Advance Financial Management

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CA Avishi Gupta CA Vinay Kumar

 AFM INDEX
Ch No. Ch Name Pg No
1 Financial policy 2
2 Risk Management 11
3 Advance capital budgeting 12 -14
4 Security analysis 14
5 Security valuation 15 - 17
6 Portfolio management 18 - 22
7 Securitization 22
8 Mutual funds 23 - 24
9 Derivatives 25 - 26
10 Forex 2-5
11 IFM 5-6
12 IRM 6
13 Business valuation 7
14 Mergers 8 -11
15 Startup 11
By CA Avishi Gupta Page 1 By CA Vinay Kumar
 Ch & Ques Question Pg No. Faculty Ref
Explain the Interface of Financial Policy and Strategic
Ch-1 Theory-1 1.11
Management
Write a short note on Balancing Financial Goals vis-a-vis
Ch-1 Theory-2 1.11
Sustainable Growth.
Advice the company whether the offer from the foreign branch
Ch-10 Practical-42 10.63
should be accepted
Advise AKC Ltd. by calculating average contribution to sales ratio
Ch-10 Practical-24 10.56
whether it should hedge its foreign currency risk or not.
Also calculate how company has been benefitted by using the
Ch-10 Practical-34 10.58
future option.
Are any of the exposure positions offsetting to
Ch-10 Practical-10(ii) 10.52
some extent?
Ch-10 Practical-5(i) Assuming
ascertain swapthat Indian
points Government
for 2 months offers a swap at
and 15 days. 10.50
spot rate which is 1US$ = ` 50 in one year, then
Ch-10 Practical-50(b) should the company should opt for this option or 10.66
should it just do nothing
At which centre, will be investment be made & what will be the
Ch-10 Practical-49 net gain (to the nearest pound) to the bank on the invested 10.66
funds?
Calculate cover rate and ascertain the profit or loss in the
Ch-10 Practical-7 10.51
transaction.
Ch-10 Practical-3 Calculate the amount of £’s credited. Ongoing inter-bank rates 10.50
Ch-10 ill-3 Calculate the amount to be debited in the customer’s account 10.31
Calculate the cancellation charges, payable by the customer if
Ch-10 Practical-45 exchange margin required by the bank is 0.10% on buying and 10.64
selling.
Ch-10 Practical-6(i) Calculate the expected loss, if the hedging is not done 10.51
calculate the loss/gain due to transaction and operating exposure
Ch-10 Practical-48(B) 10.65
if the contracted price of air conditioners
Ch-10 Practical-1 Calculate the rate of return 10.49
Calculate the rate to be quoted to the importer by assuming an
Ch-10 Practical-16 10.54
exchange margin of 5 paisa
Calculate to the nearest £ the receipt for Nitrogen Ltd, under
Ch-10 Practical-41(a) 10.62
each of the three proposals.
Calculate which of the following method would be
Ch-10 Practical-35 10.59
cheaper to Gibralter Limited
Calculate: (i) Cancellation rate (ii) Amount payable
Ch-10 ill-9 on $ 2,00,000 (iii) Swap loss (iv) Interest on outlay of 10.37
funds, if any (v) New contract rate (vi) Total Cost
Ch-10 Practical-19(i) Calculate: (i) Rate of discount quoted by the Bank 10.54
Calculate: (ii) The probable loss of operating profit if the forward
Ch-10 Practical-19(ii) 10.54
sale is agreed to
Compute and show how a money market hedge can be put in
Ch-10 Practical-29 place. Compare and contrast the outcome with a forward 10.57
contract

By CA Avishi Gupta Page 2 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
Ch-10 Practical-5(iii) compute the annual rate of premium/discount of US$ on INR 10.50
compute the profit/loss the company will make if it hedges its
Ch-10 Practical-23 10.55
foreign exchange risk with the exchange rate
Ch-10 Practical-32(ii) Compute The rate of new forward contract. 10.58
Compute: (i) The cost to the importer in respect of the extension
Ch-10 Practical-32(i) 10.58
of the forward contract
Considering the quotes from Bank A only, for GBP/CHF what are
Ch-10 Practical-47(ii) 10.65
the Implied Swap points for Spot over 3 months?
Construct a swap that will help the Drilldip to
Ch-10 Practical-50(a) 10.66
reduce the exchange rate risk.
Ch-10 Practical-5(ii) determine foreign exchange rate for June 20, 2016, and 10.50
Determine the cancellation charges payable by the
Ch-10 ill-5 10.31
customer
Determine the cancellation charges payable by the
Ch-10 ill-6 10.33
customer
determine the extension charges payable by the customer and
Ch-10 ill-8 10.35
the new rate quoted to the customer
Determine the extension charges payable by the customer
Ch-10 ill-7 10.34
assuming exchange margin of 0.10%
Determine the net exposure of each foreign currency in terms of
Ch-10 Practical-10(i) 10.52
Rupees.
Do you expect that US dollar will be at a premium or at discount
Ch-10 Practical-14(i) 10.53
in the Indian Forex Market?
Evaluate both the options if the cost of Rupee Funds is 12%.
Ch-10 Practical-43 10.63
Which option is preferable?
explain whether there is any arbitrage gain possible from the
Ch-10 Practical-13 10.53
quoted spot exchange rates.
Find out the gain/loss to UK exporter if Can $ spot rates (i)
Ch-10 Practical-4 10.50
declines 2%, (ii) gains 4% or (iii) remains unchanged
How could the dealer use arbitrage in profit from this situation
Ch-10 Practical-20 10.55
and how much profit is earned?
How many Rupees is the firm required to pay to obtain US $
Ch-10 Practical-11(ii) 10.52
2,00,000 in the spot market?
How many US dollars should a firm sell to get ` 25 lakhs after 2
Ch-10 Practical-11(i) 10.52
months
How much does the customer stand to gain or lose due to the
Ch-10 Practical-9 10.52
delay?
How much minimum CHF amount you have to pay for 1 Million
Ch-10 Practical-47(i) 10.65
GBP spot?
how the company can hedge its foreign exchange exposure using
Ch-10 Practical-38 Forward markets and Money markets hedge and suggest which 10.61
the best hedging technique is
Ch-10 Practical-6(i) How the position will change, if the firm takes forward cover 10.51
If bank agrees to take early delivery then what will be net
Ch-10 ill-4 10.31
inflow to Mr. X
If the Indian rupee is the home currency and the foreign currency
Ch-10 ill-1 10.3
is the US Dollar
By CA Avishi Gupta Page 3 By CA Vinay Kumar
 Ch & Ques Question Pg No. Faculty Ref
In which market will you cover the transaction, London or New
Ch-10 Practical-8 10.51
Yor
Ch-10 Practical-6 Is the decision to take forward cover justified? 10.51
Is there any arbitrage possibility? If yes how an arbitrageur can
Ch-10 Practical-26 10.57
take advantage of the situation, if he is willing to borrow
Operations in foreign exchange are exposed to a number of
Ch-10 Theory-1 10.49
risks.” Discuss.
Recommend, which of the above two methods would be
Ch-10 Practical-36 appropriate for the American firm to hedge its foreign exchange 10.59
risk on the two interest payments
Ch-10 Practical-11(iii) Should the firm encash the US $ now or 2 months later? 10.52
should the firm sell forward its pound receivables due in
Ch-10 Practical-15(ii) 10.53
September, 2009
The company has 3 choices: (i) Forward cover (ii) Money market
Ch-10 Practical-40 cover, and (iii) Currency option Which of the alternatives is 10.62
preferable
Ch-10 Practical-21 The importer seeks your advice. Give your advice 10.55
Ch-10 Theory-2 What do you mean by Nostro, Vostro and Loro Accounts? 10.49
Ch-10 Practical-15(i) What is the expected spot rate for 1.9.2009? 10.53
Ch-10 Practical-44 What is the loss/gain to the customer on cancellation? 10.63
What operations would be carried out to take the possible
Ch-10 Practical-27 10.57
arbitrage gains?
Ch-10 Practical-28 What should the exporter do? 10.57
What steps would you take, if you are required to maintain a
Ch-10 ill-2 credit Balance of £7,500 in the Nostro A/c 10.7

