Quiz 11: Investment Planning

a) The following table P1 shows the calculation of determining lump sum investment , which is as follows: In the table P1 , the lump sum investment is calculated by dividing the target financial goals with Future Value Factor. Therefore, form the above calculations it can be concluded that Ms. L have to invest in one lump sum, to end up with $50,000 in eight years. b) The following table P2 shows the calculation of determining the annual payments required , which is as follows: In the table P2 , the annual payment required is calculated by dividing the target financial goals with future value factor for annuity. Therefore, from the above calculations it can be concluded that, Ms. L have to put away annually to accumulate the required capital in eight years. c) The following table P3 shows the calculation of determining the annual payments required , which is as follows: In the table P3 , the terminal value of initial investment, is calculated by multiplying the initial amount with future value factor. In the table P3 , the annual payment required is calculated by dividing the balance from annual investment with the future value factor for annuity. Therefore, form the above calculations it can be concluded that , Ms. L have to put away annually to accumulate the required capital in eight years. d) Ms. L could use the investment plans to achieve her goals an open a book shop in 8 years. The following ways helps Ms. L in achieving her objectives easily through an investment plan, which are as follows: • An investment plan would provide with a wide range of plans to suit her requirements such as annual or monthly plans. • Different plans are market linked and can provide significant return making the achievement of target amount easy • A target savings amount can be achieved through disciplined savings through an investment plan.

Listing on NYSE would give brand recognition to the companies. Being listed on NYSE would help in finding more investors and improve market confidence in the company. Companies like Apple and Facebook prefer NASDAQ over NYSE although they easily meet the listing requirements because of the following reasons: • Transactions in NASDAQ are faster and therefore allow quicker execution of orders and reduce the uncertainty due to market movement. • Lower execution cost at NASDAQ due to lower effective spread than NYSE reduces the trading costs • The average spread at NASDAQ is lower which provides better liquidity to traders and investors. Institutional investors prefer NASDAQ due to its high speed, competitive, transparent and accessible market; hence companies prefer listing in NASDAQ over NYSE.

In a market order the order is executed at the lowest price for a buy order and at the highest price in a sell order. In a limit order the trade is executed at the price specified by the broker. For executing a trade the following are process that takes place, which are as follows: • A call is made by the client to the broker. • The broker through the telecommunication places the orders in the market. • Confirmation on execution is transmitted to the broker who confirms the client. • The client has three business days to settle his trade.