Project

Of

Investment management

Submitted to

Waqar Akbar

Submitted by

Mumtaz Ali

Asad Ali

Ayaz Ali

Department of Administrative sciences

Quaid-i-Azam University Islamabad

 ECONOMIC ANALYSIS

Pakistan economic analysis shows that national economy is not exactly

in best of health. There are plenty of reasons behind present economic
conditions that Pakistan finds itself in. Major causes have been low levels of
foreign investment and an ongoing conflict with neighboring country India.
Closer economic analysis in Pakistan reveals that this has contrived to bar
Pakistani economy from achieving its fullest potential. Pakistan GDP growth
in fiscal year of 2008 has been estimated to be 5.8 percent. It can be
assumed as a result of in depth economic analysis at Pakistan that due to
internal conflicts and political disputes, economy of Pakistan has always been
impoverished and underdeveloped. In fiscal year 2008, gross domestic
product of Pakistan with regards to purchasing power parity was estimated to
be $454.2 billion. Pakistani GDP for official exchange rate was approximately
$160.9 billion. Real growth rate in 2008 GDP of Pakistan, as per statistical
data was found to be 4.7 percent, while $2,600 was GDP per capita income.
Economic analysis of Pakistan shows that each sector contributes differently
to Pakistan economy. Agricultural sector contributes about 20.4 percent to
Pakistan gross domestic product. 26.6 percent is contributed by industrial
sector as was estimated by 2008 GDP of Pakistan. 53 percent was received
from services sector during 2008.

Privatization of banking sector assisted by foreign assistance made

Pakistan get access to global markets. This was suggested by IMF. There has
been a macroeconomic recovery since then in Pakistan. Between 2004 and
2007, there has been a growth of 6-8 percent. As per in depth Pakistan
economic analysis this growth was accelerated by industrial and service
sectors. Since 2001, level of poverty has decreased by 10 percent and a
steady development can be seen in Islamabad. There has been a 52 percent
real increase in budget share. Inflation, however, remains chief concern in
Pakistan among public. In Pakistan economy, inflation rate moved up from
6.9 percent in fiscal year of 2007 to 11 percent in early months of 2008. This
was result of mounting prices of commodities across financial globe. Since
emergency rule in November 2007, value of Pakistani rupee has declined.

Detailed Pakistan economic analysis shows that there was 5.4 percent
growth in manufacturing, 4.8 percent growth in large scale manufacturing
and 1.5 percent growth in agriculture sector in 2008. In addition there has
been a growth of 18.4 percent in per capita income and 17 percent growth in
finance and insurance sector in 2008. Increase in public debt burden is also
shown to have gone up from 55.2 percent of GDP to 56 percent. Latest
Pakistan economic report has confirmed that political stability is required in
order for this south Asian country to deal with its economic crises in a more
suitable way. New Pakistani economic report has also suggested that process
of political reconciliation should be persisted with if this country is to do away
with their economic problems
 As per Pakistan’s economic report terrorism has been a thorn in flesh
of Pakistan economy. Shah Mahmood Qureishi, foreign minister of Pakistan,
has also reiterated that in order to add to strength of economic institutions in
Pakistan it is imperative that central government dealt with these issues with
an iron fist so that economic imbalance in this country could be addressed.

According to economic report of Pakistan it has been observed that

International Monetary Fund and Pakistan have reached an agreement
regarding Pakistan’s budget for fiscal 2009-10. As per this agreement a
capital value tax, at rate of 0.2 percent, would be imposed on every Rs.
25,000 that is taken out of foreign currency accounts as specified in budget
for 2009-10. Added information from economic report in Pakistan reveals that
in meeting that IMF and Pakistan had in Dubai revisions were made for macro
economic goals for fiscals 2009 and 2010. Both these parties have also
arrived mutually at macro economic goals for Pakistan economy. Economic
report at Pakistan states that in case withdrawals from foreign currency
accounts are in excess of Rs. 25,000 a withholding tax at rate of 0.3 percent
would be exercised in that case. It has also been suggested in economic
report from Pakistan that for account holders who are not recognized by
income tax and sales tax departments in Pakistan rate of withholding tax
could be increased to 6 percent from 3 percent. This would be levied when
they take out money from banks. However, this proposal is still doing rounds
in higher circles of Pakistan economy.

