SAPM Test

Duration 2 hours 60 Marks

Note: Q1 is compulsory.

Q1)  (A) Choose the right answer with reasons 10 Marks

(1)A market which deals in securities that have been already issued by companies is called as

      (a) Primary Market

      (b)  Money Market

      (c ) Secondary Markets

      (d)   Forward Market

(2) Which of the following is a money market security?

      (a) Debentures

      (b) Mutual Funds

      (c ) Commercial Paper

 (d) Gold and Silver

(3)The fundamental analysis (investment) approach has been associated with ____________

     (a) Uncertainties

     (b) Certainties

(c) Ratios

(d) Balance Sheet

(4) The object of portfolio is to reduce_______________  diversification

      (a) Return

      (b) Risk

      (c) Uncertainty

      (d) Percentage

(5) Trading in electronic form is known as ____________  trading

       (a) Online

       (b) Scriptless

       (c ) Budla

       (d) Margin

Q1)  (B) True or False 5 Marks

  1. Investment decisions which are not carefully thought out are costly

  2. Risk is less when return is high and it is more when return is low

  3. A financial service is any kind of service offered by a financial service provider

  4. Debentures and Bonds are debt instruments

  5. Every investment has some risk

 

Q2) (A) Mr. Rajesh, a Fund Manager produced the following returns for the last 5 yrs. Rates of return on Sensex are also given for comparison: 8 Marks

2003-04

2004-05

2005-06

2006-07

2007-08

Mr. Rajesh

6%

48%

-15%

7%

11%

Sensex

12%

40%

-6%

20%

3%

              Calculate the average return and standard deviation of Mr. Rajesh’s Mutual Fund. Did he do better or worse than Sensex by these measures?

 

Q2) (B) Compare the expected return and Risk of an investment in the following security. 7 Marks

Economic Condition

Probability (p)

Return on Investment (%)

Boom

0.275

+40%

Stagnation

0.450

+20%

Depression

0.275

-10%

 

Or

 

Q2) (A) What is credit Rating? What is its need? 8 Marks

      (B) Short Notes: 7 Marks

(i) Primary Market

(ii) Elements of investment

Q3) (A) Triveni Industries Ltd. gives you the following information for the year ended 31st March 2008: 10 Marks

Profit before interest and taxes

                       Rs. 16,50,000

Tax Rate

                          30%

Proposed Equity Dividend

25%

Capital Employed

10% Preference Share Capital

Rs. 15,00,000

80000 Equity Shares of Rs. 10 each

                       Rs. 8,00,000

15% Debentures of Rs 100 each

                       Rs. 7,00,000

Reserve and Surplus

Rs. 12,00,000

Current Market Price per Equity Share

                       Rs. 50

 

You are required to calculate:

  1. Earning Per Share

  2. Price Earning Ratio

  3. Dividend Payout Ratio

  4. Dividend Yield

  5. Book Value per share and state whether it is worth investing in the Equity Shares of the Company

Q3) (B)           5 Marks

A GOI bond of Rs. 1000 each has a coupon rate of 8 % per annum and maturity period Is 20 yrs. If the current market price is Rs. 1050, find YTM

Or

Q3) (A) What is Fundamental Analysis? 8 Marks

           How is it different from technical Analysis?

        (B) Types of Risk 7 Marks

 

Q4) (A) The Capital of T Ltd. is as under: 8 Marks

80,000 Equity shares of Rs. 10 each

Rs. 8,00,000

30,000 9% Preference shares of Rs. 10 each

Rs. 3,00,000

Total

Rs. 11,00,000

 The Following information has been obtained from the books of the company:

Profit after tax (at 60%)

Rs. 2,70,000

Depreciation

Rs. 60,000

Equity Dividend Paid

20%

 

Market Price of equity shares is Rs 40 per share. Calculate the following ratios and state whether it is profitable for investment

  1. Dividend per share

  2. Dividend yield ratio

  3. Earning per share

  4. Earning yield ratio

  5. Price earning ratio

  6. Dividend cover separately for preference and equity

 

Q4) (B) 7 Marks

          Face Value = Rs 1000

           Interest Rate = 8% p.a

Maturity Period = 6 yrs

Market Price = Rs 750

YTM if Interest payment is made semi-annually

Or

Q4) (A) What are tax saving investments?  What are their benefits? 8 Marks

       (B) What is difference between investor & speculator? 7 Marks

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