What steps would you take, if you are required to

Ch-10 Practical-51 10.67
maintain a credit Balance of Swiss Francs 30,000 in
the Nostro A/c and keep as overbought position
Ch-10 Practical-8 what will be the exchange profit or loss on the transaction? 10.51
What will be the expected 6-months forward rate for US dollar in
Ch-10 Practical-14(ii) 10.53
India?
What will be the expected rate after 1 year and after 4 years
Ch-10 Practical-30 10.58
applying the Purchasing Power Parity Theory
Ch-10 Practical-46 What will be the gain or loss in the transaction 10.64
Ch-10 Practical-14(iii) What will be the rate of forward premium or discount? 10.53
Ch-10 Practical-2 what would be the equivalent US$ amount 10.49
What would be the forward rate for US $ for delivery on 30th
Ch-10 Practical-31 10.58
June?
What would be their total commitment in Rupees, if they enter
Ch-10 Practical-18(i) 10.54
into a forward contract?
which alternative would you consider to be the most appropriate
Ch-10 Practical-41(b) 10.62
and the reason
Which of the following methods would be most advantageous to
Ch-10 Practical-25 EFD Ltd? (i) Using forward contract (ii) Using currency futures (iii) 10.56
Not hedging the currency risk

By CA Avishi Gupta Page 4 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
Which of the following strategies would be most preferable to
Ch-10 Practical-39 XYZ Ltd.? (a) A forward contract; (b) A money market hedge; (c) 10.61
An option contract; (d) No hedging.
Which one of the following options would be better? (i) Pay the
Ch-10 Practical-22 supplier on 60th day and avail bank loan for 30 days. (ii) Avail the 10.55
supplier's offer of 90 days credit.
Ch-10 Practical-18(ii) Will you advise them to do so? Explain giving reasons 10.54
You are required to (a) Calculate (to the nearest £) the £ receipt
Ch-10 Practical-37 (b) In your opinion which alternative you consider to be most 10.60
appropriate
You are required to calculate effective realization for the
Ch-10 Practical-34 10.58
company while selling the receivable
You are required to calculate loss/gain due to transaction
Ch-10 Practical-48(A) 10.65
exposure
You are required to calculate the expected loss and to show how
Ch-10 Practical-17 10.54
it can be hedged by a forward contract.
You are required to evaluate the following options: (i) Pay the
Ch-10 Practical-12 supplier in 60 days, or (ii) Avail the supplier's offer of 90 days 10.53
credit.
Ch-10 Practical-33 You are required to recommend cheaper hedging alternative 10.58
Ch-10 Practical-5 You are required to: 10.50
Ch-11 Practical-2 11.32
Advise the US Company on the financial viability of the project.
calculate the net present value (NPV) and modified
Ch-11 Practical-5 11.34
internal rate of return (MIRR) of the proposal.
Calculate the NPV of the project using foreign currency approach.
Ch-11 Practical-1 11.32
Required rate of return on this project is 14%.
compute the number of GDRs to be issued and cost of the
Ch-11 ill-4 11.18
GDR
Determine whether Opus Technologies should go for the project
Ch-11 ill-3(b) or not assuming that there neither there is restriction on the 11.11
transfer of funds
Determine whether Perfect Inc. should invest in the project or
Ch-11 ill-1 11.5
not (from subsidiary point of view)
estimate Net Present Value (NPV) of the proposed project in
Ch-11 Practical-4 11.33
India.
Identify expected future cash flows in China and determine NPV
Ch-11 ill-3(a) 11.11
of the project in CN¥
State whether Its Entertainment Ltd. should undertake Water
Ch-11 ill-2 11.8
Park project in Nepal or not.
Ch-11 Theory-2 What is the impact of GDRs on Indian Capital Market? 11.31
Ch-11 Theory-1 Write a short note on Instruments of International Finance. 11.31
You are required to calculate the net present value of the
Ch-11 Practical-3 11.33
proposed investment considering the following:
Ch-12 Practical-5 calculate Fixed rate and interest under both legs. 12.17
Ch-12 Practical-4 Calculate semi-annual fixed payment. 12.16

By CA Avishi Gupta Page 5 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref

Ch-12 Practical-4 Find the first floating rate payment for (i) above if the six month 12.16
period from the effective date of swap to the settlement date
if the settlement is on ‘Net’ basis, how much the fixed rate payer
Ch-12 Practical-4 12.16
would pay to the floating rate payer
Keeping the exchange rate invariant, quantify the opportunity
Ch-12 Practical-6 gain or loss component of the ultimate outcome, resulting from 12.17
the designed currency swap
Show how the borrower can hedge the risk using
Ch-12 Practical-7 Option Cap arising out of expected rise in the rate of 12.17
interest when he wants
Show how the settlement will be executed on the
Ch-12 Practical-7 12.17
perspective interest due dates
Ch-12 Theory-2 What do you know about swaptions and their uses? 12.15
What will be the Final settlement amount, if the actual rate of
Ch-12 Practical-1 interest after 6 months happens to be (i) 9.60% p.a. and (ii) 8.80% 12.15
p.a.
Ch-12 Theory-1 Write a short note on Forward Rate Agreements 12.15
You are required to determine: (a) Profit/Loss to TM
Ch-12 Practical-2 Fincorp. in terms of basis points. (b) The settlement 12.16
amount.
You are required to show how far interest rate risk
Ch-12 Practical-3 12.16
is hedged through Cap Option
According to the EVA you computed in (ii), how much can Delta
Ch-13 Practical-13(iii) pay in dividend per share before the value of the company would 13.49
start to decrease?
Based on the EVA, which company would be considered for best
Ch-13 Practical-12(iii) 13.49
investment? Give reasons
Calculate Economic Value Added of the
Ch-13 Practical-16 13.50
company.
Ch-13 ill-3 Calculate the Enterprise Value of HK Ltd 13.17
Calculate the estimated market capitalisation for each of the
Ch-13 Practical-12(v) 13.49
Companies.
Ch-13 Practical-1 Calculate the range of valuation that ABC has to consider 13.43
Ch-13 Practical-5(i) Calculate the total
valuevalue
of theofbusiness,
the business
givenofthat
XY Ltd
the capitalization 13.46
Ch-13 Practical-2(i) rate is 14% 13.43
Compute (a) Economic Value Added® (b)
Ch-13 Practical-14 13.50
Market Value Added.
Ch-13 ill-5 Compute EVA of A Ltd. with the following information 13.22
Ch-13 Practical-9 Compute the Economic Value Added (EVA) 13.48
Ch-13 Practical-11(b) Compute the Economic Value Added (EVA) 13.48
Ch-13 Practical-12(ii) 13.49
Compute the Economic Valued Added (EVA) for each company
Ch-13 Practical-11(a) Compute the operating income 13.48
Compute the operating income or EBIT earned by Delta Ltd. in
Ch-13 Practical-13(i) 13.49
the current year.
By CA Avishi Gupta Page 6 By CA Vinay Kumar
 Ch & Ques Question Pg No. Faculty Ref
Ch-13 Practical-12(i) 13.49
Compute the Weighted average cost of capital for each company
Determine the incremental value due to adoption of the
Ch-13 Practical-3 13.44
strategy.
Determine the market price per equity share, with Eagle Ltd.‘s
Ch-13 Practical-2(ii) 13.43
share capital being comprised
Ch-13 ill-2(a) Determine: (a) Per Share Earning Value of the Company. 13.16
Determine: (b) Equity Value of the company if applicable EBITDA
Ch-13 ill-2(b) 13.16
multiple is 5
Ch-13 Theory-1 Differentiate between EVA and MVA. 13.42
Ch-13 Practical-10(ii) Estimate Economic Value Added (EVA) 13.48
Estimate the value of WXY Ltd. using Free Cash Flows to Firm
Ch-13 Practical-8 13.47
(FCFF) & WACC methodology
Ch-13 Practical-10(i) 13.48
Estimate Weighted Average Cost of Capital (WACC) of RST Ltd.; an
How much dividend can the company pay before the value of the
Ch-13 Practical-11(c) 13.48
entity starts declining?
If Delta does not pay any dividends, what would you expect to
Ch-13 Practical-13(iv) 13.49
happen to the value of the company?
If the industry PE ratio is 11x, estimate the price for the share of
Ch-13 Practical-12(iv) 13.49
each company
Relative Valuation is the method to arrive at a ‘relative’ value
Ch-13 Theory-2 using a ‘comparative’ analysis to its peers or similar enterprises. 13.42
Elaborate this statement.
The basis of allocation of the shares among the shareholders of
Ch-13 Practical-5(iii) 13.46
XY Ltd.
Ch-13 Practical-5(ii) The number of shares to be issued by AB Ltd.; and 13.46
Using the chop-shop approach (or Break-up value
Ch-13 ill-4 13.20
approach), assign a value for Cornett GMBH.
What is Delta Ltd.’s Economic Value Added
Ch-13 Practical-13(ii) 13.49
(EVA) for the current year
Ch-13 Practical-15 What is its Economic Value Added (EVA)? 13.50
Ch-13 Practical-6 What is the correct value of Hansel Ltd 13.46
Ch-13 ill-1 What is the potential value to be placed on X Pvt. Ltd? 13.13
Ch-13 Practical-7 What is the value of the firm? 13.47
You are required to arrive at the value of the shares of both H
Ltd. and B Ltd. under: (i) Net Asset Value Method (ii) Earnings
Ch-13 Practical-4 13.45
Capitalisation Method (iii) Exchange ratio of shares of H Ltd. to be
i
Ch-13 Practical-5 You are required to: 13.46

