SUBMITTED TO: SYED FARHAN SHAKEEL SUBMITTED BY: Roomasa Ramesh REGISTRATION NO: 1146124 SUBJECT: Introduction to business

finance

ASSIGNMENT NO: 4 DATE: 16/3/2012

Qno.1 (a) List all provinces of India. There are actually 28 states (they are no longer called provinces) in the Republic of India as well as seven Union Territories. India is composed of 28 states and 7 union territories. A complete list of these is given below

States of India: Andhra Pradesh Arunachal Assam Bihar Chhattisgarh Goa Gujarat Haryana Himachal Pradesh Jammu and Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamilnadu Tripura Uttaranchal (Uttarakhand) Uttar Pradesh West Bengal

Union Territories of Indians: Andman and Nicobar Chandigarh Dadra and Nagar Haveli Daman and Diu Delhi (National Capital Territory of Delhi) Lakshadweep Pondicherry

(b) What is difference between dheli, new dheli and Bombay? Difference between dheli and new dheli: Delhi Most of the airline offices, travel agents, banks and hotels are here. There are a number of cinemas and performing arts centers around Connaught Place, but Delhi's strict licensing laws effectively curtail nightlife. Central New Delhi also has its fair share of more recent high-rise offices and hotels, standing close to pre-British constructions such as the open-air observatory, Jantar Mantar, and a generous smattering of excellent museums covering arts and crafts and the lives of India's post-Independence politicians. New Delhi The capital of the Indian republic is at New Delhi, the planned city devised by the British. The smooth roads, modern houses and buildings and offices and departments attract tourist. As you come out of the New Delhi rly stn, in front is Paharganj and on the south Chemsford Road which intersect at Connaught Place. New Delhi, the imperial city created by the British Raj, is composed of spacious, tree-lined avenues and imposing government buildings, and has a sense of order absent from other parts of the city. Difference between Delhi and Mumbai: Delhi is the capital of India and it is the largest metropolis in the country. It is the second largest city in India in terms of population. Mumbai on the other hand is the largest Indian city in terms of population. Delhi occupies a total area of 573 square miles, whereas Mumbai occupies a total area of 169 square miles. Delhi is characterized by the humid subtropical climate whereas Mumbai is characterized by a tropical climate. Mumbai has the cold season from December to February and

the summer season from March to June. Mild winter starts in late November in Delhi and it is coldest during January. Delhi is very well known for fog in these months. Delhi is considered the largest commercial center in the northern part of India. Delhis economy is triggered by construction, power, telecommunications, health and community services. Mumbais economy is largely influenced by textile mills, diamond polishing and information technology. Mumbai has the distinction of being the largest film producer in India. Bollywood is the center of Hindi film industry and Marathi film industry too. Delhi on the contrary is known for manufacturing industry that has grown fast in the recent years. It has the largest consumer market as well. Gurgaon is the satellite city of Delhi is considered an important economic hub in India. Delhi is home to several points of tourist interest such as Jama Masjid, Qutab Minar, Red Fort and Akshardham temple to mention a few. Mumbai is home to places of tourist interest such as the Elephant Caves, Rajabai Clock Tower, and Juhu and Chowpathi beaches. Mumbai has beaches whereas Delhi does not have beaches. Delhi is the seat of art and culture. (c)List all multinational companies (firm) operating overseas but head office in Pakistan.

MULTINATIONAL COMPANIES:
National bank EFU Life Assurance Ltd Bata Pakistan Ltd Berger Paints Pakistan Ltd Abbott Laboratories Pakistan Limited Glaxo SmithKline Pakistan Limited - GSK IBM Pakistan IGI Insurance Limited Indus Motor Company Limited (Toyota Motors) KH PHARMA PVT LIMITED United Bank Limited Habib Bank Limited Cisco Systems Pakistan (Pvt) Ltd. Genista Pharma (Pvt) Ltd

(d) List all capital markets in the SAARC region. 1) India - NSE - National Stock Exchange of India Ltd. BSE Bombay Stock Exchange 2) Pakistan ISE - Islamabad Stock Exchange KSE - Karachi Stock Exchange LSE - Lahore Stock Exchange STF - Sialkot Trading Floor 3) Bangladesh- DSE - Dhaka Stock Exchange 4) Sri Lanka CSE - Colombo Stock Exchange 5) Nepal NEPSE - Nepal Stock Exchange 6) Bhutan Royal Securities Exchange of Bhutan 7) Maldives MSE - Maldives Stock Exchange 8) Afghanistan AFX Afghanistan Stock Exchange (e) What is the difference between stock and mutual funds? A stock is a company or a stock is ownership in a company. For example, you can own stock in General Electric. If you buy 100 shares you own a small part of GE. When you buy a mutual fund, you are buying shares of many many different companies. The mutual fund will take your money. Pool it with other people's money and buy shares in several different companies. Mutual funds can be thought of as a basket of stocks. Mutual funds are generally considered to be lower risk than individual stocks because they are "diversified" -they don't put all their eggs in one basket. (f)List all commodities extracted from Pakistan. List of Commodities Ineligible for Concessionary Export Finance Under the Export Financing Scheme 1 Raw cotton (excluding surgical bleached/absorbent) 2 Cotton yarn (excluding cotton sewing thread, blended yarn containing 49 percent cotton, dyed yarn, and yarn of Count 30 and above) 3 Fish other than frozen and preserved 4 Mutton and beef (excluding frogs legs) 5 Petroleum products 6 Crude vegetable materials (excluding floricultural and horticultural

