Section C (4 Mark)
A Portfolio manager is holding the following portfolio:
The risk free rate of return is 6% and the portfolio’s required rate of return is 12.5%. The manager would like to sell all of his holdings in stock A and use the proceeds to purchase more shares of stock D. What would be the portfolio’s required rate of return following this change?
Section B (2 Mark)
Suppose you have some money to invest and you hear about a great stock tip from your neighbor who is known to have a good stock market sense. He recommends you purchase shares in Petrolite, a company that makes a new kind of lighter fluid for charcoal grills.
What is your response to this situation if you exhibit Availability bias?
Section A (1 Mark)
Which of the following could be classified as an emotional bias?
Section A (1 Mark)
____________ is defined as a dollar per thousand dollars of assessed value of property and is used to calculate a property owner's tax bill.
Section B (2 Mark)
A January month Nifty Futures contract will expire on the last _____ of January
Section C (4 Mark)
Consider a three-month futures contract on gold. The fixed charge is Rs.310 per deposit and the variable storage costs are Rs.52.5 per week. Assume that the storage costs are paid at the time of deposit. Assume further that the spot gold price is Rs.15000 per 10 grams and the risk-free rate is 7% per annum. What would the price of three month gold futures if the delivery unit is one kg? Assume that 3 months are equal to 13 weeks.
Section C (4 Mark)
Paridhi has an investment portfolio of Rs.2,00,000; the initial portfolio mix is Rs.1,00,000 in stocks, Rs.60000 bonds and Rs.40000 in bank.
If market goes up by 10% and the value of bonds decreases by 10%, what should Paridhi do under the constant mix policy?
Section C (4 Mark)
Read the senario and answer to the question.
During identification of new business opportunities, one of Harish’s friends Shekhar has offered him a business proposal. In this proposal a partnership firm consisting of two partners, Harish and Shekhar, shall take the franchise of a company which is a reputed brand in the field of pathology lab in which their investment and profit sharing ratio shall be equal.
Franchise rights shall be valid for 5 years and the project requires an upfront investment of Rs. 25 lakh for required infrastructure. The franchisee agreement has an option that the company can take over the franchisee after 5 years by charging depreciation @15% p.a. on straight line basis.
The projected profits from the firm are as follows:
Harish wants to know what IRR he will earn on his investment from this project ? (Please ignore taxes and assuming no additional investment is made during this five year period)
Section A (1 Mark)
______________is a risk whenever a decision maker commits resources to a course of action (thereby making an “investment”) in the hope of achieving a positive outcome and experiences disappointing results
Section C (4 Mark)
Find out the effective quarterly rate for 18% per annum compounded half yearly.
Section A (1 Mark)
A testator sometimes make two wills one relating to his property in his native country and other relating to his property in some foreign country this type of will is called
Section B (2 Mark)
As per Double Taxation Avoidance Agreement, the Technical Fees in UK is charged at:
Section C (4 Mark)
The current dividend on an equity share of Bharat Limited is Rs.8.00 on earnings per share of Rs. 30.00. Assume that the dividend per share will grow at the rate of 20 percent per year for the next 5 years. Thereafter, the growth rate is expected to fall and stabilize at 12 percent. Investors require a return of 15 percent from Bharat’s equity shares. What is the intrinsic value of Bharat’s equity share?
Section C (4 Mark)
A Portfolio manager is holding the following portfolio:
The risk free rate of return is 6% and the portfolio’s required rate of return is 12.5%. The manager would like to sell all of his holdings in stock A and use the proceeds to purchase more shares of stock D. What would be the portfolio’s required rate of return following this change?
Section A (1 Mark)
A well-diversified portfolio is defined as
Section C (4 Mark)
Read the senario and answer to the question.
If Mahesh extends his retirement age to 65, what is the annual saving required in the beginning of every year if his post retirement expenses are 85% of his pre-retirement expenses?
Section A (1 Mark)
A person saves Rs. 5,000/- every quarter for 9 years @ 15 % per annum compounded Quarterly. What amount would he be having after 9 years ?