According to Pakistan economic report this tax would make account

holders go for documenting their financial transactions with checks in place
of cash. Ministry of Finance, Pakistan has made it clear that this proposal
would be included in budget for fiscal 2009-10. Pakistan economic report for
2009 also states that some other important matters are at level of discussion
in Pakistan. Economic authorities are aiming to take tax to GDP ratio to 12.5
percent within 2009 to 2012 from 10 percent at 2008-09.

INDUSTORY ANALYSIS

PHARMACUTICAL INDUSTORY

Healthcare in Pakistan is still in the early stages of development.

Widespread poverty and a weak health system underlie the poor health
status of the population. This report is ideal for executives wanting to
understand the key drivers in the pharmaceutical market and have access to
a wealth of statistical data, including five-year market projections. In addition
to the report are 3 free quarterly updated outlook reports, enabling you to
keep up to date with market developments for a year.

The pharmaceutical market has slowly evolved over the years, from
one that was largely dominated by multinationals around 20 years ago, to
one that is now almost evenly split between local and multinational
companies. The domestic pharmaceutical industry serves an estimated 80%
of the market, with around 20% served by imports. The balance of
pharmaceutical trade remains negative. Between 2004 and 2008, the deficit
in the balance of trade rose by a considerably high CAGR. There are a large
number of local producers, but there is virtually no investment in R&D for
new drugs. The local industry comprises manufacturers of generics, which
import around 90% of raw materials used to make drugs. Increased
competition, low drug prices, rising raw material costs, poor intellectual
property rights and generally weak market conditions brought on by
economic and political instability has made the country somewhat less
attractive to some multinational companies. In February 2010, it was
announced that the Biological Production Division (BPD) of the National
Institute of Health (NIH) will restart the basic manufacturing of tetanus
toxoid, measles and cell culture rabies vaccines. The NIH wants the division
to attain vaccine self-sufficiency in the next few years.

The Pharmaceutical Industry in Pakistan commenced its business operations

a few years after the country came into existence. With the passage of time
most of the multinational companies began manufacturing activities to cope
with the requirement of quality drugs and medicines for the rapidly
increasing population in both wings of the country. Presently the number of
registered or licensed manufacturers in the country is close to 300 units out
of which are 32 majority control multinationals and there are many joint
ventures with foreign collaboration. According to the IMS (International
Market Survey) the total pharmaceutical market in Pakistan in 1996 was
valued at US$900 million which grew at the rate of 20 per cent in 1996. The
total world market for pharmaceuticals is estimated to be about US$248
billion in 1994 out of which North America had a share of 33.5 per cent
followed by Europe at 27 per cent and Japan 21.5 per cent. Pakistan's share
was about 0.3 per cent. The per capita consumption of pharmaceuticals is
about US$4 in Pakistan whereas the average worldwide annual.

As many as 32 multinational companies command more than 70 per cent of

the total pharmaceutical sales in the country. The present devaluation has
enhanced the cost of raw material and imported medicines and made them
beyond the common man's reach, besides promoting smuggling.

At present there are 15 Pharmaceutical companies on the list of Karachi

Stock Exchange and they command more than 70 per cent of total
pharmaceutical sales in the country. Total Paid-up Capital of these companies
stood at Rs. 1009.87 million. Free Reserves and Surplus stood at Rs. 1346.96
million. General Break-up Value per Rs. 10/- worked out to Rs. 23.52. Total
sales of these companies in 1992 stood at Rs. 10.67 billion as compared to
Rs. 9.36 billion in the preceding year, showing a rise of 14 per cent. Pretax
Profit has also increased from Rs. 718.41 million to Rs. 752.27 million in
1992, depicting a rise of 4.71 per cent. Increase may be attributed to higher
price allowed by the government. The top 5 pharmaceutical companies
according to sales in 1992 are given below:-

Dividend: The Dividend picture in this section is very encouraging. Out of 15

companies 12 paid dividends during the year under review. The highest
dividend of 45% (cash) was paid by Boots Pakistan Limited followed by 35%
each by Welcome and Glaxo. Ferozsons, Ostuka and Zafara International
have not paid any dividend, bonus or right shares during 1992.

Price Policy: Price Policy for the pharmaceutical industry is quite confusing.
An across the board increase of 9.5 to 10 per cent was allowed in 1991
without considering the fact that major pharmaceutical units were allowed a
10 per cent price increase at the end of 1989 for top ten products of each
company. It is to be noted that in most of these cases the top ten products
usually account for upto 80 per cent of the company's total turnover.