By CA Avishi Gupta Page 7 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
Are the shareholders of RIL better or worse off than they were
Ch-14 Practical-24(ii) 14.43
before the merger?
Are the shareholders of RIL better or worse off than they were
Ch-14 Practical-24(iii) 14.43
before the merger?
Ch-14 Practical-29(b) Ascertain the number of Shares to be issued to Weak Bank 14.48
Ascertain the profits accruing to shareholders of both the
Ch-14 Practical-11(iv) companies. 14.35
Based on your analysis in part (i) and (ii), would you expect the
Ch-14 Practical-28(iii) negotiated terms to be closer to the upper, or the lower 14.46
exchange ratio limits and why?
Based on your analysis on parts (i) and (ii), would you expect the
Ch-14 Practical-27(iii) negotiated terms to be closer to the upper or the lower exchange 14.46
ratio limits and why?
Calculate and show - (i) Net consideration payable.
(ii) No. of shares to be issued by T Ltd.
Ch-14 Practical-21 (iii) EPS of T Ltd. after acquisition. 14.40
(iv) Expected market price per share of T Ltd. after acquisition.
(v) State briefly the advantages
Ch-14 Practical-29(d) Calculate CAR and Gross NPA of Strong Bank after merger. 14.48
Calculate free float market capitalization of the
Ch-14 Practical-17(iv) 14.37
merged firm
Calculate gain/loss for shareholders of the two independent
Ch-14 Practical-7(v) 14.33
companies
Calculate gain/loss for the shareholders of the two independent
Ch-14 Practical-10(v) 14.34
entities, due to the merger.
Ch-14 Practical-29(a) Calculate Swap ratio based on the above weights: 14.48
Calculate the change in earnings per share of B Ltd. if it acquires
Ch-14 Practical-1 14.31
the whole of C Ltd. by issuing share
Calculate the expected value of debt and equity
Ch-14 Practical-15 14.36
separately for the merged entity.
Calculate the following: (i) Market price per share, earnings per
share & Book Value per share (ii) Swap ratio (iii) Promoter's
holding percentage after acquisition; (iv) EPS of E Ltd. after
Ch-14 Practical-19 14.38
acquisitions of H Ltd; (v) Expected market price per share and
market capitalization of E Ltd after acquisition (vi) Free float
market capitalization
Ch-14 Practical-25(ii) 14.44
calculate the gain or loss to shareholders of both the companies
Ch-14 Practical-25(iii) Calculate the gain to the shareholders of both the Companies 14.44
increase in the
Ch-14 Practical-25(i) Calculate the post-merger total
EPS value
based on of
anBCD Ltd. resulting
exchange ratio of from
0.4: 14.44
Ch-14 Practical-28(iv) 1 being offered by BA Ltd. 14.46
Calculate the swap ratio and also calculate Promoter’s holding %
Ch-14 Practical-17(i) 14.37
after acquisition
Ch-14 Practical-26(a) Calculate the total value of the business 14.45

Ch-14 Practical-20(c) Calculate: (i) Promoter’s revised holding in the Abhiman Ltd. (ii) 14.39
Free float market capitalization. (iii) Also calculate No. of Shares

By CA Avishi Gupta Page 8 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
Calculate: 1. The Ratio in which shares of Fortune Pharma are to
be issued to the shareholders, Expected Market price of Fortune
Ch-14 Practical-22 14.41
India (FMCG) Ltd.
3. Book Value per share
Decompose the share price of both the companies into EPS & P/E
Ch-14 Practical-27(i) 14.46
components
Decompose the share price of both the companies into EPS and
Ch-14 Practical-28(i) 14.46
P/E components; and also segregate their EPS
Ch-14 Practical-6(iii) 14.32
Determine the equivalent earnings per share of T L
Ch-14 Practical-10(iv) Determine the market value of the merged Co 14.34
Ch-14 Practical-7(iv) Determine the market value of the merged firm 14.33
Ch-14 Practical-6(v) Determine the market value of the merged firm. 14.32
Determine the market value of the post-merger firm. PE ratio is
Ch-14 Practical-11(iii) 14.35
likely to remain the same
Determine the maximum exchange ratio acceptable to
Ch-14 Practical-8(iv) 14.33
shareholders of XYZ Ltd
Due to synergic effects, the management of RIL estimates that
Ch-14 Practical-24(iii) the earnings will increase by 20%. What are the new post-merger 14.43
EPS and Price per share
Ch-14 Practical-27(ii) Estimate future EPS growth rates for both the companies 14.46
Ch-14 Practical-28(ii) Estimate future EPS growth rates for each company 14.46
Ch-14 Practical-28(v) Estimate the post-merger market price 14.46
Ch-14 Theory-1 Explain synergy in the context of Mergers and Acquisitions 14.31
Find the earning per share for company MK Ltd. after merger,
Ch-14 Practical-3(i) 14.31
and
Find the exchange ratio so that shareholders of NN Ltd. would
Ch-14 Practical-3(ii) 14.31
not be at a los
Ch-14 Practical-5 how much cash should he offer to maintain his EPS? 14.32
If the merger goes through by exchange of equity and the
Ch-14 Practical-12(i) 14.35
exchange ratio is based on the current market price, what is the
If the proposed merger takes place, what would be the new
Ch-14 Practical-4(ii) 14.32
earning per share
If there are no synergic effects, what is the market value of the
Ch-14 Practical-24(ii) 14.43
Post-merger RIL?
Ch-14 Practical-8(i) Make a the
Illustrate report toof
impact the Board
merger on of
EPSthe company
of both advising
the companies. 14.33
them about the financial feasibility of this
Ch-14 Practical-30 14.48
acquisition
Ch-14 Practical-29(c) Prepare Balance Sheet after merger; a 14.48
prepare the new balance sheet assuming the scheme of re-
Ch-14 ill-1 14.25
construction is implemented
segregate their EPS figures into Return On Equity (ROE) and Book
Ch-14 Practical-27(i) 14.46
Value/Intrinsic
show the resulting accretion or dilution in pre-merger market
Ch-14 Practical-28(v) 14.46
prices
Ch-14 Practical-26(c) The basis of allocation of the shares among the shareholders 14.46

By CA Avishi Gupta Page 9 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
The number of equity shares to be issued by A Ltd. for acquisition
Ch-14 Practical-6(i) 14.32
of T Ltd.
Ch-14 Practical-26(b) The number of shares to be issued 14.45
Ch-14 ill-3(ii) What exchange ratio is relevant to achieve the objective? 14.27

