this is shailja shukla here for help to those students who belongs to commerce background n hav sum problem regarding accounts n taxation
in reference to: Promoting Your Blog - Blogger Help (view on Google Sidewiki)Saturday, January 15, 2011
assignment for
Q.3) Find out GAV from the following details :
A | B | C | |
Municipal Value | 8000 | 16000 | 19000 |
Fair Rent | 10000 | 18000 | 14000 |
Standard Rent | 12000 | 20000 | 15000 |
Rent Per month | 1500 | 1800 | 1200 |
Vacancy Period | 1 | 2 | 4 |
Solution:
CALCULTION OF GROSS ANNUAL VALUE(GAV)-
For this we have to calculate actual rent:
A | B | C | |
Rent Received per month | 1500 | 1800 | 1200 |
Vacancy Period | 1 | 2 | 4 |
Actual Rent Received | 16500 | 18000 | 9600 |
A | B | C | |
Municipal Value | 8000 | 16000 | 19000 |
Fair Rent | 10000 | 18000 | 14000 |
Standard Rent | 12000 | 20000 | 15000 |
Actual Rent | 16500 | 18000 | 9600 |
GAV | 16500 | 18000 | 15000 |
GAV of House A-16500
B-18000
C-15000
assignment for security analysis
Q. 1 Is there any logic behind technical analysis? Explain meaning and basic tenets of technical analysis.
Selecting the right stocks for investment is an important part of making investment at the stock market but that is not the only thing that you have to consider. More important than the selection of stocks is determining the perfect time for investing is that stocks. Stocks have price movement at the stock market everyday. There are ups and downs that come in a cyclic way. As an investor you have to determine what is the exact time or more precisely the optimum price range for investing in that stock.
The reason behind this is that every stock has a potential price for a given time. It takes certain time to reach that point and once the stock reaches that price, it is most likely to fall or stand still at that level with least movement in the price. In both the scenario it is not profitable to invest in stock that has already reached that optimum level, as you will either make loss or get least profit. Therefore, it is not worth investing in the stocks that are already reached the potential high for the time being. So as a trader it is important to know what is the optimum price range for the stock as that will help you to decide whether it is the right time to invest in a certain stock or not.
Technical analysis is the process that does exactly that. Technical analysis can give you the idea of the future price movement of that stock. Based on that analysis you can decide whether it is profitable in that stock at that point. In technical analysis certain information like the past performance of the stock, current price of the stock, trading volume of the stock are considered. With these information and one the basis of certain principles different types of graphs and charts are prepared. By comparing these graphs of the price movements with that of the previous years it is decided by the experts how the stock will perform in the near future. So, basically technical analysis is the scientific way of predicting the movement of the stock price in the market. Technical analysis is performed by the analysts on the basis of different indicators such as cycles regressions, relative strength index, moving averages, regressions, and inter-market and intra-market price correlations. Different principles are followed by the analysts to prepare the charts and graphs of the price movements of the stocks on the basis of these indicators. These indicators are basically mathematically transformed date derived from the price of the stocks and trading volume. Here we are presenting some of the most popular models of technical analysis.
Candle Stick Charting – This method was developed by Homma Munehisa during 18th century. In candle chart method the price movement of a certain stock is predicted through the bar style chart. This chart is basically a combination of the simple line chart and colored bar chart. The candle stick chart gives a graphical presentation of the opening price, closing price, high and low price of the stock in a single day for over a period of time. This graphical presentation helps to predict the future movements by comparing the previous patterns of price movement of that stock.
Dow Theory – This theory is named after its inventor Charles H. Dow. He was the first editor of the Wall Street Journal and co-founder of Dow Jones and Company. The Dow Theory is based on six basic principles.
· There can be three different types of movements in the stock market.
· There are three different phases in the market trends.
· Stock market discounts all news.
· Market trends need to be confirmed by trading volume.
· Market average should always confirm each other.
· Market trend can be said have ended only when the definitive signals prove that.
Elliott wave principle - This theory was developed by Ralph Nelson Elliott and published for the first time in his book The Wave Principle in the year 1938. In his theory Elliott proclaimed that the psyche of the stock market investors moves from pessimism to optimism and this creates the swing creates the price pattern. This pattern is projected by the three wave structure of increasing degree in this theory.
