NAME: MUHAMMAD FAHAD AYUB

CLASS: BBA

REGISTRTION: 191087

ASSIGNEMENT: 4

Qs Working of the PSX in context of the brokers and dealers. Do we have an Islamic index?
Elaborate

ANS: First, an investor must pick a broker with whom to trade and enter into a broker-customer
agreement. It is the responsibility of the courier to clarify and explain the various terms and
conditions of trade transactions before entering into an agreement with the investor. It is an
arrangement that is obligatory. The provisions of this agreement minimize the possibility of
conflicts over terms and conditions relating to the placement of orders, company confirmation,
brokerage fees and securities and payment delivery. Stock brokers today have a variety of
services designed to meet the rising needs of small shareholders .Some are managed by the
stock exchange, while others are operated from Queens Road and elsewhere in the city by
telephone. Stock offers are also provided by most major banks. Before selecting a stockbroker,
contact some of them and inquire how much they would charge. You expect a comparison of
your fees to those of other brokers .A retail broker that will best satisfy its service demands
should be chosen by an individual investor. A retail broker should be chosen by an individual
investor to help satisfy the service requirements .When the time is limited for evaluating
individual companies and stocks, a full service courier is suggested. When selecting a broker,
the investor must ensure that the courier is a high-quality member of the Pakistan Stock
Exchange. He will contact his broker if an investor has decided to buy shares in a certain
business. The investor can buy a fixed number of shares or shares up to a certain amount. He
will contact his broker if an investor has decided to buy shares in a certain business. The
investor can buy a fixed number of shares or shares up to a certain value. The investor will
contact his sales broker again. The stock broker has to sell at the greatest possible cost, but an
investor may determine what should be the lowest price he is willing to accept. The Stock
Broker assists an investor at the best price to buy and sell shares, but is under no duty to
supervise, counsel or advise the investor/customer on the sale/acquisition of shares in any way.

ISLAMIC INDEX

The main objective of the All Shares Islamic Index is to calculate the stock market segment's Sharia
results. And it is therefore necessary that Sharia screening criteria should be included in the All Shares
Islamic Index for all shares that meet the requirements in order to ensure the completeness of the index
and its adherence to the main objective of the proposed All Shares Islamic Index .It should be noted,
however, that many of the listed companies in Pakistan are closely held sponsors, leading to very few
free floats. These shares can be illiquid and pose a risk of high price distortion.

Qs When and how did the PSX crash in the past?

ANS: When the Pakistan Stock Exchange delivered impressive 46pc returns in 2016, the highest returns
on equity investments by any market in Asia, market participants and regulators moved to puff their
chests.

Brokers and analysts expected the Index to hit 56,000 points by Dec 2017, up another 8,300 points from
Jan 1. For the PSX, good things went on to roll well into 2017. The benchmark KSE-100 index reached an
all-time intraday high at 53,124 on May 25, up from Jan 1 at 11pc. That marked the peak the index
imploded from .In only 16 trading sessions until last Friday, the Index lost 6,265 points, reflecting an
extraordinarily steep decline of 12pc.

The Bust:

Local participants who had bought the six heavyweight stocks in anticipation of selling them to
foreign funds at a higher price had brought market prices to unparalleled levels .UBL stock was
valued at Rs260 on 25 May at the height of the bull run; HBL at Rs305; Lucky Cement Rs962; OGDC
Rs187; MCB at Rs247 and Eng. Corporation a share at Rs399. As panic gripped the market over the
complete lack of interest displayed by EM Funds, local investors started unwinding their
positions .A big rout in the process has been seen by the six stocks. UBL's stock price had decreased
to Rs222 by the end of last Friday's trading; HBL to Rs260; Lucky Cement to Rs826; OGDC to Rs141;
MCB to Rs208 and Eng. Company to Rs335. Due to their heavy weight of as much as 70pc in the
KSE-100 index, they pulled the entire market down. At the last close last Friday, the KSE-100 index
plummeted 6,265 points or 11.79pc from its intra-day all-time high of 53,124 points on May 25.The
dirty end of the stick was left to keep stockbrokers who had acquired the six large shares mainly
but were unable to sell off on time. Vice Chairman Nasim Beg, Atif Habib Savings, claims that when
leverage was traded, the dealers were able to control the market in the past, but no longer .In an
informal conversation, another fund manager told him that his customers had to have an inventory
of early purchases by foreign brokerage, Goldman Sachs, the majority of market participants and
even individual investors who held out said that the political upheaval invokes fear in the light of
changes in government or inconsistencies in economic policies. But if the new government is
crashing by now, everybody knows that there is a deafening mentality in financial markets across
the globe. "An adage goes out: "Uncertainty is worse for the economy than bad news.

Qs. What is efficient market hypothesis. Explain

ANS: The Efficient Market Hypothesis, called the EMH in the investment community, is one of the
fundamental reasons why investors can choose a passive investment strategy. The Efficient Market
Hypothesis (EMH) is a theory of financial economics which shows that all available information is
completely reflected in asset prices .Effective market hypothesis suggests that at their fair value, stock
markets very often trade, giving entrepreneurs the ability to either buy undervalued stocks or sell stocks
at inflated prices. As a result, with the help of market timing and expert stock selection, investors could
truly beat the market. According to the EMH, making riskier investments is the only way for investors to
earn higher returns. Stocks are still trading at fair value on exchanges, according to the EMH, making it
difficult for investors to buy undervalued stocks or sell stocks at inflated prices. There are three types of
EMH: weak, semicircular, and strong. Here is the demand for what everyone is saying.

EMH Poor Form: Simple securities analysis can provide short-term information to an investor to
generate income above market averages, but there are no "patterns"

Semi-Strong Type EMH: means that an investment benefit can not be provided by either simple analysis
or technical analysis and that new knowledge is automatically awarded to EMH securities.

Strong Form EMH notes that all data is stock priced, both publicly and privately, and no investor can
profit from the market.