Products, rosebuds/flower, sassafras, and guar gum extract/guar protein) 7 Wool and animal hair (excluding wool tops) 8 Crude animal materials (excluding animal casings and fat-ends) 9 Animal feed 10 All grains including grain flour (excluding Irri/basmati rice with brand Names in packets of 150 kg) 11 Stone, sand, and gravel 12 Waste and scrap of all kinds 13 Crude fertilizers 14 Oil seeds, nuts, and kernels 15 Jewellery exported under the Entrustment Scheme 16 Live animals (excluding hatching eggs and day-old chicks) 17 Hides and skins 18 Leather (wet blue) 19 Inorganic elements and oxides, etc. 20 Crude minerals (excluding refined/treated salt) 21 Works of art and antiques 22 All metals (excluding Magnetite in processed form, blister copper, and Chrome concentrates in processed form) 23 Furs 24 Wood in rough or squared cubes (g) 1000*1million*1billion /1million+10billion-100million = Rs.100, 999, 899million (h) What is the difference between retail investors and institutional investors? Definition of 'Retail Investor': Individual investors who buy and sell securities for their personal account, and not for another company or organization. Definition of 'Institutional Investor': A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. Institutional investors face fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves. Comparing Retail and Institutional Investors: Retail investors are the individuals and small groups who invest in the equity market for either short-term or long-term gains. On the other hand, institutional investors are the banks, financial services firms, different financial institutions and mutual fund companies which make heavy investments in the stock markets generally for a prolonged period of time. The risk taking capacity of institutional investors is far more than that of retail investors. So, that is why we see

many institutional investors purchasing falling stocks or holding stocks even in the phase of a bear market. Retail investors constitute of a very small portion of the total volumes generated on the stock exchange. This is true in the case of almost all the stock exchanges in the world. So, we can say that the stock markets across the world are directed and controlled mostly by the large institutional investors. The institutional investors can either be the domestic ones or the foreign ones who have sought the requisite permissions to invest in markets of various countries. The financial planning and financial management of institutional investors is much more sophisticated and perfect as compared to the retail investors. That is why; it has been observed that institutional investors have always made more money than the retail investors. Lack of knowledge of the stock markets is an age-old problem with the retail investors. Many times, such investors depend on the news in the market or tips from technical analysts to trade in stocks. On the contrary, institutional investors have their own talented research teams which conduct a thorough stock research before investing. However, one thing is for sure-the institutional investors have a more performance pressure as they have the money of the masses with them and they need to give the promised returns on investment for all their investors to maintain their standard in the industry. Many retail investors are seen copying the moves of the large institutional investors which can be disastrous for them. Retail investors should prepare their own stock portfolio based on their risk taking ability and invest for the long-term to beat short-term volatility in the markets. (I)In govt. securities according to the equation of interest rate which variable is assumed to be zero? As buying government securities which have low risk of default securities so that default rate premium is zero in government securities. (j)Explain the relationship between credit rating and interest rate use Pakistan as an example. Credit ratings are used by investors, issuers, investment banks, broker-dealers, and governments. For investors, credit rating agencies increase the range of investment alternatives and provide independent, easy-to-use measurements of relative credit risk; this generally increases the efficiency of the market, lowering costs for both borrowers and lenders. This in turn increases the total supply of risk capital in the economy, leading to stronger growth. It also opens the capital markets to categories of borrower who might otherwise be shut out altogether: small governments, startup companies, hospitals, and universities Internal Risk Rating. 2.6.2 Credit risk rating is summary indicator of a banks individual credit exposure. An internal rating system categorizes all credits into various classes on the basis Of underlying credit quality. A well-structured credit rating framework is an Important tool for monitoring and controlling risk inherent in individual credits

As well as in credit portfolios of a bank or a business line. The importance of Internal credit rating framework becomes more eminent due to the fact that Historically major losses to banks stemmed from default in loan portfolios. While A number of banks already have a system for rating individual credits in Addition to the risk categories prescribed by SBP, all banks are encouraged to Devise an internal rating framework. An internal rating framework would Facilitate banks in a number of ways such as a) Credit selection b) Amount of exposure c) Tenure and price of facility d) Frequency or intensity of monitoring e) Analysis of migration of deteriorating credits and more accurate Computation of future loan loss provision f) Deciding the level of Approving authority of loan. Interest rate risk: 3.2.1 Interest rate risk arises when there is a mismatch between positions, which are Subject to interest rate adjustment within a specified period. The banks lending, Funding and investment activities give rise to interest rate risk. The immediate Impact of variation in interest rate is on banks net interest income, while a long Term impact is on banks net worth since the economic value of banks assets, Liabilities and off-balance sheet exposures are affected. Consequently there are Two common perspectives for the assessment of interest rate risk.