FIN630 GDB 1 Solution Autumn 2021-GDB Solutions-VU

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Transcript

00:00In the name of Allah, the most Gracious, the most Merciful.

00:02Peace be upon you, dear students and viewers.

00:04Welcome to my YouTube channel, Degree No. 5.

00:06In today's video tutorial,

00:08we will solve GDV No. 1 of Fin 630,

00:12which belongs to Atom 2021.

00:16But before that,

00:18I request my viewers

00:20that

00:22when you send me a GDV assignment,

00:26kindly try to

00:28submit the PDF file as it is,

00:30so that I can easily

00:32read out and understand it.

00:34If you send me a screenshot,

00:36please take a screenshot

00:38with ease

00:40and also check

00:42whether the data

00:44in the screenshot is visible or not.

00:46Kindly check.

00:48It is cut from here.

00:50And after that,

00:52I made some adjustments

00:54from here

00:56so that I can complete

00:58the remaining sentences.

01:00So that when I read it,

01:02I can understand the related requirement

01:04and also answer it.

01:06I hope you will

01:08cooperate on this in the future.

01:10So let's go.

01:12Let's read out the

01:14discussion statement of our GDV,

01:16then the related requirement

01:18and then the solution.

01:20First, we have to discuss

01:22the application of circuit breaker

01:24in this scenario.

01:26Circuit breaker is a regulatory

01:28instrument.

01:30It is a regulatory instrument.

01:32If we talk about Pakistan Stock Exchange,

01:34any broker,

01:36any investor

01:38can apply it

01:40or not.

01:42He can follow it.

01:44He can decide

01:46whether to apply it or not.

01:48He decides

01:50according to the circuit breaker.

01:52It is triggered

01:54if the index or any stock

01:56cross the price range

01:58within which it was allowed to move.

02:00It is said that

02:02circuit breakers

02:04are triggered

02:06when

02:08the price of any stock

02:10has a range.

02:12Range means low limit

02:14and upper limit.

02:16When it moves

02:18on the downside

02:20or the

02:22maximum or minimum limit

02:24on the upside,

02:26it tries to cross it.

02:28Its core

02:30purpose is to prevent

02:32excessive speculative

02:34gain losses on security

02:36or catastrophic losses in the market.

02:38Its fundamental

02:40goal

02:42is to remove

02:44speculative effect

02:46or stop it

02:48from the market.

02:50It causes a lot of losses.

02:52For example,

02:54it happened in August 2005

02:56when the market crashed.

02:58Next,

03:00Sapphire Fibers Limited

03:02SFL was listed on the

03:04Stock Exchange of Pakistan

03:06on 5th June 1979.

03:08It is a company

03:10called Sapphire Fibers Limited.

03:12Its symbol

03:14is SPL.

03:16It was listed

03:18on the Stock Exchange

03:20on 5th June 1979.

03:22The major activities

03:24of the company include

03:26manufacturing and

03:28sales of yarn, fabrics and garments.

03:42On 15th November 2021,

03:44the stock of SFL closed

03:46at Rs. 70.40.

03:56Furthermore,

03:58the Circuit Breaker

04:00in Pakistan Stock Exchange

04:02was at 7.5%.

04:14As of this and the next day.

04:26Suppose you are working

04:28as a broker

04:30in Pakistan Stock Exchange

04:32for last few years.

04:34Suppose you are working

04:36as a broker

04:38in Pakistan Stock Exchange

04:40for last few years.

04:42On 16th November 2021,

04:44the closing date

04:46is 16th November 2021.

04:48The closing date

04:50is 16th November 2021.

04:52The viewers

04:54and students

04:56have sent me

04:58pictures and images.

05:00It is difficult to read

05:02these pictures and images.

05:04Let's see what happens next.

05:06Circuit Breaker in Pakistan Stock Exchange

05:08was at

05:20An investor of SFL named

05:22Mr. Muhammad approached you.

05:32After thorough discussion

05:34on the current situation

05:36of Pakistan Stock Exchange

05:38and the company,

05:40he finally took a decision

05:42to sell 100 shares of SFL

05:44on that very day

05:46via computerized trading only.

06:02Moreover,

06:04he mentioned that

06:06he wants to sell the stock

06:08at any price above Rs. 800.

06:28Keeping in view

06:30the concept of Circuit Breaker,

06:32you are required to briefly discuss

06:34Yes, No comments along with reasons

06:36whether it would be possible

06:38for the stock to be sold

06:40above Rs. 800 or not.

07:00Moreover,

07:02support your answer by showing

07:04necessary calculations for

07:06price ceiling and price floor

07:08of SFL stock.

07:30Let's go to the solution.

07:32The answer is

07:34Part 1.

07:36I have divided it into two parts.

07:38In Part 1, we have to answer

07:40Yes or No with reasoning

07:42and then we calculate

07:44the Circuit Breaker

07:46for the stock of SFL

07:48on which it is sold.

07:50In Part 2, we have to

07:52answer Yes or No with reasoning

07:54and then we calculate

07:56the Circuit Breaker

07:58for the stock of SFL

08:00on which it is sold.

08:02In Part 3, we have to

08:04answer Yes or No with reasoning

08:06and then we calculate

08:08the Circuit Breaker

08:10for SFL stock

08:12on which it is sold.

08:14In Part 4, we have to

08:16answer Yes or No with reasoning

08:18and then we calculate

08:20the Circuit Breaker

08:22for SFL stock

08:24on which it is sold.

08:26because the price of Rs. 800 is exceeding the ceiling price of Rs. 795.5 per stock on this day.

08:57So, if there is a limit, then they can't even sell it at Rs. 796.

09:03So, this is its ceiling price.

09:26That is, we can determine the range.

09:28A band in which the price of the stock can move.

09:35There is a limit, it can't be less than that.

09:37An upper limit can't be more than that.

09:41We have an upper limit of ceiling price.

09:44And we call it Rs. 740.

09:47Now, if we want to go upward, then 7.5%.

09:52If I multiply it by 1.075, then I will get Rs. 795.5.

09:59Similarly, if I want to go downward, then I will get Rs. 0.925.

10:12If we multiply it by 1.075, then we will get Rs. 684.5.

10:17Now, if we take out its difference, then we will get Rs. 55.5.

10:21As you can see, the band or range that we have is Rs. 55.5.

10:26When we add it to Rs. 740, then its ceiling price will come.

10:30If we reduce it by Rs. 55.5, then we will get its floor price.

10:37So, here our DDP is over.

10:40If you have any questions or queries, then you can ask them in the comment section.

10:44If there is any mistake in the calculation, then mention it in the comments section so that everyone can benefit.

10:50Thanks for watching.

10:52Take care of yourself and subscribe to the channel.

10:55Don't forget to press the bell icon.

10:58Assalamualaikum.

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