It was reported that out of 264 national pharmaceutical manufacturing units,

210 licensed manufacturing companies operating in the country of these 32
are multinationals. The present devaluation has enhanced the cost of raw
material and imported medicines and made it beyond the common man's
reach, besides promoting smuggling. The cheaper and low quality medicines
are mostly smuggled from Sri Lanka and Burma. Other sources are Iran,
where pharmaceutical industry is heavily subsidized and India where quality
is non-existent and its basic raw material is produced locally. In case of
Pakistan all the raw material is imported.

TEXTILE INDUSTORY

When we think manufacturing industry, Pakistan, it is the textile

industry that immediately come to the mind that is playing an important role
in term of the employment generation and value added special with strong
base of raw material has started its journey from non existence in 1947 with
3000 looms that is too in the unorganized sector, with only one textile unit. It
could supply only 8% of the domestic demand derived from its population 76
million people.
The industry has gone through a long way and now possesses 443
units, 8.4 million spindles and 166,000 rotors. 20,000 shuttle less looms,
200,000 power looms, 8,000 terry towel looms, 7620 canvas looms, 157,000
woolen / worsted installed spindles, 15,000 woolen looms, 12,000 knitting
machines, over 600 processing units and over 2500 garments units. The
textile industry at present is a passing through a transition phase. It is sailing
smoothly under the protected cover of the quota system; however it has to
face the rough waters of the open sea when globalization of trade is
implemented under WTO agreement in 2004. three years have already gone
unnoticed the fast approaching deadline sounding a note of warning for
restructuring of all the segments of the cotton and textile industries on war
footings to enable it to face the future challenges of fierce competitio0n
amongst the low cost Asians manufacturers to capture share of their higher
cost European counter –parts when the gates of the global economies are
open.

TEXTILE INDUSTRY ECONOMIC CONTRIBUTION

Description Contribution
Exports 64% of total exports (US$ 4.9 billion)
Manufacturing 46% of total manufacturing
Employment 38% total employment
Investment 31% of total investment
Market capitalization 7% of total market capitalization
Interest Rs. 4 billion per annum
Salaries and wages Rs. 40 billion per annum
Contribution to research and Rs. 116 million per annum
development
Gross domestic product (GDP) 8.5% of Total GDP

This sounds a triumph like situation at a glance. There is however much more
than it meets the eyes when you go into details, which carry some failures
also to weep on. This industry has not performed as well as it should have. It
is struggling for its survival for the past 7years.

CONTRIBUTION IN EMPLOYMENT

Textile unit constitute 38% of employment generated by the manufacturing

sector while textile being largest industry has got other forward and back
ward relation where it must had played its role in generating employment in
related industries for example shipping industry will definitely by mainly
depended upon textile industry.

FUTURE PROSPECTS

In the fierce competitive environment as a result of the quota free

trade, there are many new entrants in export market. To succeed we are
focusing on efficiency, operational excellence and pursuing new business
opportunities. The increasing fuel prices and continuing increase in mark-up
rates are areas of main concern.

COMPANY ANALYSIS

ABBOT LABS PAKISTAN

We are a global, broad-based health care company devoted to discovering
new medicines, new technologies and new ways to manage health. Our
products span the continuum of care, from nutritional products and
laboratory diagnostics through medical devices and pharmaceutical
therapies. Our comprehensive line of products encircles life itself - addressing
important health needs from infancy to the golden years.
Abbott has sales, manufacturing, research and development, and distribution
facilities around the world, close to where our customers need us to be. We
are recognized for our global reach and our ability to serve our customers
around the world. Its commitment to improving life extends to humanitarian
causes. We recognize that as a leading provider of innovative health care
products, we have a unique responsibility and opportunity to ensure people
have access to them – whether they are among the poor and underprivileged
or victims of natural disasters. We’re determined to do our part through
creative and varied social programs. The promise of our company is in the
promise that our work holds for health and for life.
Abbott prides itself on being recognized as a good place to work because we
strive to provide an environment that enables employees to succeed. We
have received numerous local, national and international distinctions for our
commitment to workplace excellence. Our programs range from award
winning health care benefits to a variety of convenience and wellness
services and long-term retirement benefits. Throughout our 120+ year
history, Abbott people have been driven by a constant goal: to advance
medical science to help people live healthier lives. It's part of our heritage.
And, it continues to drive our work. Today, approximately 83,000 employees
around the world share the passion for " Turning Science into Caring." It's a
commitment to focusing on what matters most: life and the potential it holds
when we are feeling our best.

