Ans: KSE 100 index is a statistical tools used to compare the prices and performance of securities with different

period of time. KSE 100 index shows a clear picture to the investors about the equity market of Pakistan. KSE 100 index consist of 100 companies almost capture 80 % of the market capitalization among 35 different sectors including leasing, insurance, power generation, engineering, textile, tobacco etc are listed companies on the Karachi stock exchange. One company is selected from each sector based on high market capitalization the remaining companies were also selected on the high market capitalization but such companies were selected on descending order. Increase or decrease in points means that the share prices of those 100 companies Karachi stock exchange 100 index were increase or decrease on the average basis on a particular day. If on the average basis the prices of the shares decrease then we can say that there is decrease in the KSE 100 index points. If on the average basis the prices of the shares increase then we can say that there is increase in the KSE 100 index points. The increase or decrease in the share prices of some companies doesnt means that there is increase or decrease in the KSE 100 index points but it shows that the average increase or decrease in the share prices of those companies which are listed on the Karachi stock exchange 100 index on a particular day. Q: differentiate between KSE 100 index and KSE 30 index. ANS 2: we can differentiate KSE 100 index and KSE 30 index on the following basis. KSE 100 Index 1. It consists of 100 companies listed on Karachi stock exchange 100 index. 2. KSE 100 index select company on the basis of market capitalization. 3. The base year for KSE 100 index is Nov 1991. 4. Base index is 1000 5. Only open end mutual fund sector is excluded. KSE 30 Index 1. It consists of 30 companies listed on the Karachi stock exchange 30 index. 2. KSE 30 index select the company on the basis of free float market capitalization. 3. The base year for KSE 30 index is June 2005. 4. Base index is 10,000. 5. Both the open ended and close ended mutual funds sectors are excluded.

Q: listing regulations of KSE? ANS: following are the rules and regulations of KSE for equity listing on normal counter. A company must have to follow the rules and regulations KSE mentioned in the companies ordinance 1984. 1. At least Rs 200 million of paid up capital will be required to be listed on KSE normal counter 2. According to the rules and regulation of Karachi stock exchange for the first time the company must issue share to the general public initial public offering (IPO) and the minimum requirement of acceptance of applications are 500 in numbers. 3. Security and exchange commission of Pakistan (SECP) will approve the IPO documents of the company properly checked by the Karachi stock exchange. 4. The director of the company shell not be allowed to purchase the shares offered to the general public. 5. The shares certificate issued by a company to the share holders shell be determined and approved by the Karachi stock exchange. 6. If the listing of the company is refused for any reason the money will be refunded in a specific time mentioned in the regulations 9 of subsection 4 of the Karachi stock exchange. 7. After the last date of the closure of the application list the company takes decision within 10 days to which application has been accepted and which has to be rejected. 8. Incase of the rejection of the application the company shell refund the application money within 10 days of the date of decision.

Q: KMI ANS: KMI stand for Karachi stock exchange meezan index. KMI is the joint venture of the Karachi stock exchange and Al meezan investment management. KMI do their operations according to the Islamic rules and regulation. There are 30 companies worked under the KMI. KMI start its operations in june 2009. KMI is an Islamic index which is evaluated and changes were made twice a year if necessary. These changes has been made by the index policy committee. Members of the Karachi stock exchange and Almeezan investment management will participate in the index policy committee. KMI consist of those companies which will be qualified for shariah complaint criteria. These companies are being weighted by float adjusted market capitalization. KMI index is an Islamic index works according to the rules and regulation of Islamic shariah. KMI was introduced to evaluate and compare the performance worked under the KMI with those companies which have not done their operations according to the rules and regulation of Islamic shariah.

The criteria of KMI are given below. 1. Nature of the business of the company must have according to the rules and regulations of Islamic shariah. 2. Income generated from other sources (Haram Sources) must be less than 5 %. 3. Those investments which are not according to the Islamic shariah should not be exceeded then 33% of the total assets of the company. 4. The company should owned at least 20% of the liquid assets of the total assets of the company. 5. Per share liquid asset price should below then the share price in the market. The main objective of the KMI was to provide the bench mark to the investors to evaluate and compare their investments with non shariah complaint investments.

Q:fy budget 2012- 13 ANS: Impact on inflation, interest rates, and exchange rates: The budget of our country is deficit from many years and as usual the budget for the year 2012-13 is still in deficit the deficit is approximately 2 trillion which is 7.5% of our GDP. Normally for budget SBP will borrow funds from commercial banks and saving schemes. Foreign funding plays an important role in our budget or we can say that our budget is dependent on the foreign funds but due to some reasons our country is deprived of foreign funding from a while which cause our budget deficit. Inflation rate is increases day by day due to huge amount of deficit in the budget. One major reason of our budget deficit is that our income tax system is not enough efficient to collect taxes and generate enough revenue to avoid budget deficit. In order to avoid budget deficit SBP will increase the discount rate to attract the lenders. The installments made to the IMF are the major reason of our budget deficit. From a while foreign direct investment is stopped in our country due to terrorism and uncertain conditions will cause the Pakistani rupee devaluing day by day which cause deficit in the budget. In order to avoid interest rate risk investors should need to invest their money in short term securities. Implication for the stock market: According to the FBR the new finance bill which is recently passed included new ordinance named capital gain tax. According to the new ordinance the investor is not liable to show his income to the FBR which he has done in the listed securities whose duration is exceeded then 120 days. The reduction in the tax rate will give benefit to the investors. It will increase their earnings which were affected due to the high tax rate and inflation. Impact on mutual pension funds investors: In this budget were given to the individual investors in the form of tax credit which is increased from 15% to 20% on that income which is taxable also there is an increase in the investment limits for individual investors about from

