Q1) (A) Choose the right answer with reasons 10 Marks
-
A portfolio manager by evaluating his own performance can identify sources of _______________
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Risk or return
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Strength or Weakness
-
Beta or Standard Deviation
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Buying or selling shares
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Portfolio performance is evaluated over a __________
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Period
-
Year
-
Time-interval
-
A month
-
Sharp measure of Portfolio evaluation uses the __________ of returns as the measures of risk.
-
Standard Deviation
-
Variance
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Range
-
Beta
-
The intrinsic value of a share is based on _________ that the investor expects to receive in future.
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Dividend
-
Capital Gain
-
Cash Flow
-
interest
-
The stock valuation model should generate changes in __________ for stocks.
-
Expected Return
-
Revised Return
-
Regular Return
-
Average Return
Q1) (B) What is the present value of the following cash stream if the discount rate is 12%? (5)
|
Year |
0 |
1 |
2 |
3 |
4 |
|
Cash Flow |
5000 |
6000 |
8000 |
10000 |
12000 |
Q2) (A) An investment of Rs 40,000 made on 1/04/02 provides inflows as follows: (8)
|
Date |
Alternative I |
Alternative II |
|
01/04/03 |
20,000 |
10,000 |
|
01/04/04 |
10,000 |
20,000 |
|
01/04/05 |
10,000 |
10,000 |
|
01/04/06 |
10,000 |
10,000 |
Which alternative would you prefer if the investor’s expected return is 10%? Give reason(s) for your preference.
Q2) (B) ‘C’ Ltd. paid dividend Rs 1.80 per share. The forecast is that dividend will grow by 5% per year into the infinite future. If the required rate of return is 11% and the current market price of the Company’s share is Rs 40, find out its intrinsic value. (7 )
Or
Q2) (A) Key determinants of share value ? (8)
Q2) (B) Portfolio Theory? (7)
Q3) (A) Calculate Sharp, Treynor, Jensen’s Ratio : (8)
|
Portfolio |
Avg. Return(%) |
Std.Devation(%) |
Beta |
|
A |
15 |
20 |
1.25 |
|
B |
12 |
35 |
.75 |
|
C |
10 |
15 |
1.20 |
|
D |
12 |
25 |
.85 |
Market Return :12% and Risk free return is 6%
Q3) (B) Calculate Beta (7)
|
Years |
A Ltd. |
Market |
|
1 |
12 |
18 |
|
2 |
-9 |
14 |
|
3 |
15 |
21 |
|
4 |
20 |
24 |
|
5 |
15 |
16 |
Or
Q3) (A) (i) Systematic Risk 8 Marks
(ii) Unsystematic Risk
Q3) (B) Portfolio Evaluation 7 Marks
Q4) (A) ABC Company Ltd. pays an annual dividend of Rs. 4 per share. The company does not intend to change its dividend
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If the investors require 8% return on company’s share what should be its market price?
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What would be the current market price of the company’s share if the required rate changes to 12%. (8)
Q4) B )PQR ltd.paid its first cash dividend RS 2.50 and growth rate is 20% for next 3 years and there after it will grow at 10%. Return is 15% find out value of share. (7)
Or
Q4) (A) What is Portfolio Performance Evaluation ? How to measures the portfolio performance? (8)
Q4) (B) Write short notes: (7)
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Selection of Asset Mix
-
Need for Portfolio Revision
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