Meaning Of Technical analysis-Technical Analysis is the study of prices and volume, for forecasting of future stock price or financial price movements. Technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is "likely" to happen to prices over time.
Technical analysis is not an exact science. It's an art and takes considerable experience. Not all studies work the same for every instrument traded. One study may give excellent buy and sell signals while another may not work for you at all.Stock Market Technical Analysis Basic Principles
Technical Analysis is based on these three basic principles:
Price Discounts Everything
Prices move in trends
History repeats itself
#1- Price Discounts Everything
Technical analysts believe that the current price fully reflects all information. Because all information is already reflected in the price, it represents the fair value, and should form the basis for analysis. After all, the market price reflects the sum knowledge of all participants, including traders, and ...
Stock Market Technical analysis utilizes the information captured by the price to interpret what the market is saying with the purpose of forming a view on the future.
#2- Prices Move in Trends
Technical analysts or chartists believe that profits can be made by following the trends. In other words if the price has risen, they expect it to continue rising; if the price has fallen, they expect it to continue falling. However, most technicians also acknowledge that there are periods when prices do not trend.
#3- History Repeats Itself
Technical analysts believe that investors repeat their behavior and they assume that there is useful information hidden within price histories; that it is a way of analyzing the past actions of people in a particular market as reflected by their actual transactions.
Q.2 Explain role played by efficient market in economy. Apply the parameters of efficient market to Indian stock markets and find out whether they are efficient.
Efficiency is one of the most important concepts to use in you're A Level Economics course. There are several meanings of the term - but they generally relate to how well an economy allocates scarce resources to meets the needs and wants of consumers. Make sure you know your definitions well, can illustrate them using appropriate diagrams and can apply them to particular situations
StaticEfficiency
Static efficiency exists at a point in time and focuses on how much output can be produced now from a given stock of resources and whether producers are charging a price to consumers that fairly reflects the cost of the factors of production used to produce a good or a service. There are two main types of static efficiency
AllocativeEfficiency
Allocative efficiency is achieved when the value consumers place on a good or service (reflected in the price they are willing to pay) equals the cost of the resources used up in production. Condition required is that price = marginal cost. When this condition is satisfied, total economic welfare is maximised.
Parameters of efficient market to Indian stock markets
Efficiency of equity markets has important implications for the the investment policy of the investors. If the equity market in question is efficient researching to find miss-priced assets will be a waste of time. In an efficient market, prices of the assets will reflect markets‟ best estimate for the risk and expected return of the asset, taking into account what is known about the asset at the time. Therefore, there will be no undervalued assets offering higher than expected return or overvalued assets offering lower than the expected return. All assets will be appropriately priced in the market offering optimal reward to risk. Hence, in an efficient market an optimal investment strategy will be to concentrate on risk and return characteristics of the asset and/or portfolio. However, if the markets were not efficient, an investor will be better off trying to spot winners and losers in the market and correct identification of miss-priced assets will enhance the overall performance of the portfolio Rutterford (1993). EMH has a twofold function - as a theoretical and predictive model of the operations of the financial markets and as a tool in an impression management campaign to persuade more people to invest their savings in the stock market (Will 2006). The understanding of efficiency of the emerging markets is becoming more important as a consequence of integration with more developed markets and free movement of investments across national boundaries. Traditionally more developed Western equity markets are considered to be more efficient. Contribution of equity markets in the process of development in developing countries is less and that resulted in weak markets with restrictions and controls (Gupta, 2006) In the last three decades, a large number of countries had initiated reform process to open up their economies. These are broadly considered as emerging economies. Emerging markets have received huge inflows of capital in the recent past and became viable alternative for investors seeking international diversification. Among the emerging markets India has received it‟s more than fair share of foreign investment inflows since its reform process began. One reason could be the Asian crisis which affected the fast developing Asian economies of the time (also some times collectively called „tiger economies‟). India was not affected by the Asian crisis and has maintained its high economic growth during the period (Gupta and Basu 2005
Q. 3 What do you understand by yield? Explain the concept of YTM with the help of example
Yield- Yield is the rate of return on an investment expressed as a percent.