Abbott Laboratories (Pakistan) Limited engages in the manufacture

and marketing of pharmaceutical, nutritional, and medical products primarily
in Pakistan. The company operates in three segments: Pharmaceutical,
Nutritional, and Others. The Pharmaceutical segment manufactures, imports,
and markets research based pharmaceutical products; and provides toll
manufacturing services. The Nutritional segment involves in the manufacture,
import, and marketing of pediatric nutritional products and medical
nutritional products. The Others segment engages in the manufacture,
import, and marketing of diagnostic equipment, diabetic care products,
molecular devices, their testing kits, and general healthcare products. The
company was incorporated in 1948 and is based in Karachi, Pakistan. Abbott
Laboratories (Pakistan) Limited is a subsidiary of Abbott Laboratories.
 PAKISTAN REFINARY COMPANY

Actual Return and Risk

Year 2005 2006 2007

Month P1 P0 D P1 P0 D P1 P0 D
379.8
Jan 176.1 184.9 5 369.9 224 216.45
Feb 255 176.1 336.5 379.85 198.5 224
Mar 177.5 255 300 336.5 191.8 198.5
Apr 218.9 177.5 296 300 221.95 191.8
May 206.9 218.9 285 296 235 221.95
Jun 207.9 206.9 213.9 285 221.95 235
Jul 213 207.9 272.7 213.9 259.95 221.95
Aug 233.5 213 325 272.7 215 259.95
267.8
Sep 344 233.5 5 325 248 215
251.7
Oct 400.5 344 5 267.85 266 248
Nov 412 400.5 218 251.75 260 266
1 216.4 10.7 2.
Dec 369.9 412 3 5 218 6 249.85 260 8
Avera 267.93 252.51 1 280.2 293.037 10.7 232.66 229.88 2.
ge 33 67 3 5 5 6 67 33 8

2008 2009
P1 P0 D P1 P0 D
271.85 249.85 55.13 98.4
276.1 271.85 53.85 55.13
238.95 276.1 68.43 53.85
274 238.95 74.22 68.43
170.62 274 71.29 74.22
R(200 11.25
151.38 170.62 89.8 71.29 5) 338
-
R(200 0.691
127.9 151.38 141.48 89.8 6) 89
R(200 2.428
105 127.9 123.52 141.48 7) 768
R(200
103.57 105 116.99 123.52 8) -2.217
R(200 2.017
103.57 103.57 107.5 116.99 9) 972
103.57 103.57 104.46 107.5
8.
98.4 103.57 6 120.7 104.46 0
168.74 181.36 8. 93.94 92.089
25 33 6 75 17 0
EXPECTED RITURN AND RISK

(R- P*(R-
R P RP R-R(bar) R(bar))2 R(bar))2
0.024 0.3 0.0072 -0.175 0.0306 0.00918
0.021 0.4 0.0084 -0.178 0.0316 0.01267
0.019 0.6 0.0114 -0.08 0.0064 0.00384
0.113 0.5 0.057 -0.086 0.00739 0.00369
0.0201 0.6 0.121 -0.1789 0.03200 0.0192
0.199 0.04858
0.2204
 KOHNOOR MILLS
Actual Return and Risk

Year → 2005 2006 2007 2008 2009

Month↓ Po P1 Po P1 Po P1 Po P1 Po P1
January 5.30 5.50 4.50 5.00 4.50 4.50 5.25 5.00 0.00 9.85
February 5.50 5.75 5.00 4.50 4.50 4.50 5.00 5.00 9.85 7.85
March 5.75 5.00 4.50 4.20 4.50 4.80 5.00 5.00 7.85 3.90
April 5.00 4.90 4.20 4.25 4.80 4.80 5.00 5.50 3.90 0.00
May 4.90 4.50 4.25 4.00 4.80 4.50 5.50 5.50 0.00 2.95
June 4.50 4.65 4.00 4.40 4.50 5.10 5.50 4.91 2.95 2.85
July 4.65 5.50 4.40 4.05 5.10 7.00 4.91 6.85 2.85 2.99
August 5.50 4.40 4.05 4.00 7.00 6.00 6.85 9.85 2.99 2.00
September 4.40 4.75 4.00 3.40 6.00 4.50 9.85 0.00 2.00 1.51
October 4.75 4.45 3.40 5.00 4.50 5.90 0.00 0.00 1.51 1.98
November 4.45 4.25 5.00 4.00 5.90 6.00 0.00 0.00 1.98 1.49
December 4.25 4.50 4.00 4.50 6.00 5.25 0.00 0.00 1.49 0.51
Average 4.91 4.85 4.28 4.28 5.18 5.24 4.41 3.97 3.11 3.16
Dividend 0.0 0.0 0.0 0.0 0.0