Ch-14 Theory-3 14.31

What is an equity curve out? How does it differ from a spin off.
Ch-14 Theory-2 What is take over by reverse bid or Reverse Merger 14.31
Ch-14 Practical-20(b) What is the Book Value, EPS and expected Market price 14.39
What is the change in EPS for the shareholders of companies
Ch-14 Practical-11(ii) 14.35
Rama Ltd. and Krishna Ltd
Ch-14 Practical-6(ii) What is the EPS of A Ltd. after the acquisition 14.32
Ch-14 Practical-17(ii) 14.37
What is the EPS of Efficient Ltd. after acquisition of Healthy Ltd.
Ch-14 Practical-10(ii) What is the EPS of Mani Ltd. after the acquisition 14.34
Ch-14 Practical-7(ii) What is the EPS of Mark Limited after acquisition 14.33
Ch-14 Practical-9(ii) What is the exchange ratio? 14.34
What is the expected market price per share and market
Ch-14 Practical-17(iii) 14.37
capitalization of Efficient Ltd. after acquisitio
What is the expected market price per share of A Ltd. after the
Ch-14 Practical-6(iv) 14.32
acquisition
What is the expected market price per share of Mani Ltd. after
Ch-14 Practical-10(iii) the acquisition, assuming its P/E ratio is adversely affected by 14.34
10%?
What is the expected market price per share of Mark Limited
Ch-14 Practical-7(iii) 14.33
after acquisition,
Ch-14 Practical-24(i) What is the market value of each Company before merger? 14.43
Ch-14 Practical-5 14.32
What is the maximum exchange ratio which the CEO should offe
What is the maximum price per equity share which PQR Ltd. can
Ch-14 Practical-31(i) 14.49
offer to pay for XYZ Ltd.?
What is the minimum price per equity share at which the
Ch-14 Practical-31(ii) 14.49
management of XYZ Ltd. will be willing
Ch-14 ill-3(i) what is the new earnings per share for A Ltd. 14.27
What is the pre-merger earnings per share (EPS) and P/E ratios of
Ch-14 Practical-9(i) 14.34
both the companies?
Ch-14 Practical-4(i) What is the present EPS of both the companies? 14.32
Ch-14 Practical-20(a) What is the swap ratio based on above weights? 14.39
Ch-14 Practical-10(i) What is the swap ratio based on current market prices 14.34
Ch-14 Practical-7(i) What is the Swap Ratio based on current market prices? 14.33
Ch-14 Practical-2 What is the true cost of the merger from the point of view 14.31
What should be exchange ratio, if XYZ Ltd. wants to ensure the
Ch-14 Practical-4(iii) 14.32
earnings to members
Ch-14 Practical-12(ii) What should be the exchange ratio in that case? 14.35
What should be the exchange ratio; if XYZ Ltd.’s pre-merger and
Ch-14 Practical-9(iii) 14.34
post-merger EPS are to be the same?
Ch-14 Practical-11(i) What will be the EPS subsequent to merger 14.35
Ch-14 Practical-8(ii) what will be the gain from merger for ABC Ltd.? 14.33
By CA Avishi Gupta Page 10 By CA Vinay Kumar
 Ch & Ques Question Pg No. Faculty Ref
Ch-14 Practical-8(iii) What will be the gain/loss to shareholders of XYZ Ltd. 14.33
Ch-14 Practical-9(ii) What will XYZ Ltd.’s post-merger EPS be? 14.34
Ch-14 Theory-4 Write a short note on Horizontal Merger and Vertical Merger. 14.31
You are required to arrive at the value of the shares of both - (i)
Net Asset Value Method
Ch-14 Practical-23 14.42
(ii) Earnings Capitalisation Method
(iii) Exchange ratio
You are required to compute (i) The swap ratio. (ii) The Book
Ch-14 Practical-18 14.38
Value, Earning Per Share and Expected Market Price
You are required to construct a table demonstrating the
Ch-14 ill-4 potential impact of each scheme on each set of 14.28
shareholders
You are required to determine: (i) Market value of both the
Ch-14 Practical-14 company. (ii) Value of original shareholders. (iii) Price per share 14.36
after merger. (iv) Effect on share price
You are required to determine:Pre-merger Market Value per
Ch-14 Practical-13 14.35
Share (ii) The maximum exchange ratio
You are required to show the impact of financial
Ch-14 ill-1 14.17
restructuring/re-construction
You are required to: (i) Compute the Value of Yes Ltd. before and
Ch-14 Practical-16 after merger. (ii) Value of Acquisition and (iii) Gain to 14.37
shareholders of Yes Ltd
You are required: (i) to calculate the Earnings Per share (EPS)
Ch-14 ill-2(i) 14.27
after merger under two alternatives
You are required: (ii) to show the impact of EPS for the
Ch-14 ill-2(ii) 14.27
shareholders of two companies under both the alternatives.
Ch-15 Theory-1 Explain some of the innovative sources for funding a start-up. 15.22
What do you mean by Pitch Presentation in context of Start-up
Ch-15 Theory-2 15.22
Business?
Ch-2 Theory-1 Explain the significance of VAR. 2.8
The Financial Risk can be viewed from different perspective.
Ch-2 Theory-2 2.8
Explain.
You are required to determine the 10-day 99% value at
Ch-2 Practical-1 2.8
risk for the portfolio?

By CA Avishi Gupta Page 11 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
A Company named Roby’s cube decided to replace the existing
Ch-3 ill-12 3.36
Computer system
Analyse the sensitivity of the project to changes in initial
Ch-3 Practical-10 3.43
project cost, annual cash inflow and cost of capital
Analyze what will be the NPV expecting worst scenario in the
Ch-3 ill-10 3.27
third year.
Calculate (i) Initial Investment of the Project (ii) Net
Present Value of the Project (iii) Annual Fixed Cost
Ch-3 Practical-12 3.44
(iv) Estimated annual unit of sales (v) Break Even
Units Coefficient of Variation of Project A and
Calculate
Ch-3 ill-6 Project B 3.18

Ch-3 Practical-13 Calculate expected net present value of the project and give your 3.45
decision whether company should accept the project or no
Calculate Net Present Value of the project based on Risk free rate
Ch-3 ill-7 3.20
and also on the basis of Risks adjusted discount rate.

Ch-3 ill-8 3.22

calculate net present value under certainty equivalent technique.

Ch-3 ill-2 3.4

Calculate NPV of the project if inflation rates for revenues & costs
Ch-3 ill-3 Calculate the expected net present value for each project 3.13
Calculate the expected net present value of the project using 10
Ch-3 ill-4 per cent discount rate if the Initial Investment of the project is ` 3.15
10,000
Ch-3 ill-9(1) Calculate the NPV of the project. 3.24
Calculate Variance and Standard Deviation of Project A and
Ch-3 ill-5 3.16
Project B
Calculate variance, standard deviation and co-efficient of
Ch-3 Practical-4(i) 3.41
variance for both the projects.
Coefficient of variation of X Ltd. on its average project which is in
Ch-3 Practical-7(v) 3.42
the range of 0.95 to 1.0. If the coefficient of variation
Company Y wants to know whether it should replace the
Ch-3 Practical-25 equipment now or wait a year with the clear 3.50
understanding that the new machine is the best
Ch-3 Practical-6(i) Compute the expected net present values of projects A and B 3.42
Compute the impact on the project’s NPV considering a 2.5 per
Ch-3 ill-9(2) cent adverse variance in each variable. Which variable is having 3.24
maximum effect?
Ch-3 Practical-6(iii) Compute the profitability index of each project. 3.42
Compute the risk attached to each project i.e. standard deviation
Ch-3 Practical-6(ii) 3.42
of each probability distribution.
Compute the standard deviation of the present value distribution
Ch-3 Practical-5(b) 3.41
and analyse the inherent risk of the projects.
Construct a decision tree for the proposed investment project
Ch-3 Practical-20(i) 3.48
and calculate the expected net present value (NPV)

