why Assume you are a portfolio manager at JS Global Capital Ltd. Recently you came across three attractive stocks and want to create a portfolio investment in these three stocks. The details of the stocks are given below:

The expected return on the market portfolio is 8% and its volatility is 10%. The risk-free rate based on central bank’s discount rate is 3%. (Total Marks 6, 1.25 marks each)

1. Calculate each of the stock’s expected return and risk (beta) as compared to the market
2. What should be the expected return of the portfolio based on values calculated in part a.
3. Calculate the beta of the portfolio? what does it tells regarding the riskiness of the portfolio?
4. Using the values from part c, can you calculate the expected return of the portfolio? Is it similar to your answer in part b? Why or why not?

Q No. 3 Mubashir Ali is negotiating his employment contract. His opportunity cost is 14%. He has been offered three possible 4-year contracts. Payments are in Pakistani rupees and are guaranteed, and they would be made at the end of each year. Terms of each contract are as follows:

As his financial adviser, which contract would you recommend that he accept?

Q No 4 Using the following income statement, balance sheet and additional information complete the tasks mention below.

In developing its forecast for the upcoming year, the company has assembled the following information:

• Sales are expected to increase by 8 % this upcoming year.
• Operating costs are expected to remain at 90% of sales.
• Cash and marketable securities are expected to remain at 1% of sales
• Accounts receivable are expected to remain at 8% of sales
• Due to excess capacity, the company expects that its year-end inventories will remain at current levels.
• Fixed assets are expected to remain at 61% of sales
• Spontaneous liabilities (accounts payable and accruals) are expected to increase at the same rate as sales.
• The company will continue to pay a zero dividend, and its tax rate will remain at 40%.
• The company anticipates that any additional funds needed will be raised in the following manner: 25% notes payable, 25% long-term debt, and 50% common stock.

Task:

1. Based on the assumptions listed above, construct a Pro forma income statement and balance sheet. Assume that there are no financial feedback effects. (That is assume interest will remain unchanged even though the company may increase its debt). 

Based upon this forecast, describe changes from the prior year that should expect in its return on equity, inventory turnover ratio, and profit margin

2 Explain Why you agree or disagree with the following statements. The answer should not be more than 3 sentences. Be specific in your answer and write only the most relevant explanations

1. A firm should select the capital structure that is fully levered 
2. Leveraged beta represents a fundamental operating risk.
3. MM Proposition I with no tax supports the argument that a firm should borrow money to the point where the tax benefit from debt is equal to the cost of the increased probability of financial distress.

Q No 5 The opening cash balance on 1^st Jan was expected to be Rs. 30,000. The sales budget was as follows:

November                               Rs.       80,000

December                                            90,000

January                                                75,000

February                                              75000

March                                                  80000

Analysis of records shows that debtors settle according to the following pattern: 60% within the month of sales, 25% the month following, 15% the month following.

Extracts from the purchases budget were as follows:

December                                Rs.60000

January                                         55000

February                                       45000

March                                           55000

All purchases are on credit and experience shows that 90% are settled in the month of purchases and the balance settled the month after.

Wages are Rs.15000 per month and overheads of Rs.20,000 per month (including Rs.5000 depreciation) are settled monthly.

Taxation of Rs.8000 must be settled in February and the company will receive a settlement of an insurance claim of Rs.25000 in March.

Required: Prepare a cash budget for Jan, Feb, and March

Future values For each of the cases shown in the following table, calculate the
future value of the single cash flow deposited today that will be available at the end
of the deposit period if the interest is compounded annually at the rate specified over
the given period.

Case Single cash flow Interest rate Deposit period (years)
A $ 200 5% 20
B 4,500 8 7
C 10,000 9 10
D 25,000 10 12
E 37,000 11 5
F 40,000 12 9

Write a short recursive Python function that finds the minimum and maximum values in a sequence without using any loops. Describe how you implement this
program, and how to run your program.