Actual Return
[Do+(P1-Po)/Po] x
Year P1 - Po Do+(P1-Po)/Po Do+(P1-Po)/Po 100
2005 -0.1 -0.1 -0.014 -1.36
2006 0.0 0.0 0.000 0.00
2007 0.1 0.1 0.012 1.21
2008 0.4 0.4 0.099 9.93
2009 0.0 0.0 0.014 1.36

Actual Risk
∑(X- ∑(X- √∑(X-
Return Mean) ∑(X-Mean)2 Mean)2/n-1 Mean)2/n-1
-1.36 -3.59 12.86 3.22 1.79
0.00 -2.23 4.97 1.24 1.11
1.21 -1.02 1.04 0.26 0.51
9.93 7.70 59.33 14.83 3.85
1.36 -0.86 0.75 0.19 0.43
Mean 2.23 78.95
Varianc
e 4.44
 2.70
Expected Return %
R p ∑Rp
-
-0.015 0.30 0.0045
0.015 0.30 0.0045
0.045 0.15 0.0068
0.075 0.20 0.0150
0.105 0.05 0.0053
0.027

Expected Risk
(R-
R- Mean) (R- √(R-
R p ∑Rp Mean 2
Mean)2p Mean)2p
- -
-0.015 0.30 0.0045 0.0600 0.0036 0.0011 0.0329
-
0.015 0.30 0.0045 0.0300 0.0009 0.0003 0.0164
0.045 0.15 0.0068 0.0000 0.0000 0.0000 0.0000
0.075 0.20 0.0150 0.0300 0.0009 0.0002 0.0134
0.105 0.05 0.0053 0.0600 0.0036 0.0002 0.0134
Mean 0.045 0.027 0.001710
Δ 0.0414 4.14%
 ABBOTT LABS PAKISTAN

ACTUAL RETURN AND RISK

` 2005 2006 2007

E:Price B:Price E:Price B:Price E:Price B: Price
P1 Po P1 Po P1 Po
Jan 203 175.15 226 219.7 157.5 153.25
Feb 201 203 230.5 226 150.5 157.5
Mar 201 159.9 180.5 230.5 152 141.9
Apr 159.9 137.75 25.65 26.05 152 141.9
May 137.75 125.8 157.5 171 162.5 152
Jun 125.8 125 162 157.5 186 162.5
Jul 125 124 185.5 162 167 186
Aug 124 134.75 143 185.5 151.9 167
Sep 134.75 161.5 140 143 179.2 151.9
Oct 151 152.4 144 140 190 179.2
Nov 169.95 181.8 144 144 206.5 190
Dec 181.8 219.7 153.25 144 211.85 206.5

2008 2009
E:Price B:Price E:Price B:Price
P1 Po P1 Po
190.55 211.85 77.79 89.61
200 190.55 72 77.79
182.4 200 73.96 72
182 182.4 76.98 73.96
160
Averages of P1 and 182
177.4
83.29
P0 of each
160 80.2
year 83.57
83.29
137.78 177.4 104.01 80.2
111.5 137.78 91.84 104.01
Average 159.58 158.3958 157.6583
110 162.4375
111.5 172.25 93
165.804 91.84
137.6 147.79 88.99917 86.9142
Dividend 5 70 0 3
97.21 930.1 0.022
110
0.013672 110 96.49
0.0569 97.21
0.0311
Return 0.039 0.045989 3.722
89.61 110 121.22 96.49
Average

calculation of
risk
X X-Xo (X-Xo)^2
2005 0.039 0.00178 3.17E-06
2006 0.014 -0.02322 0.000539
2007 0.057 0.01978 0.000391
2008 0.0311 -0.00612 3.75E-05
 2009 0.045 0.00778 6.05E-05

Xo 0.03722
risk 0.016059
2%

Expected return And risk

R P RP (R-means)2 (R-means)2*p

3.9 0.55 2.145 -1.9 1.98

1.4 0.35 0.49 -4.4 6.8
5.7 0.1 0.57 -0.1 0.001
3.11 0.12 0.373 -2.69 0.868
4.5 0.5 2.2 -1.3 0.845
Return 5.783 10.494