By CA Avishi Gupta Page 12 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
Ch-3 ill-1 Determine NPV of the project with the following information: 3.3
Determine the risk adjusted net present value of the following
Ch-3 Practical-15 3.46
projects
Evaluate the proposal, adopting decision tree
Ch-3 ill-11 3.34
approach.
Ch-3 Theory-4 Explain the steps involved in Simulation Analysis 3.39
Explain whether your opinion will change, if you use coefficient of
Ch-3 Practical-3(ii) 3.40
variation as a measure of risk.
Ch-3 Practical-16 Find out the risk-adjusted discount rate (RADR) for these projects. 3.47
Ch-3 Practical-8(i) Find the probable NPV; 3.43
Ch-3 Practical-8(ii) Find the worst-case NPV and the best-case NPV 3.43
Future replacement will be with identical machine with same
cost. Revenue is unaffected by the age of the machine. Ignoring
Ch-3 Practical-26 inflation and tax, determine the optimum replacement 3.50
cycle.
How would standard deviation of the present value distribution
Ch-3 Practical-1(iii) 3.40
help in Capital Budgeting decisions
If risk adjusted discount rate method is used, which project would
Ch-3 Practical-14(ii) 3.46
be appraised with a higher rate and why?
Show how the viability of the project is to be evaluated
Ch-3 Practical-17 (Inflation is given) 3.47
Show how the viability of the project is to be evaluated
Ch-3 Practical-18 (Inflation is given) 3.47
Standard deviation and coefficient of variation assuming that
Ch-3 Practical-7(iv) there are only three streams of cash flow, which are represented 3.42
by each column
State the probability occurrence of the worst case, if
Ch-3 Practical-8(iii) the cash flows are perfectly positively correlated 3.43
over time.
Ch-3 ill-3 State which project is preferable? 3.13
Ch-3 Practical-7(ii) The best case and the worst case NPVs 3.42

Ch-3 Practical-1 The Company wishes to take into consideration all possible risk 3.40
factors relating to airline operations. The company wants to know
Ch-3 Practical-7(i) The expected NPV of the project 3.42

Ch-3 Practical-1(i) The expected NPV of this venture assuming independent 3.40
probability distribution with 6 per cent risk free rate of interest.
Ch-3 Practical-1(ii) The possible deviation in the expected value 3.40

Ch-3 Practical-7(iii) The probability of occurrence of the worst case if the cash flows 3.42
are perfectly dependent overtime and independent overtime
Ch-3 Theory-2 What is the sensitivity analysis in Capital Budgeting? 3.39
What net present value will the project yield, if worst outcome is
Ch-3 Practical-20(ii) 3.48
realized? What is the probability of occurrence of this NPV?

By CA Avishi Gupta Page 13 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
What will be the best outcome and the probability of that
Ch-3 Practical-20(iii) 3.48
occurrence?
Ch-3 Practical-22 When should the company replace the machine? 3.49
Which factor is the most sensitive to affect the acceptability of
Ch-3 Practical-11 3.44
the project?
Ch-3 Practical-24 Which machine company X should buy? 3.50
Ch-3 Practical-3(iii) Which measure is more appropriate in this situation and why? 3.40
Ch-3 Practical-4(ii) Which of the two projects is riskier? 3.41
Ch-3 Practical-6(iv) Which project do you recommend? State with reasons. 3.42
Which project is better based on NPV, criterion with a discount
Ch-3 Practical-5(a) 3.41
rate of 10%?
Ch-3 Practical-14(i) Which project should be accepted 3.46
Ch-3 Practical-2 which project should be accepted? Explain with workings. 3.40
Which project should be selected and why? (Cash flow &
Ch-3 Practical-21 3.48
Probability is given)
Ch-3 Practical-3(i) Which project will you recommend based on the above data 3.40
Ch-3 Practical-20(iv) Will the project be accepted? 3.48
Ch-3 Theory-3 Write a note on project appraisal under inflationary conditions 3.39
Write short note on Certainty Equivalent
Ch-3 Theory-1 3.39
Approach.
You are required to advise the company as to which
Ch-3 Practical-23 alternative is to be adopted.(Old v/s Exisiting 3.49
Machine)
You are required to calculate net present value of the project.
Ch-3 Practical-19 (Revenue, Cost & Depreciation) 3.47
You are required to determine optimal replacement period
Ch-3 Practical-27 3.51
of bike
You are required to determine the optimal
Ch-3 ill-13 3.38
replacement period of taxi if cost of capital
You are required to measure the sensitivity of the project
Ch-3 Practical-9 3.43
in relation to each of the following parameters
You are required to measure the sensitivity of the project’s
Ch-3 Practical-13 net present value to a change in the following project 3.45
variables
Ch-4 Practical-1 Calculate Exponential Moving Average (EMA) of Sensex 4.34
Ch-4 Theory-2 Explain Dow theory. 4.34
Explain the Efficient Market Theory in and what is
Ch-4 Theory-1 4.34
major misconception about this theory?
Ch-4 Theory-3 Explain the Elliot Wave Theory of technical analysis. 4.34
Explain the various indicators that can be used to assess the
Ch-4 Theory-4 4.34
performance of an economy
You are required to test the weak form of efficient market
Ch-4 Practical-2 hypothesis by applying the run test at 5% and 10% level of 4.35
significance

By CA Avishi Gupta Page 14 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
1% for every one time of difference for Interest and Fixed
Ch-5 Practical-7(i) 5.34
Dividend Coverage
2% for every one time of difference for Capital Gearing
Ch-5 Practical-7(ii) 5.34
Ratio.
A bond with 7.5% coupon interest, Face Value 10,000 & term to
Ch-5 Practical-21(ii) maturity of 2 years, presently yielding 6%. Interest payable half 5.38
year
Advice Mr. A whether he should invest all his money in one type
Ch-5 Practical-27 5.39
of bond or he should buy both the bonds
As an investor when will you exercise conversion for given market
Ch-5 Practical-23 5.38
prices of the equity share
Calculate - (i) Stock value of bond.
(ii) The percentage of downside risk.
Ch-5 Practical-24 5.38
(iii) The conversion premium
(iv) The conversion parity price of the stock.
Ch-5 Practical-12(ii) Calculate its sustainable growth rate of earnings 5.36
Ch-5 Practical-21 Calculate Market Price of: 5.38
Calculate the expected market price, if increase in required yield
Ch-5 Practical-26 5.39
is by 75 basis points.
Calculate the fair price of the Company's share using dividend
Ch-5 Practical-12(iii) 5.36
discount model, a
Ch-5 Practical-13 Calculate the intrinsic value of the share 5.36
Ch-5 Practical-4(i) Calculate
Calculate thethe value
present of of
value share
stockfrom
of ABCthe
Ltd.following 5.33
Ch-5 Practical-10 information: 5.35
compute is the price of the share today using both Dividend
Ch-5 Practical-1 5.32
Growth Model and Walter’s Model.
Compute the current price at which equity shares should sell (2
Ch-5 Practical-3 stage growth) 5.32
Ch-5 Practical-7 Compute the value per equity share of the company assuming 5.34
Ch-5 Practical-19 Determine the value of the bond if required yield 5.37
Ch-5 Practical-12(i) Draw income statement for the year 5.36
Find out the present as well as the likely value of the share after
Ch-5 Practical-9 5.34
the decision.
Government of India security currently quoted at 110, but yield is
Ch-5 Practical-21(i) 5.38
expected to go up by 1%.
Ch-5 Practical-15(ii) How would the equilibrium price change when 5.36
If he wants a yield of 13% what is the maximum price, he should
Ch-5 Practical-20(i) 5.37
be ready to pay for

Ch-5 Practical-11(ii) If the anticipated growth rate is 16% per annum, calculate the 5.35
indicative market price with the same cost of capital.
Ch-5 Practical-20(ii) If the Bond is selling for 97.60, what would be his yield? 5.37
If the company's cost of capital is 20% p.a. & the anticipated
Ch-5 Practical-11(iii) 5.35
growth rate is 19% p.a., calculate the market price per share
Ch-5 Practical-4(ii) Is its stock overvalued if stock price 5.33

By CA Avishi Gupta Page 15 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
RBI sold a 91-day T-bill of face value of 100 at an yield of 6%.
Ch-5 Practical-28 5.39
What was the issue price?
Should Mr. A buy the share? If so, what maximum price should he
Ch-5 Practical-14 pay for each share? Assume no tax on dividend income and 5.36
capital gain
Show as to how the investor can maintain his target
Ch-5 Practical-16 receipt from the investment for first 3 years and 5.37
improved income
Show that the market value of the share is affected by the
Ch-5 Practical-16 5.36
decision of the Board
Suppose dividends were expected to grow at a rate of 20% per
Ch-5 Practical-6(ii) annum for 5 years and 10% per year thereafter. Now what is the 5.33
firm’s expected, or required, return on equity
The company seeks your advice - the minimum period for the
Ch-5 Practical-29 company to breakeven its investment expenditure overtime 5.39
value of money.
The company seeks your advice -as to the period of investment
Ch-5 Practical-29 5.39
so as to earn a pre-tax income of 5%. (discuss)
The impact of share re-purchase on the EPS,assuming that net
Ch-5 Practical-18(iii) 5.37
income is same.
the maximum amount Mr. B should pay for shares, if he requires
Ch-5 Practical-5(i) 5.33
a rate of return of 13% per annum.
the maximum price Mr. B will be willing to pay for share, if he is
Ch-5 Practical-5(ii) of the opinion that the 9% growth can be maintained indefinitely 5.33
and require 13%
Ch-5 Practical-18(ii) The number of shares that can be re-purchased 5.37