Yield is usually calculated by dividing the amount you receive annually in dividends or interest by the amount you spent to buy the investment.
In the case of stocks, yield is the dividend you receive per share divided by the stock's price per share. With bonds, it is the interest divided by the price you paid. Current yield, in contrast, is the interest or dividends divided by the current market price.
In the case of bonds, the yield on your investment and the interest rate your investment pays are sometimes, but by no means always, the same. If the price you pay for a bond is higher or lower than par, the yield will be different from the interest rate.For example, if you pay $950 for a bond with a par value of $1,000 that pays 6% interest, or $60 a year, your yield is 6.3% ($60 ÷ $950 = 0.0631). But if you paid $1,100 for the same bond, your yield would be only 5.5% ($60 ÷ $1,100 = 0.0545).
Case: A coworker of yours was discussing her investments with a broker. Your coworker was confused because she had purchased a 10% bond but the broker kept repeating that it had a 9% yield to maturity. What is Yield to Maturity?
Yield to maturity (YTM) is the yield promised by the bondholder on the assumption that the bond will be held to maturity.
YTM also assumes that all coupon and principal payments will be made and coupon payments are reinvested at the bond's promised yield at the same rate as invested.
YTM is a measurement of the return of the bond and its calculation is identical to the calculation of internal rate of return (IRR).
Applying to the situation mentioned, the coworker purchased a bond with a coupon rate of 10 percent.
The 9 percent YTM applies if she holds on to that bond until it matures while reinvesting all interest payments she received from the instrument.
The significance of YTM is that it allows comparison of bonds with different coupon rates and prices.
1) Calculator: enter n, M, PMT, PV and VL and request k
2) Trial and Error: find k such that VL = INT({PVIFAM n) + M(PVIF M n)
3) Yield approximation formula:
YTM = INT + (M- VL)/ n
--------------------
(M + VL)/2
Where:
VL = the value of the bond
kc = the fixed coupon interest
n= the number of periods until maturity
M = the dollar principal payment at maturity
INT = periodic dollar coupon payment = kc x M
kd = discount rate on the bond
If a bond's current yield is less than its YTM, then the bond is selling at a discount.
If a bond's current yield is more than its YTM, then the bond is selling at a premium.
If a bond's current yield is equal to its YTM, then the bond is selling at par.
Assignments For MBA students for internal audit
Q1. Explain the meaning of flow chart. Explain different types of flow chart
A flowchart is a diagrammatic representation that illustrates the sequence of operations to be performed to get the solution of a problem. Flowcharts are generally drawn in the early stages of formulating computer solutions. Flowcharts facilitate communication between programmers and business people. These flowcharts play a vital role in the programming of a problem and are quite helpful in understanding the logic of complicated and lengthy problems. Once the flowchart is drawn, it becomes easy to write the program in any high level language. Often we see how flowcharts are helpful in explaining the program to others. Hence, it is correct to say that a flowchart is a must for the better documentation of a complex program. A flowchart helps to clarify how things are currently working and how they could be improved. It also assists in finding the key elements of a process, while drawing clear lines between where one process ends and the next one starts. Developing a flowchart stimulates communication among participants and establishes a common understanding about the process. Flowcharts also uncover steps that are redundant or misplaced. In addition, flowcharts are used to identify appropriate team members, to identify who provides inputs or resources to whom, to establish important areas for monitoring or data collection, to identify areas for improvement or increased efficiency, and to generate hypotheses about causes. Flowcharts can be used to examine processes for the flow of patients, information, materials, clinical care, or combinations of these processes. It is recommended that flowcharts be created through group discussion, as individuals rarely know the entire process and the communication contributes to improvement.
DIFFERENT TYPES OF FLOWCHART
Document Flowchart
A document flowchart traces the movement of a document, such as internal memos, payroll information and interoffice mail, through a system. The chart is columns that are divided by vertical lines. Each column represents a section, employee, department or unit in a company. The flowchart shows how a document passes from one part of the company to another. Usually, document flowcharts contain minimal detail, just the route the document takes from one place to another.