Risk 3.23

PROSPERITY WAVING MILLS LIMTED

ACTUAL RETURN AND RISK

2005 2006 2007

P0 P1 D P0 P1 D P0 P1 D
25.3 25.6 16 16.9 13.3 13.5
25.6 27.5 16.85 15.9 13.5 11.5
27.5 24.8 15.9 14 11.5 12.3
24.8 23 14 14.1 12.3 11.5
23 18.3 14.05 13.5 12.5 12.5
18.3 20.8 13.5 12 12.5 13.3
20.8 20 12 12 13.3 13.2
20 19 12 12.3 13.2 13.9
19 19.9 12.25 12.5 13.9 13.7
19.9 15 12.5 10.1 13.7 12.3
15 17.4 10.1 10.5 12.3 13
17.4 16 10.5 13.3 13 12.5
159.6
256 247 0 5 157 0 155 153 0
13.30
21.4 20.6 42 13.1 12.9 12.7

2008 2009
P0 P1 D P0 P1 D
12.5 12 0 0
0 0 8 7.74
12 10.8 7.74 8
10.8 9 8 8.55
9 8.5 7.85 7.3
8.5 7.45 7.3 6
7.45 8.95 6 6.5
8.95 8 6.5 7
0 0 7 12.1
0 0 12.1 12.2
0 0 12.2 13.1
0 0 13.1 13.5
69.2 64.7 0 95.8 102 2
5.76 5.39 7.98 8.49
 Actual Return and Risk
Year Returns (X) (X-Mean)2
2005 -0.036 0.179
2006 -0.017 0.163
2007 -0.011 0.158
2008 -0.065 0.204
2009 2.064 2.812
Mean 0.387
Risk 0.938

Expected Return and Risk

(R-
R P RP mean)2 (R-mean)2*P
3.256 0.5 1.628 0.116 0.058
0.3
1.708 5 0.5978 3.61 1.26
0.1
0.547 5 0.08205 9.32 1.398
0.5
-0.065 0 -0.0325 13.43 6.72
2.064 0.5 1.32 2.25 1.125
Return Risk
3.6 10.54
 GULL AHMED TEXTILE LIMITED

Year → 2005 2006 2007

Month↓ Po P1 Po P1 Po P1
January 92 76.20 60.55 55.05 28.35 25.50
February 86.80 92.00 58.00 60.55 35.50 28.35
March 68.00 78.40 55.10 58.00 35.75 35.50
April 59.00 68.00 54.50 55.10 49.00 35.75
May 62.00 59.00 46.10 54.50 48.00 49.00
June 55.60 62.00 41.00 46.10 40.65 48.00
July 58.00 55.60 38.50 41.00 96.75 45.50
August 61.00 58.00 34.95 38.50 40.95 46.75
Septemb
er 61.50 61.00 34.15 34.95 40.00 40.75
October 69.50 66.00 33.00 34.15 39.00 40.00
Novemb
er 52.00 51.80 29.95 30.83 38.00 39.00
Decemb
er 55.45 52.00 25.50 29.95 38.10 30.00
Averag
e 65.07 65.00 42.61 44.89 44.17 38.68
Dividen
d 0.0 0.0 0.0

2008 2009
Po P1 Po P1
37.30 38.10 0.00 0.00
43.65 37.30 0.00 0.00
43.00 43.65 33.70 47.70
39.95 43.00 43.85 33.00
42.00 39.99 38.00 43.85
40.00 42.00 38.84 38.00
0.00 0.00 33.97 33.97
46.96 40.00 31.23 31.97
48.70 46.99 29.75 31.23
0.00 0.00 30.01 29.75
0.00 0.00 29.23 30.01
0.00 0.00 27.00 29.21
28.46 27.59 27.97 29.06
1.0 0.0
Actual Return
Do+(P1- Do+(P1- [Do+(P1-Po)/Po] x
Year P1 - Po Po)/Po Po)/Po 100
2005 -0.1 -0.1 -0.001 -0.11
2006 2.3 2.3 0.054 5.35
2007 -5.5 -5.5 -0.124 -12.44
2008 0.9 1.9 0.066 6.60
2009 1.1 1.1 0.039 3.91