Ch-5 Practical-18(i) The price at which the shares can be re-purchased, if the market 5.37
capitalization of the company should be 210 lakhs after buyback,
the price of share at the end of three years, if 9% growth rate is
Ch-5 Practical-5(iii) 5.33
achieved
What are the ex-right price of shares and the value of a
Ch-5 Practical-2 5.32
right
Ch-5 Practical-26 What is the current market price, duration&volatility of bond? 5.38
What is the equilibrium price of the equity stock of
Ch-5 Practical-15(i) 5.36
Platinum Ltd.?
what is the firm’s expected or required return on equity using a
Ch-5 Practical-6(i) dividend-discount model 5.33
Ch-5 Practical-22 What is the premium over conversion value? 5.38
Ch-5 Practical-12(iv) What is your opinion on investment in the company's share at 5.36
Ch-5 Practical-30 What was the net amount received by the Co. on issue of CP? 5.40
Why should the duration of a coupon carrying bond always be
Ch-5 Theory-1 5.32
less than the time to its maturity?
Ch-5 Theory-2 Write short notes on Zero Coupon Bonds. 5.32
Ch-5 Practical-25 You are required to analyse bond refunding decision 5.38

By CA Avishi Gupta Page 16 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
You are required to calculate the expected rate of return on
Ch-5 Practical-8 company’s shares as per CAPM model and equilibrium 5.34
price per share by dividend growth model.
You are required to calculate the required rate of return and
Ch-5 Practical-17 5.37
intrinsic value of the stock.
You are required to compute - The cost of equity to the company
Ch-5 Practical-11(i) 5.35
if the market expects a growth rate of 15% p.a
Ch-5 Practical-31 You are required to determine - Dirty Price 5.40
Ch-5 Practical-31 You are required to determine - Repayment at maturity 5.40
Ch-5 Practical-18 You are required to determine: 5.37
Ch-5 Practical-12 You are required to: 5.35

By CA Avishi Gupta Page 17 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
Ch-6 Practical-25(ii) Advisability of replacing Security 'Better' with NIFTY. 6.73
Advise X Co. Ltd., of the comparative risk in the two investments
Ch-6 Practical-32(iii) 6.75
by calculating the standard deviation
Ch-6 Practical-2 advise-Whether to accept buy-back offer? 6.64
Also show how well the Fund will be compensated for the risk
Ch-6 Practical-24(c) 6.72
undertaken due to inclusion of stocks
Assuming perfect correlation, show whether it is preferable to
Ch-6 Practical-5(ii) 6.66
invest 75% in A and 25% in C or to invest 100% in E
Assuming three will have to be selected, state which ones will be
Ch-6 Practical-5(i) 6.65
picked.
Ch-6 Theory-2 Briefly explain the objectives of “Portfolio Management”. 6.64
calculate Expected rate of return in each, using the Capital Asset
Ch-6 Practical-28 6.73
Pricing Mode
Ch-6 Practical-28 calculate Simple Average return of the portfolio. 6.73
Calculate the average return from the portfolio for the year
Ch-6 Practical-32(i) 6.75
ended
Ch-6 Practical-27(ii) Calculate The average return of his portfolio 6.73
Calculate the Covariance and the Correlation coefficient of the
Ch-6 Practical-6 6.66
two securities
Calculate the expected average return from the portfolio for the
Ch-6 Practical-32(ii) 6.75
yea
Calculate The expected rate of return of each security using
Ch-6 Practical-27(i) 6.73
Capital Asset Pricing Method
Ch-6 Practical-1(i) Calculate the expected return 6.64
Ch-6 Practical-34(i) Calculate the following: The Portfolio Beta 6.76
Ch-6 Practical-16(ii) Calculate the portfolio Beta. 6.69
Calculate the risk of XYZ’s short-term investment portfolio
Ch-6 Practical-22 6.71
relative to that of the market
Ch-6 Practical-1(ii) Calculate the Standard deviation of returns. 6.64
Calculate the systematic and unsystematic risk
Ch-6 ill-1 6.35
for the companies’ stocks
calculate: - Expected rate of return in each, using the Capital
Ch-6 Practical-26(i) 6.73
Asset Pricing Model (CAPM
Ch-6 Practical-26(ii) calculate: - Risk free rate of return. 6.73
Ch-6 Practical-11(i) Characteristic line for stock A 6.67
Ch-6 Practical-7(i) 6.66
Comment on return and risk of investment in individual shares.
Compare the risk and return of these two shares with a Portfolio
Ch-6 Practical-7(ii) 6.66
of these shares in equal proportions
Compute Beta Value of the company as at the end of 2005. What
Ch-6 ill-6 6.41
is your observation
Compute Beta Value of the Krishna Ltd. at the end of 2015 and
Ch-6 Practical-8 6.66
state your observation
Ch-6 Practical-36(i) Compute the following: Portfolio beta 6.76
Ch-6 ill-3 Compute the risk premium on Security K 6.40

Ch-6 ill-4(ii) 6.40

combination of investments

By CA Avishi Gupta Page 18 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
Ch-6 Practical-4(iv) Correlation coefficient between the returns of the two stocks. 6.65
Ch-6 Practical-40(c) determine the composition of his portfolio. 6.78
Ch-6 Practical-16(i) Determine the portfolio return 6.69
Determine whether the investor should liquidate his holdings in
Ch-6 Practical-33 6.75
stocks A and B or on the contrary
Discuss the Capital Asset Pricing Model (CAPM) and its relevant
Ch-6 Theory-3 6.64
assumptions
Estimate the Company’s Cost of capital and the discount rate for
Ch-6 Practical-39(ii) 6.77
an expansion of the company’s present business.
Expected return of each stock, if the market return is equally
Ch-6 Practical-13(b) 6.68
likely to be 7% or 25%
Expected return on the portfolio, if the Government Securities
Ch-6 Practical-25(i) 6.72
expected
are return,
at 8% and systematic
the NIFTY risk and unsystematic
is yielding 10%
Ch-6 Practical-17(iii) risk 6.70
Find out the expected return and variability of returns of the
Ch-6 Practical-2 6.64
equity shares if buyback offer is accepted by the investo
Find out the proportion of each of the above shares to formulate
Ch-6 Practical-7(iii) 6.66
a minimum risk portfolio.
how much is the return of the share under Arbitrage
Ch-6 Practical-38 6.77
Pricing Theory?
If equal amount of money is allocated for the stocks what would
Ch-6 ill-1 6.39
be the portfolio risk?
If Mr. X borrows ` 1,00,000 at the risk free
rate and invests the amount he borrows
Ch-6 Practical-15(ii) 6.69
along with the original amount of ` 1,00,000
in security A and B in the same proportion

If Mr. X has ` 1,00,000 to invest and sells

Ch-6 Practical-15(i) short ` 50,000 of security B and purchases ` 6.69
1,50,000 of security A what is the sensitivity
of Mr. X’s portfolio to the two factors?
If the company invests 15% of its investment in C, 15% in A, 10%
Ch-6 Practical-23(ii) in E and the balance in equal amount in the other two mutual 6.71
funds, what is the beta of the portfolio
If the company invests 20% of its investment in each of the first
Ch-6 Practical-23(i) two mutual funds and an equal amount in the mutual funds C, D 6.71
and E, what is the beta of the portfolio?
If the expected return of market portfolio is 12% at a beta factor
Ch-6 Practical-23(iii) 6.71
of 1.0, what will be the portfolios expected return
If the PM seeks to increase the beta to 1.2, how much risk free
Ch-6 Practical-36(iii) 6.77
investment should he bring in?
If the PM seeks to reduce the beta to 0.8, how much risk free
Ch-6 Practical-36(ii) 6.76
investment should he bring in?
Ch-6 ill-7(ii) If the projected return is 18%, is the investment rightly valued? 6.43
If you invest 30% in B Ltd. and 70% in A Ltd., what is your
Ch-6 Practical-21(ii) 6.70
expected rate of return and portfolio Standard deviation?