Data Flowchart
A data flowchart illustrates how data pass through a system. Symbols connote operations involved in the flow of data and the storage, input and output materials needed to keep the flow going. This is a good way to track where data originates and where it ends up. Data flowcharts are more concerned with the movement of the data than how the data is processed.
System Flowchart
A system flowchart shows how an entire system works by demonstrating how data flows and what decisions are made to control this event. Symbols that connote decisions, processes, inputs and outputs and data flow are the most important elements of a system flowchart. These differ from data flowcharts because they show decisions, which are more detailed. System flowcharts are used in fields such instances as aircraft control, central heating and automatic washing machines.
Program Flowchart
A program flowchart demonstrates how a program works within a system. These flowcharts show any and all user-interaction pathways by using boxes and arrows. These arrows and boxes form hierarchical menus. Program charts can be large and complex. However, they are useful for mapping an entire program. One example of program flowchart is storyboarding for a film. With all intentions mapped, people can see exactly how a program functions.
High-Level Flowchart
A high-level (also called first-level or top-down) flowchart shows the major steps in a process. It illustrates a "birds-eye view" of a process, such as the example in the figure entitled High-Level Flowchart of Prenatal Care. It can also include the intermediate outputs of each step (the product or service produced), and the sub-steps involved. Such a flowchart offers a basic picture of the process and identifies the changes taking place within the process. It is significantly useful for identifying appropriate team members (those who are involved in the process) and for developing indicators for monitoring the process because of its focus on intermediate outputs.
Most processes can be adequately portrayed in four or five boxes that represent the major steps or activities of the process. In fact, it is a good idea to use only a few boxes, because doing so forces one to consider the most important steps. Other steps are usually sub-steps of the more important ones.
Detailed Flowchart
The detailed flowchart provides a detailed picture of a process by mapping all of the steps and activities that occur in the process. This type of flowchart indicates the steps or activities of a process and includes such things as decision points, waiting periods, tasks that frequently must be redone (rework), and feedback loops. This type of flowchart is useful for examining areas of the process in detail and for looking for problems or areas of inefficiency. For example, the Detailed Flowchart of Patient Registration reveals the delays that result when the record clerk and clinical officer are not available to assist clients.
Deployment or Matrix Flowchart
A deployment flowchart maps out the process in terms of who is doing the steps. It is in the form of a matrix, showing the various participants and the flow of steps among these participants. It is chiefly useful in identifying who is providing inputs or services to whom, as well as areas where different people may be needlessly doing the same task. See the Deployment of Matrix Flowchart.
The Sarbanes–Oxley Act of 2002 (Pub. L. No. 107-204, 116 Stat. 745, also known as the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly called SOX or SarbOx; July 30, 2002) is a United States federal law passed in response to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, and WorldCom (now MCI). These scandals resulted in a decline of public trust in accounting and reporting practices. Named after sponsors Senator Paul Sarbanes (D–Md.) and Representative Michael G. Oxley (R–Oh.), the Act was approved by the House by a vote of 423-3 and by the Senate 99-0. The legislation is wide ranging and establishes new or enhanced standards for all U.S. public company boards, management, and public accounting firms. The Act contains 11 titles, or sections, ranging from additional Corporate Board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law. Some believe the legislation was necessary and useful, others believe it does more economic damage than it prevents, and yet others observe how essentially modest the Act is compared to the heavy rhetoric accompanying it.
The first and most important part of the Act establishes a new quasi-public agency, the Public Company Accounting Oversight Board, which is charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies. The Act also covers issues such as auditor independence, corporate governance and enhanced financial disclosure. It is considered by some as one of the most significant changes to United States securities laws since the New Deal in the 1930s.
The first and most important part of the Act establishes a new quasi-public agency, the Public Company Accounting Oversight Board, which is charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies. The Act also covers issues such as auditor independence, corporate governance and enhanced financial disclosure. It is considered by some as one of the most significant changes to United States securities laws since the New Deal in the 1930s.
The legislation not only affects the financial side of corporations, it also affects the IT departments whose job it is to store a corporation's electronic records. The Sarbanes-Oxley Act states that all business records, including electronic records and electronic messages, must be saved for "not less than five years." The consequences for non-compliance are fines, imprisonment, or both. IT departments are increasingly faced with the challenge of creating and maintaining a corporate records archive in a cost-effective fashion that satisfies the requirements put forth by the legislation.