Actual Risk
∑(X- ∑(X- √∑(X-
Return ∑(X-Mean) Mean)2 Mean)2/n-1 Mean)2/n-1
-0.11 -0.77 0.59 0.15 0.39
5.35 4.69 22.03 5.51 2.35
-12.44 -13.10 171.70 42.93 6.55
6.60 5.93 35.22 8.81 2.97
3.91 3.25 10.53 2.63 1.62
Mean 0.66 240.08
Varian
ce 7.75
 Expected 2.70
Return %
R p ∑Rp
-
0.004
-0.015 0.30 5
0.004
0.015 0.30 5
0.006
0.045 0.15 8
0.015
0.075 0.20 0
0.005
0.105 0.05 3
0.02
7

Expected Risk
R- (R- (R- √(R-
R p ∑Rp Mean Mean)2 Mean)2p Mean)2p
- -
0.004 0.060 0.003
-0.015 0.30 5 0 6 0.0011 0.0329
0.015 0.30 0.004 - 0.000 0.0003 0.0164
5 0.030 9
 0
0.006 0.000 0.000
0.045 0.15 8 0 0 0.0000 0.0000
0.20 0.015 0.030 0.000 0.0002
0.075 0 0 9 0.0134
Portfolio Return
0.05 0.005 0.060 0.003 0.0002
0.105 Co. Name 3 R 0 W 6 RW 0.0134
Pak Refin0.02 0.199 0.100 0.020
0.001710
Mean 0.045 Kohinoor 7 0.027 0.150 0.004
4.14Abbott labs 5.780 0.050 0.289
δ 0.0414 % P W Mills 3.600 0.400 1.440
G Ahmed 0.027 0.300 0.008
1.76105

PORTFOLIO RETURN AND RISK

Correlation
(A&B) -0.648
A=X B=Y XY X2 Y2
-
11.2 -1.36 15.2320 125.4400 1.8496
-0.69 0 0.0000 0.4761 0.0000
2.43 1.21 2.9403 5.9049 1.4641
-
-2.217 9.93 22.0148 4.9151 98.6049
2.013 1.36 2.7377 4.0522 1.8496
-
12.7360 11.1400 31.5688 140.7883 103.7682
Correlation
(A&C) 0.336
A=X C=Y XY X2 Y2
11.2 0.0390 0.4368 125.4400 0.0015
-0.69 0.0137 -0.0095 0.4761 0.0002
2.43 0.0569 0.1383 5.9049 0.0032
-2.217 0.0311 -0.0689 4.9151 0.0010
2.013 0.0460 0.0926 4.0522 0.0021
12.7360 0.1867 0.5893 140.7883 0.0080

Correlation
(A&D) -0.054
A=X D=Y XY X2 Y2
11.2 -0.036 -0.4032 125.4400 0.0013
-0.69 -0.017 0.0117 0.4761 0.0003
2.43 -0.011 -0.0267 5.9049 0.0001
-2.217 -0.065 0.1441 4.9151 0.0042
2.013 2.064 4.1548 4.0522 4.2601
12.7360 1.9350 3.8807 140.7883 4.2660

Correlation
(A&E) -0.312
A=X E=Y XY X2 Y2
11.2 -0.11 -1.2320 125.4400 0.0121
-0.69 5.35 -3.6915 0.4761 28.6225
-
2.43 -12.44 30.2292 5.9049 154.7536
-
-2.217 6.6 14.6322 4.9151 43.5600
2.013 3.91 7.8708 4.0522 15.2881
-
12.7360 3.3100 41.9141 140.7883 242.2363

Correlation
(B&C) -0.100
B=X C=Y XY X2 Y2
-1.36 0.0390 -0.0530 1.8496 0.0015
0 0.0137 0.0000 0.0000 0.0002
1.21 0.0569 0.0688 1.4641 0.0032
9.93 0.0311 0.3088 98.6049 0.0010
1.36 0.0460 0.0626 1.8496 0.0021
11.1400 0.1867 0.3872 103.7682 0.0080
Correlation (B&D) -0.127

B=X D=Y XY X2 Y2
-1.36 -0.036 0.0490 1.8496 0.0013
0 -0.017 0.0000 0.0000 0.0003
1.21 -0.011 -0.0133 1.4641 0.0001
9.93 -0.065 -0.6455 98.6049 0.0042
1.36 2.064 2.8070 1.8496 4.2601
11.1400 1.9350 2.1972 103.7682 4.2660
Portfolio Risk