By CA Avishi Gupta Page 19 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
In view of the above factors whether the investor should buy,
Ch-6 Practical-29 6.74
hold or sell the shares? And why?
In view of the above, advise whether the investor should buy,
Ch-6 Practical-30 6.74
hold or sell the shares
Ch-6 Practical-21(i) Is investing in B Ltd. better than investing in A Ltd.? 6.70
portfolio return, beta, portfolio variance and
Ch-6 Practical-17(ii) 6.70
portfolio standard deviation
Portfolio variance (on the basis of modern portfolio theory given
Ch-6 Practical-34(iv) 6.76
by Markowitz)
Ch-6 Practical-34(iii) Portfolio variance using Sharpe Index Model 6.76
Rank the portfolios using (a) Sharpe’s method, (b)
Ch-6 Practical-42 6.79
Treynor’s method and (c) Jensen’s Alpha
Ch-6 Practical-34(ii) Residual variance of each of the three shares 6.76
Sharpe ratio, Treynor ratio and Alpha of MFX, MFY
Ch-6 Practical-17(iv) 6.70
and Portfolio Mix
Suppose the investor invests ` 4,000 out of ` 8,000 in security A.
Ch-6 Practical-31(ii) 6.74
How he will allocate the balance between security B and C
Ch-6 Practical-13(d) The Alphas of the two stocks 6.68
Ch-6 Practical-4(iii) The covariance of returns from the two stock 6.65
The expected return on a portfolio containing A and B in the
Ch-6 Practical-4(i) 6.65
proportion of 40% and 60% respectively.
The risk of a portfolio containing A and B in the proportion of
Ch-6 Practical-4(v) 6.65
40% & 60%
The Security Market Line (SML), if the risk free rate is 7.5% and
Ch-6 Practical-13(c) 6.68
market return is equally likely to be 7% or 25%
Ch-6 Practical-4(ii) The Standard Deviation of return from each of the two stock 6.65
Ch-6 Practical-11(ii) The systematic and unsystematic risk of stock A. 6.67
Using Arbitrage Pricing Theory, determine the expected return on
Ch-6 Practical-40(a) 6.78
the market index
Using Capital Asset Pricing Model (CAPM), determine the
Ch-6 Practical-40(b) 6.78
expected return on the market index
Ch-6 Practical-14(ii) What are the covariances among the various stocks 6.68
Ch-6 ill-5 What is Pearl Ltd’s Beta? 6.41
What is the beta of Portfolio if A Ltd.’s weight is 70% and B Ltd.’s
Ch-6 Practical-21(iv) 6.70
weight is 30%?
Ch-6 Practical-12(i) What is the beta of Security X 6.67
Ch-6 Practical-39(i) What is the beta of the Company’s existing portfolio of assets? 6.77
What is the beta of the portfolio consisting of equal investment
Ch-6 Practical-14(iv) 6.68
in each stock
Ch-6 Practical-23(ii) what is the beta of the portfolio? 6.71
Ch-6 Practical-12(ii) What is the characteristic line for Security X? 6.68
Ch-6 ill-2(i) What is the expected return of company stock based on CAPM 6.39
What is the market portfolios expected rate of return and how
Ch-6 Practical-21(iii) 6.70
much is the risk -free rate?
Ch-6 ill-4(i) What is the market risk premium 6.40

By CA Avishi Gupta Page 20 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
What is the sensitivity of returns of each stock with respect to the
Ch-6 Practical-14(i) 6.68
market
Ch-6 Practical-15(iii) what is the sensitivity of the portfolio to the two factors 6.69
What is the total, systematic and unsystematic risk of the
Ch-6 Practical-14(v) 6.68
portfolio in (iv)
Ch-6 ill-7(iii) What is your strategy? 6.43

Ch-6 Practical-24(a) What percentage of your portfolio should you allocate to stocks 6.72
of Economy A if you want to increase the expected rate of return
Ch-6 ill-8 What shall be the strategy? 6.43
What should be the optimum portfolio assuming no
Ch-6 Practical-35 6.76
short sales?
Ch-6 Practical-23(iii) what will be the portfolios expected return 6.71
What will be the standard deviation of your portfolio assuming
Ch-6 Practical-24(b) 6.72
that stocks of Economy A are included
Ch-6 ill-7(i) What would be the return from this investment 6.43
Ch-6 ill-2(ii) what would be the revised expected return on this stock? 6.39
What would be the risk of portfolio consisting of all the three
Ch-6 Practical-14(iii) 6.68
stocks equally
What would be the weight for each stock for a portfolio
Ch-6 Practical-31(i) 6.74
constructed by investing 5000 in portfolioX & 3000 in portfolioY
Ch-6 Practical-22 Whether XYZ should change the composition of its portfolio. 6.71
which of the above stocks are over, under or correctly valued in
Ch-6 ill-8 6.43
the market?
With the help of following data determine the return on the
Ch-6 ill-9 6.45
security X.
Write short note on factors affecting decision of investment in
Ch-6 Theory-1 6.64
fixed income securities.
Ch-6 Practical-7 You are required to 6.66
You are required to advise Mr. FedUp in regard to the following,
Ch-6 Practical-25 6.72
using Capital Asset Pricing Method
You are required to calculate - variance of return
Ch-6 Practical-17(i) 6.70
from MFX, MFY and market return,
You are required to calculate the expected rate of return on the
Ch-6 Practical-18 company’s shares as per CAPM model and the equilibrium price 6.70
per share by dividend growth model
You are required to calculate the expected return of security ‘F’
Ch-6 Practical-9 and the market portfolio ‘P’, the covariance between the market 6.67
portfolio and security and beta
You are required to calculate the portfolio return of the
Ch-6 Practical-3 following portfolios of B & D to be considered by A for his 6.65
investment
Ch-6 Practical-13(a) You are required to calculate: The Betas of the two stocks 6.68
You are required to compute Reward to Volatility
Ch-6 Practical-41 Ratio and rank these portfolio using: Sharpe method & 6.78
Treynor's method

By CA Avishi Gupta Page 21 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
Ch-6 Practical-20 You are required to derive Security Market Line. 6.70
Ch-6 Practical-4 You are required to determine 6.65
You are required to determine the beta coefficients of the Shares
Ch-6 Practical-10 6.67
of Company A and Company B
You are required to determine the Standard Deviation of Market
Ch-6 Practical-19 6.70
Return and Security Return.
Ch-6 Practical-11 You are required to determine: 6.67
You are required to find out the risk of the portfolio if the
Ch-6 Practical-37 6.77
Ch-7 Theory-1 Differentiate between PTS and PTC 7.14
What are the main problems faced in securitisation especially in
Ch-7 Theory-2 7.14
Indian context?