500,000 to 100,000. Through this individual investor can increase their return on investment in the security and money market. Government has also encourage the retire people to save their money by providing tax exemption benefits to them.

Q: Can a broker go bankrupt? Why ANS: There are two aspects about the bankruptcy of the broker. 1. Yes a broker can go bankrupt because broker is the main agent between the buyer and seller and without broker the buyer and seller cant purchase and sell shares directly to and from each others even they cant purchase and sell shares directly in the market. Both the buyer and seller must have to open an account with the broker. Through that account they can buy and sell shares of different companies listed in the Karachi stock exchange. Some time broker facilitates his customer by providing loan to them. He get loan from the banks and purchase share for his customer on his behalf in which the customer is interested. At the maturity when the customer fails or unable to make payment to the broker at the same time if the broker is short of cash and unable to return his loan he will become bankrupt. The customer may be unable to pay the loan to the broker due to some reasons but the major reason is the losses beard by the customer on his investment thats why he will be unable to pay to the broker. As the customer is not directly involved in getting the loan from the financial institution so the broker is liable to pay the loan of the financial institution as well as the burden will come on his shoulders so in this case there is a chance that the broker can go bankrupt. 2. No a broker cannot go bankrupt because he is the agent between the buyer and seller and he purchase and sell shares on the behalf of the customers. For this purpose he will charge his fees. Broker is the safe person because there is no risk for broker. Buyer and seller can go bankrupt. Broker cant go bankrupt.

Q: ANS: ODD-LOT: Karachi stock exchange set a standard for buying and selling the shares i.e. 100 in a single transaction. If an individual or an investor purchase shares in Karachi stock exchange of whatever company less than 100 as the standard set by the Karachi stock exchange then it is called odd lot. Defaulters counter: Default counter is a kind of penalty for the listed companies of Karachi stock exchange. If a listed company of Karachi stock exchange break the rules and regulations or if they were unable or fail to follow the rules and regulation of the Karachi stock exchange then

Karachi stock exchange traded the shares of that company over the counter called the defaulters counter. Such action is taken against the company who fails to obey the rules and regulations according to the 32 (1) of the Karachi stock exchange regulations. De-Listed: Delisted means that if any company listed on the Karachi stock exchange fails or unable to follow the rules and regulations of the Karachi stock exchange then the company is considered delisted by the Karachi stock exchange. Provisionally Listed: provisionally listed means that the registrar of the Karachi stock exchange issue statement of luie to the company. The said statement is issued by the Karachi stock exchange to the company when company fails to arrange the memorandum of association, article of association, and prospectus at the time of listing on the Karachi stock exchange. Through this process the company will be provisionally listed with the Karachi stock exchange. They can issue shares or stock as well. Future market: Future market means if a person needs some stock or shares some time in future at a specified price and locked the price today but the payment and delivery will be done in future through a standardized procedure is called future market. For example if MR. A needs 5000 shares of PTCL from MR. B at RS 100 / share after 3 months but the delivery and payment will be done in future though the delivery time and price is fixed today is called future market transaction.

Q: CDC & NCCPL ANS: CDC: CDC stands for (central depository company) CDC is an electronic book keeping which recorded the ownership of the share holders. The broker opens an account for his customer. Buying and selling of shares will be recorded in that account and those shares will be transferred to the account of an investor. The main purpose of Central Depository Company is to transfer the shares of one investor account to another at the time of buying and selling. All those companies listed with Karachi stock exchange and their shares will trade in Karachi stock exchange must be registered with central depository company. NCCPL: NCCPL stands for national clearing company limited. The purpose of NCCPL is to serve the services of 3 main stock exchange companies of Pakistan i.e. Karachi, Lahore, Islamabad. From Dec 2001 NCCPL also start to serve the purpose of setting banks, securities, and also settling of clearing members. Whenever a broker purchase shares from another broker equal amount of money will be transferred from his account to the seller account. Both the brokerage houses and financial institution must be registered so that the broker can easily take loan from the financial institution when in need.

Differences between CDC and NCCPl: 1. CDC keeps the shares record whereas NCCPL keeps record of the cash transaction. 2. CDC maintain the record of individual account holder where as NCCPL maintain the record of broker.