ ID No._____________
_______________________________________________________
Instructions:
● Write your Name and ID in a proper manner.
● Assignment should be on time. (i.e.6:50 pm)

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QUESTION 1:
Your grandfather urged you to begin a habit of saving money early in your life. He suggested that you put Rs.5 a day into an envelope. If you follow his
advice, at the end of the year you will have Rs.1, 825 (365 x Rs.5). Your grandfather further suggested that you take that money at the end of the year
and invest it in an online brokerage mutual fund account that has an annual expected return of 8%.You are 18 years old. If you start following your
grandfather’s advice today, and continue saving in this way the rest of your life, how much do you expect to have in the brokerage account when you are
65 years old?
https://www.chegg.com/homework-help/questions-and-answers/17-grandfather-urged-begin-habit-saving-money-early-life-suggested-put-5-day-envelop-
follo-q65925033
QUESTION 2: Suppose three honest individuals gave you their estimates of Stock X’s intrinsic value. One person is your current roommate, the second
person is a professional security analyst with an excellent reputation on Wall Street, and the third person is Company X’s CFO. If the three estimates
differed, in which one would you have the most confidence? Why?
https://www.chegg.com/homework-help/questions-and-answers/suppose-three-honest-individuals-gave-estimates-stock-x-s-intrinsic-value-one-person-
curre-q128491369
Question 3:
1) It is now January 1, 2009. Today you will deposit Rs.1, 000 into a savings account that pays 8%.
a. If the bank compounds interest annually, how much will you have in your account on January 1, 2012?
b. What will your January 1, 2012, balance be if the bank uses quarterly compounding?
https://www.chegg.com/homework-help/questions-and-answers/january-1-2016-today-deposit-1-000-savings-account-pays-8---bank-compounds-interest-
annual-q23581290
2) What is the future value of a 3-year, Rs.100 ordinary annuity if the annual interest rate is 10%?
a. What is its present value?
b.What would the future and present values be if it was an annuity due?
https://www.chegg.com/homework-help/questions-and-answers/1-future-value-3-year-ordinary-annuity-100-appropriate-interest-rate-10-percent-2-
present--q27056697
3) What’s the difference between an ordinary annuity and an annuity due? What type of annuity is shown here? How would you change it to the other
type of annuity?
0 1 2 3
0 400 400 400
https://www.chegg.com/homework-help/questions-and-answers/s-difference-ordinary-annuity-annuity-due-type-annuity-shown-would-change-type-
annuity-e-1-q26847642
Question 4: Define the following terms with examples.
1. Money market and capital market
2. primary market; secondary market
3. Private markets; public markets
4. Spot and future market
Question 5:
MONEY MARKET:
Money market, a set of institutions, conventions, and practices, the aim of which is to facilitate the lending and borrowing of money on a short-term basis
CAPITAL MARKET:
The part of a financial system concerned with raising capital by dealing in shares, bonds, and other long-term investments.
PRIMARY MARKET:
Where new stocks and bonds are sold to the public for the first time.
SECONDARY MARKET:
The secondary market is where investors buy and sell securities. Trades take place on the secondary market between other investors and traders rather
than from the companies that issue the securities.
PRIVATE MARKET:
A type of alternative investment in which the investors purchase shares in privately-held business.
PUBLIC MARKET:
A commodity or service that is made available to all members of a society.
SPOT MARKET:
Where financial instruments, such as commodities, currencies and securities are traded for immediate delivery.
FUTURE MARKET:
An exchange where agreements to buy or sell a particular commodity or security at a predetermined price at a specified time in the future are traded.