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FOI Assignment 2023

This document provides information for an assignment in finance and investment (FOI) due on April 17, 2023. It includes 12 questions covering topics like risk and return, security analysis, portfolio management, and mutual funds. It also provides an option to do a project work visiting a stock broking house to understand opening a demat account or covering another topic related to securities or portfolios. The document instructs students to attempt any 5 questions or 3 questions along with the project work.

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Rohan Maurya
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19 views

FOI Assignment 2023

This document provides information for an assignment in finance and investment (FOI) due on April 17, 2023. It includes 12 questions covering topics like risk and return, security analysis, portfolio management, and mutual funds. It also provides an option to do a project work visiting a stock broking house to understand opening a demat account or covering another topic related to securities or portfolios. The document instructs students to attempt any 5 questions or 3 questions along with the project work.

Uploaded by

Rohan Maurya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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FOI - Assignment and Project Work

Last date of submission : 17 April, 2023


(Attempt any FIVE QUESTIONS OR Any THREE questions and Project Work)

Q1 Distinguish between any three of the following:


i) Investment and speculation
ii) Systematic risk and Unsystematic risk
iii) Security market line and Capital market line
iv) Fundamental and Technical Analysis
v) Futures and Options
vi) Future and Forward contracts.

Q 2 An investor has choice to invest in one of the following two securities :


State of Economy Probability Return on A Return
on B
Good 40% 16% 20%
Fair 40% 12% 13%
Bad 20% 3% -5%

Which of the following two securities is good for investment:


a) In terms of return
b) In terms of risk.

Q3 The details regarding average price of a share and dividend paid per share over last six years is given below:

Year Price Dividend


1 25 3
2 35 3
3 38 3
4 40 5
5 52 5
6 60 5

Find the return and risk of the investors using the data given above.

Q 4 Suresh purchased stock of Ambica Ltd at a price of Rs 50 per share . The year end prices of the stock under different
market conditions with equal probabilities as follows :

Condition Year end Price ( Rs)


Bullish 75
Normal 60
Bearish 45

a) Find out the expected value of return for one year period and risk (σ) of the return.
b) Also calculate inflation adjusted return if rate of inflation , during the year is 8%.

Q5) An investor purchase a bond for Rs 950. The bond will mature after 4 years from now. It has coupon rate of 9% and
face value of Rs 1000.
i) Find the yield to maturity of the bond .
ii) If the bond is callable after 2 years at Rs 1025, find the yield to call.
iii) What is the current yield of the bond
iv) If the investor sells this bond for Rs 980 after one year , what will be his holding period yield.
Q6 The following information is available in respect of ABC Ltd for the year 2020-21:
Annual Turnover 50,00,000
Operating profit 20%
Equity share capital (FV = Rs100) 20,00,000
Capital reserve 5,00,000
Preference share capital (12%) 20,00,000
Long term loan (10%) 10,00,000
Debentures (12%) 10,00,000
Tax rate 30%
Dividend payout ratio 50%
Price Earning ratio 30
Using the above information, one can find following ratios
i. Earning per share (ii) Dividend per share (iii)Expected market price of the share
(iv) Earning yield (v)Dividend yield

Q 7 An investor is interested in investing his funds in securities of two company – A


Ltd. and B Ltd. , whose expected return and risk are given below:
A Ltd. B Ltd.
Expected Return 14% 20%
Risk in terms of Std. Dev 8% 12%
Find the following
i) Return of portfolio if 40% of funds are invested in A Ltd. and remaining in B Ltd.
ii) Maximum and Minimum risk of such portfolio.
iii) What should be the weights of the securities if return of 16% is desired? What will be risk of such portfolio
if the market index risk and return are 10 % and 15% respectively and return of T-bill is 5% ?

Q8) What do you understand by ‘efficient portfolio’ ? How it is arrived in Markowitz Model ?

Q9 a) Mrs. X is holding a security offering 16% return. If the return on risk free asset is 7% and on market index is 15%,
advice her, on the basis of CAPM to hold or not to hold security if systematic risk is :
(i) 1 (ii) 0.6 (iii)1.5

b) The risk and return of market portfolio are 4% and 16% respectively. The risk free interest rate is 6%. Comment on
the efficiency of the following portfolio and if the investors has appetite for risk which portfolio should be selected:

Portfolio Expected Return Risk ( in terms of std. dev.)


A 12% 2%
B 16% 5%
C 35% 7%

Q10 a) If the spot rate of a stock is Rs 20 and risk free rate of interest is 6% p.a. , find its future price at the end of three
months from now.

b)Explain the techniques of finding pay off in call option and put option from the buyer and seller point of view using
appropriate example.

Q11 Discuss the benefits of Mutual funds. Illustrate the procedure of finding NAV and return to be generated by funds
when investors’ required rate of return, load expenses and recurring expenses are given, using practical question.

Q12 Write short notes on any three of the following


(i) Benefits of Credit rating to a company and investors
(ii) Forms of Market efficiency
(iii) Significance of P/E ratio in equity valuation
(iv) Types of risk in bond investment.
(v) Role of SEBI
(Project Work)
Visit any Stock Broking house and enquire the formalities of opening demat and
trading account OR cover any other aspect in Securities/Portfolios as per your
convenience . Observe the set up and prepare 1 to 2 pages of your experience
preferably alongwith geotagged photograph.

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