SUBJECT :- Investment Analysis and portfolio Management (FIN630)

Question:

Mr. Ahmad intends to invest in a stock in order to enjoy an increase in his income. He finds out two stocks of his concern for the investment. The following information pertains to the said stocks:

Stock A: It was purchased 60 days ago at Rs. 1,000 and currently selling at Rs. 1,500. It has paid a divdend of Rs. 30.

Stock B: It was purchased 45 days ago at Rs. 700 and currently selling at Rs. 1,200. It has paid a dividend of Rs. 25.

Mr. Ahmad is confused in the selection of stock with maximum return.

Requirements:

As a student of Investment Analysis and Portfolio Management, you are required to calculate the following returns for suggesting the better stock to Mr. Ahmad:

1. Dividend Yield and Capital Appreciation (%) on stock A and B. (8 marks)

2. Holding Period Return (HPR) on stock A and B. (6 marks)

3. Annual Holding Period Return (HPR) on stock A and B. (4 marks)

4. On the basis of above calculations, identify which stock is better

for the investment and why? (2 marks)

NOTE 1: You are required to provide complete calculations (working) in part (1), (2), (3) with each and every step, formula, and resulting figures with proper units. In part (4), you are required to provide to-the-point answer. Unnecessary and irrelevant details won't get any marks.

Note 2 :-Solve these question and please explain in detail in such a way that i will get 10/10 marks.