Smrt Quantitative Skill

1.Choice of Company

We have selected SMRT as our company because we believe that the stocks of the company will rise in the next 5 years. Our reason for doing so is because due to the economic crisis in Europe, it will be inevitable that it will hit us soon.

Therefore, people in Singapore might have to take pay cuts or get laid off. When this happens, less people would be able to afford cars or have to give up their cars. In order to get to work, more people would be forced to take public transportation and the transportation company that provides a very wide coverage as well as convenience is the SMRT. So therefore, we believe the stock of SMRT will inevitably rise.

In addition, due to the resignation of chief executive officer of SMRT, Saw Phaik Hwa and along with the recent Euro-Zone debt crisis, our group has predicted that it is highly possible for an upward movement of the stock. (YahooFinances, 2012)

2.Choice of Bank

United Overseas Bank Ltd. (UOB) is the second largest bank in Singapore and is staking a claim on the larger Asian-Pacific region. The bank offers the full range of commercial and corporate banking services, personal financial services, private banking and other asset management services, as well as corporate finance, venture capital, investment, and insurance services. The company also provides stockbroking services through its share of UOB-Kay Hian Holdings. Having established itself in the mature Singapore market--the company acquired rival Overseas Union Bank in 2002--UOB expects its future growth to come from its overseas operations.

The company is already present, through subsidiaries and branch offices, in Malaysia, the Philippines, Indonesia, Thailand, China and Hong Kong, and Taiwan, as well as in South Korea, Japan, Australia, and Vietnam. Further abroad, the company operates branch offices in the United States, Canada, France, and the United Kingdom. In all, the company operates more than 250 offices worldwide. Although banking represents the company's primary business, UOB is also present in real estate, through a 40 percent stake in United Overseas Land; and in trading, through a 30 percent stake in Haw Par Corporation, which produces, among other products. (UOB, 2012)

3.Choice of government

We have chosen the Singapore government as the government has made sound financial decisions and is very stable as well as a haven for investors. On top of that, they also have a AAA rating from Standard & Poor's. (standardandpoors. 2012)

Option

1

2

3

Company

SMRT (Corp.Ltd)

UOB (Bank)

UOB (Bank)

Period(year)

5

10

15

Investment (in $)

5000

5000

600

Share Dividened Rate (in%)

4.9

N/A

N/A

Per Share (in $)

1.75

N/A

N/A

Interest Rate (In %)

N/A

0.5

0.5

Total Earnings

1214.225

256.3

321.9285

Average Annual Earning

242.845

25.63

21.4619

Highly Recommended

Recommended

Not Recommended

- Refer to Annex B - 1 for Calculation of option (1,2,3)

Since option 1 shows the highest return per year compared to the rest, we would recommend George and Mary to take option 1.

4.Further Information

We would advise George and Mary to obtain further information regarding the investment's history of returns, whether it is to be too good to be true the higher the return, the greater risk. Also, we would also advise them to obtain and fully understand the liquidity of the investment as every investment opportunity carries risk and nothing is guaranteed.

Investing and saving in the Bank will be more safer than investing in share, however investing in company share can give more earning than Bank even it is risky. When we look into the company annunity profit and share dividened from past 5 years, the base earning per share was increased from 6.9% to 10.7%.

5.Renting a house V.S Buying a house

Renting:

Pros:

Cons:

Inflow of foreigners might bring rental prices down

Insecurity of losing rented home

Landlord