FEATURES OF SOX• TITLE I – “Public Company Accounting Oversight Board (PCAOB)” Title I establishes the Public Company Accounting Oversight Board (PCAOB), to provide independent oversight of public accounting firms providing audit services ("auditors"). It also creates a central oversight board tasked with registering auditors, defining the specific processes and procedures for compliance audits, inspecting and policing conduct and quality control, and enforcing compliance with the specific mandates of SOX. Title I consists of nine sections.
• TITLE II - “Auditors Independence”
Title II, which consists of nine sections, establishes standards for external auditor independence, to limit conflicts of interest. It also addresses new auditor approval requirements, audit partner rotation policy, conflict of interest issues and auditor reporting requirements. Section 201 of this title restricts auditing companies from doing other kinds of business apart from auditing with the same clients.
• TITLE III - “Corporate Responsibility”
Title III mandates that senior executives take individual responsibility for the accuracy and completeness of corporate financial reports. It defines the interaction of external auditors and corporate audit committees, and specifies the responsibility of corporate officers for the accuracy and validity of corporate financial reports. It enumerates specific limits on the behaviors of corporate officers and describes specific forfeitures of benefits and civil penalties for non-compliance. For example, Section 302 implies that the company board (Chief Executive Officer, Chief Financial Officer) should certify and approve the integrity of their company financial reports quarterly. This helps establish accountability. Title III consists of eight sections.
• TITLE IV - “Enhanced Financial Disclosures”
Title IV consists of nine sections. It describes enhanced reporting requirements for financial transactions, including off-balance sheet transactions, pro-forma figures and stock transactions of corporate officers. It requires internal controls for assuring the accuracy of financial reports and disclosures, and mandates both audits and reports on those controls. It also requires timely reporting of material changes in financial condition and specific enhanced reviews by the SEC or its agents of corporate reports.
• TITLE V - “Analyst Conflicts of Interest”
Title V consists of only one section, which includes measures designed to help restore investor confidence in the reporting of securities analysts. It defines the codes of conduct for securities analysts and requires disclosure of knowable conflicts of interest.
• TITLE VI - “Commission Resources and Authority”
Title VI consists of four sections and defines practices to restore investor confidence in securities analysts. It also defines the SEC’s authority to censure or bar securities professionals from practice and defines conditions under which a person can be barred from practicing as a broker, adviser or dealer.
• TITLE VII – “Studies and Reports”
Title VII consists of five sections. These sections 701 to 705 are concerned with conducting research for enforcing actions against violations by the SEC registrants (companies) and auditors. Studies and reports include the effects of consolidation of public accounting firms, the role of credit rating agencies in the operation of securities markets, securities violations and enforcement actions, and whether investment banks assisted Enron, Global Crossing and others to manipulate earnings and obfuscate true financial conditions.
• TITLE VIII – “Corporate and Criminal Fraud Accountability”Title VIII consists of seven sections and it also referred to as the “Corporate and Criminal Fraud Act of 2002.” It describes specific criminal penalties for fraud by manipulation, destruction or alteration of financial records or other interference with investigations, while providing certain protections for whistle-blowers.
• TITLE IX – “White Collar Crime Penalty Enhancement”
Title IX consists of two sections. This section is also called the “White Collar Crime Penalty Enhancement Act of 2002.” This section increases the criminal penalties associated with white-collar crimes and conspiracies. It recommends stronger sentencing guidelines and specifically adds failure to certify corporate financial reports as a criminal offense.
• TITLE X – “Corporate Tax Returns”
Title X consists of one section. Section 1001 states that the Chief Executive Officer should sign the company tax return.
• TITLE XI – “Corporate Fraud Accountability”
Title XI consists of seven sections. Section 1101 recommends a name for this title as “Corporate Fraud Accountability Act of 2002” . It identifies corporate fraud and records tampering as criminal offenses and joins those offenses to specific penalties. It also revises sentencing guidelines and strengthens their penalties. This enables the SEC to temporarily freeze large or unusual payments.
Q3. What are the mandatory standards of ICAI?
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