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Egyptian stock exchange - Trading and settlement process

All your answers must be on the Excel

Question I: Return and Risk

Use the data in the attached Excel file named (Question 1 Return and Risk) to answer this question

You have the index (EGX30 Index) and five companies which are CIB, Eastern Tobacco, El SWEDY Electric, Heliopolis Housing, and SODIC.

  1. First Portfolio: Select only two stocks out of the five stocks as your portfolio (i.e., your portfolio will be consisting of only two stocks of your selection). Manually determine the optimal weights scenario of your first portfolio (i.e. Show your calculations step by step)
  2. Second Portfolio: Construct a portfolio consisting of the five stocks. Use the matrix multiplication and Data analysis tools to determine the optimal weights scenario for your second portfolio.
  3. Does the annual return of your second portfolio exceed the annual return of the market?
  4. If you invest all your money in only one company of the five above mentioned companies, which one would you select? Why?

Question II: Mortgage Finance

Use the data in the attached Excel file named (Question 2 Mortgage Finance) to answer this question

Calculate the followings:

A.    The monthly installment (P&I)

B.     The total amount paid for the house

C.     The amortization schedule for the mortgage loan

D.    There is an early prepayment penalty fee of 3%. If you decide to do early prepayment in Month 70, how much will you have to pay (loan and penalty)

E.     What is the maximum loan you can take given your income?

F.      What is the maximum property price given your income?

G.    Are you qualified for this mortgage given your income? Why?

H.    What is the effect of increasing the number of years on the mortgage monthly installment? What is the effect of increasing the loan to value on the mortgage monthly installment?

Question III: Stock Valuation

Use the data in the attached Excel file named (Question 3 Stock Valuation) to answer this question

  1. Calculate the fair value of SODIC stock.
  2. What is your recommendation for this stock?

Question IV: Time Value of Money

Use the data given in the file named (Question 4 Time Value) to answer the following questions:

A.    A Steel factory is offered today April 14, 2020 for a market price of 60 million. Calculate the present value (fair value) of that factory using the given expected cash flows. Do you recommend buying this factory? Why?

B.     Calculate the future value of the bank deposits. Assume a land will cost you L.E 120 Million on April 14, 2020, will you be able to buy it today?

Question V: Theoretical

  1. Explain the trading and settlement process in the Egyptian stock exchange (You may just use the diagram explained in the lecture or write it in words)
  1. Compare between the following:
    1. T-bill and T-bond
    2. Primary market and secondary market
    3. Money market and capital market
    4. Initial public offering and private placement
    5. Stocks and bonds

Egyptian stock exchange - Trading and settlement process

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