δAδAWAWA
0.00039601 -
δAδBWAWB 0.00005224
δAδCWAWCr 0.00193124
-
δAδDWAWDr 0.00153854
-
δAδEWAWEr 0.00005032
-
δBδAWBWAr 0.00005224
δBδBWBWB 0.00001640
-
δBδCWBWCr 0.00011653
-
δBδDWBWDr 0.00073985
δBδEWBWEr 0.00001158
δCδAWCWAr 0.00193124
-
δCδBWCWBr 0.00011653
δCδCWCWC 0.08352100
δCδDWCWDr 0.12556578
-
δCδEWCWEr 0.00175251
-
δDδAWDWAr 0.00153854
-
δDδBWDWBr 0.00073985
δDδCWDWCr 0.12556578
δDδDWDWD 2.07360000
δDδEWDWEr 0.00257318
δEδAWEWAr -
0.00005032
δEδBWEWBr 0.00001158
δEδCWEWCr -
0.00175251
δEδDWEWDr 0.00257318
δEδEWEWE 0.00006561
∑ 2.40926259
δp 1.55217995
Correlation (B&E) 0.353
B=X E=Y XY X2 Y2
-1.36 -0.11 0.1496 1.8496 0.0121
0 5.35 0.0000 0.0000 28.6225
- -
1.21 12.44 15.0524 1.4641 154.7536
9.93 6.6 65.5380 98.6049 43.5600
1.36 3.91 5.3176 1.8496 15.2881
11.1400 3.3100 55.9528 103.7682 242.2363
 Correlation (C&D) 0.302

C=X D=Y XY X2 Y2
0.0390 -0.036 -0.0014 0.0015 0.0013
0.0137 -0.017 -0.0002 0.0002 0.0003
0.0569 -0.011 -0.0006 0.0032 0.0001
0.0311 -0.065 -0.0020 0.0010 0.0042
0.0460 2.064 0.0949 0.0021 4.2601
0.1867 1.9350 0.0907 0.0080 4.2660

Correlation (C&E) -0.749

C=X E=Y XY X2 Y2
0.0390 -0.11 -0.0043 0.0015 0.0121
0.0137 5.35 0.0733 0.0002 28.6225
-
0.0569 12.44 -0.7078 0.0032 154.7536
0.0311 6.6 0.2053 0.0010 43.5600
0.0460 3.91 0.1799 0.0021 15.2881
0.1867 3.3100 -0.2537 0.0080 242.2363

Correlation (D&E) 0.221

D=X E=Y XY X2 Y2
-0.036 -0.11 0.0040 0.0013 0.0121
-0.017 5.35 -0.0910 0.0003 28.6225
-
-0.011 12.44 0.1368 0.0001 154.7536
-0.065 6.6 -0.4290 0.0042 43.5600
2.064 3.91 8.0702 4.2601 15.2881
1.9350 3.3100 7.6911 4.2660 242.2363

CAPITAL ASSET PRICING MODEL (CAPM)

ABBOT Lab Company

X Y XY x^2
4.43 8.98 39.7814 19.6249
4.31 5.98 25.7738 18.5761
Beta = 4.863378
-16.9 -6.98 117.962 285.61
-3.49 -3.46 12.0754 12.1801
-5.71 -5.16 29.4636 32.6041
-17.36 -0.64 225.0562 368.5952
Risk = 38.1802679

PROSPERITY WAVING MILL

x y xy x^2
Beta 154.25-3.24 144 22212 23793.06
209 162.5 33962.5 43681
Risk 84-10.44 52.42 4403.28 7056
-451 -565 254815 203401
299 207 61893 89401
295.25 0.92 377285.78 367332.1

PAKISTAN REFINERY

x y xy x^2
125 212 26500 15625
Beta 70 9.8 69 4830 4900
206 199 40994 42436
Risk 67.8
-198 -178 35244 39204
212 201 42612 44944
415 503 150180 147109

GUL AHMED TEXTILE

x y xy x^2
15 11 165 225
Beta 11.5
499 535 266965 249001
45 -1444 -64980 2025
Risk 78
550 660 363000 302500
401 391 156791 160801
1510 153 721941 714552

KOHINOOR TEXTILE MILLS LIMITED

x y xy x^2
-11 136 -1496 121
Beta 137 -5.9 0 0 18769
Risk -26.4
172 121 20812 29584
14 993 13902 196
81 136 11016 6561
393 1386 44234 55231
PORTFOLIO BETA (β)

W Beta(β) ∑wβ
0.1 4.863377984 0.486337798
0.15 -3.24 -0.486
0.05 9.8 0.49
0.4 11.5 4.6
0.3 -5.9 -1.77
∑wβ = 3.320337798

Portfolio Return (Ř)

Ř=Rf+(Rm-Rf)βp

Ř=28.92s