By CA Avishi Gupta Page 22 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
Calculate annual rate of return to each of the
Ch-8 Practical-17 8.27
investors.
calculate expected NAV after a month for the schemes of both
Ch-8 Practical-21 8.29
the Mutual Funds.
Ch-8 Practical-3 Calculate monthly return 8.22
Ch-8 Practical-8(i) Calculate Net Assets Value (NAV) of the Fund 8.23
Calculate the month end net asset value of the mutual fund
Ch-8 Practical-6(i) 8.23
scheme
Ch-8 Practical-7 Calculate the NAV per unit of the Scheme Rudolf. 8.23
Ch-8 Practical-14 8.26
Calculate the NAVs as on 31.03.2013, 31.03.2014 and 31.03.2015.
Ch-8 Practical-9(a) calculate: (a) NAV of the Fund on 1st April 2009 8.24
Calculate: (i) Front-end Load (ii) Back end
Ch-8 Practical-2 8.22
Load
Ch-8 Theory-1 Explain how to establish a Mutual Fund 8.22
Ch-8 Practical-8(iii) Find new NAV of the Fund as on 2nd February 2012 8.24
Find out the Net Asset Value (NAV) per unit given that operating
Ch-8 Practical-19 8.29
expenses paid
Ch-8 Practical-5(ii) Had these distributions been re-invested at an average NAV 8.22
Help him in finding the date of his original investment after
ascertaining the following (i) Number of units in each scheme;
Ch-8 Practical-12 (ii) Total NAV; 8.25
(iii) Total Yield; and
(iv) Number of days investment held.
How much should the mutual fund earn to provide Mr. A return
Ch-8 Practical-1 8.22
of 16 per cent
Ch-8 Practical-6(ii) Provide a brief comment on the month end NAV 8.23
The return on the investment as on 31st December, 2010 if all
Ch-8 Practical-4(ii) 8.22
dividends and capital gains distributions are reinvested
The return on the investment if the NAV as on 31st December,
Ch-8 Practical-4(i) 8.22
2010 is 13.00
Ch-8 Theory-2 What are the advantages of investing in Mutual Funds? 8.22
What are the NAVs as on 31.3.2008, 31.3.2009 &
Ch-8 Practical-13 8.26
31.3.2010?
What difference would it make in terms of return
Ch-8 Practical-15 8.26
available and which option is preferable?
What is the effective yield on per annum basis in respect of each
Ch-8 Practical-10 8.25
of the three schemes
What is the effective yield per annum in respect of the above two
Ch-8 Practical-18 8.28
plans?
Ch-8 Practical-5(i) What is the fund’s return during the year? 8.22
Ch-8 Practical-16 What was his annual rate of earning? 8.26
Ch-8 Practical-9(c) what will be new NAV 8.24
Ch-8 Practical-9(b) what will be position of fund. 8.24
Ch-8 Practical-8(ii) what would be the position of the Fund? 8.23

By CA Avishi Gupta Page 23 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref

You are required to calculate (i) Income available for distribution;

Ch-8 Practical-20 8.29
(ii) Issue price at the end of April; (iii) repurchase price at the end
of May; and (iv) net asset value (NAV) as on 30th June
You are required to calculate the effective yield on per annum
Ch-8 Practical-11 8.25
basis in respect of each
You are required to compute the fee payable to CA. X, if return
Ch-8 Practical-22 8.30
on the fund this year turns out to be
You are required to determine the value of the
Ch-8 Practical-23 portfolio for each level of NAV following the 8.30
Constant Ratio Plan.
Ch-8 Practical-6 You are required to: 8.23

By CA Avishi Gupta Page 24 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
Advice her. she wants to know the probability of attaining the
Ch-9 Practical-21 share price ` 592 so that buying of a one-month CALL of EIL at the 9.65
execution price of ` 522 is justified.
Ascertain the net payoffs to the option holder of a
Ch-9 Practical-20 9.65
call option and a put option separately
Based on the assumption that TIC Ltd. is not going to declare any
Ch-9 ill-3(i) 9.26
dividend over the next three months
calculate the current fair value of a regular call option on CAB
Ch-9 ill-1 9.22
Stock
Ch-9 Practical-23 calculate the probability of price moving up and down 9.65
Calculate the profit or loss that Mr. A would make assuming that
Ch-9 Practical-15 9.64
the market price falls to ` 350
Calculate value of aforesaid call option based on Black Scholes
Ch-9 ill-3(ii) 9.26
valuation model
Ch-9 ill-3(iv) calculate value of the call option. 9.26
calculate: (i) Price of future contract. (ii) The gain on short futures
Ch-9 Practical-5 9.60
position if index turns out to be 4,500
Ch-9 Practical-11(ii) calculate: The theoretical value of the NIFTY futures 9.61
calculate:The number of contracts of NIFTY the investor needs to
Ch-9 Practical-11(iii) 9.61
sell to get a full hedge
calculate:The number of future contracts the investor should
Ch-9 Practical-11(iv) 9.61
trade if he desires to reduce the beta of his portfolios
Ch-9 Practical-18(i) Compute - (i) Expected Share price at the end of 4 months. 9.64
Compute - (ii) Value of Call Option at the end of 4 months, if the
Ch-9 Practical-18(ii) 9.64
exercise price prevails.
Ch-9 ill-6 Decide whether MIS Ltd. should accept the project or wait&see. 9.42
Ch-9 Theory-4 Define the term Greeks with respect to options 9.58
Ch-9 Practical-19 9.64
Determine profit or loss, if the price of Delta Corporation’s stock:
Determine the Investor’s ending position, if the tie up
Ch-9 Practical-16(ii) programme fails and the price of the stocks falls to ` 36 in 3 9.64
months
Determine the Investor’s position if the tie up offer bids the price
Ch-9 Practical-16(i) 9.64
of ABC Corporation’s stock up to ` 43 in 3 months
Ch-9 ill-4 Determine the value of the patent. 9.39
Determine: (i) Current portfolio beta (ii) Portfolio beta after 3
Ch-9 Practical-8 9.60
months
Develop an arbitrage strategy and show what your riskless profit
Ch-9 Practical-6 9.60
will be 3 months
draw a two-step binomial tree showing prices
Ch-9 Practical-23 9.65
and payoffs at each node.
Ch-9 Practical-4 examine arbitrage opportunities 9.59
Ch-9 Practical-3 find out the future price of contract deliverable on 31-12-2011 9.59
Ch-9 Practical-25 Find the value of a call option 9.66
Ch-9 Practical-7 How many index futures he should short for perfect hedging? 9.60

By CA Avishi Gupta Page 25 By CA Vinay Kumar

 Ch & Ques Question Pg No. Faculty Ref
indicate the price range at which the call and the
Ch-9 Practical-20 9.65
put options may be gainfully exercised.
Ch-9 ill-3(i) is the option worth buying for ` 25 9.26
Ch-9 Theory-3 State any four assumptions of Black Scholes Model. 9.58
Sumana wanted to buy shares of ElL which has a range of ` 411 to
Ch-9 Practical-21 9.65
` 592 a month later.
the number of NIFTY contracts that he would have to sell if he
Ch-9 Practical-13(ii) 9.63
desires to hedge until June in each of the following cases
Using the binomial model, calculate the current fair value of a
Ch-9 ill-1 9.22
regular call option on CAB Stock

Ch-9 Theory-1 What are the reasons for stock index futures becoming more 9.58
popular financial derivatives over stock futures segment in India?
What combination of share and option should Mr. Dayal select if
Ch-9 Practical-22(i) 9.65
he wants a perfect hedge
Ch-9 Practical-22(iii) What is the expected rate of return on the option? 9.65
Ch-9 Practical-10 What is the overall profit/loss to Ram 9.60
Ch-9 Practical-1 What should be the spot price? 9.58
what should be the value of a 3 months Call option under the
Ch-9 ill-2 “Risk Neutral” method 9.24
what should be the value of a 3 months Call option under the
Ch-9 Practical-24 9.65
“Risk Neutral” method at the strike rate of
Ch-9 Practical-22(ii) What should be the value of option today 9.65
Ch-9 Practical-18(iii) what will be the expected value of the call option? 9.64
Ch-9 ill-5 what will be value of abandonment option. 9.41
What would be the worth of put option if current price is
Ch-9 ill-3(iii) 9.26
considered
Which position on the index future gives a
Ch-9 Practical-9 speculator, a complete hedge against the following 9.60
transactions:
Ch-9 Theory-2 Write short note on Marking to market. 9.58
Ch-9 Practical-11(i) You are required to calculate: (i) The beta of his portfolio. 9.61
You are required to calculate: (i) the beta of his portfolio. (ii) the
Ch-9 Practical-13(i) 9.63
theoretical value of the futures
You are required to determine the daily balances in the margin
Ch-9 Practical-14 9.64
account and payment on margin calls
You are required to determine: (1) portfolio beta, (2) the value of
risk free securities to be acquired, (3) the number of shares of
Ch-9 Practical-12 9.62
each company to be disposed off, (4) the number of Nifty
contracts to be bought/sold; and (5) the value of portfolio beta
You are required to find out expected value of option at maturity
Ch-9 Practical-17 9.64
(i.e. 6 months)
you are required: (i) to calculate the theoretical minimum price of
Ch-9 Practical-2 a 6-months forward purchase; and (ii) to explain arbitrage 9.58
opportunity
You should also indicate the composition of the implied
Ch-9 ill-1 9.22
riskless hedge portfolio at the valuation date
By CA Avishi Gupta Page 26 By CA Vinay Kumar