Advanced Financial Management - Nov 2024 RTP

Two friend Mr. A and Mr. N were discussing about the risks of market. While Mr. A is sort of risk averse, Mr. N is an aggressive investor and believes in taking risk. Mr. N said we cannot diversify the market risk at all, and he quoted the Modern Portfolio Approach. Both friends analyze the market data for the few months and came out with expected returns on two stocks for a particular market. Market Return 7% 25% Aggressive 4%…

Mr. X on 1.7.2021, during the initial offer of some Mutual Fund invested in 10,000 units having face value of ` 10 for each unit. On 31.3.2022, the dividend paid by the M.F. was 10% and Mr. X found that his annualized yield was 153.33%. On 31.12.2023, 20% dividend was given. On 31.3.2024, Mr. X redeemed all his balance of 11,296.11 units when his annualized yield was 73.52%. 36 NOVEMBER 2024 EXAMINATION REVISION TEST PAPER ADVANCED FINANCIAL MANAGEMENT Based on…

Mr. H is holding 100 equity shares of V Ltd. which is being quoted at ` 2,100 per share. He is interested in hedging downside risk of his holding as he is going to sell them after 2 months. A 2-month Call option is available at a premium of ` 60 per share and a 2-month put option is available at a premium of ` 50 per share. The strike price in both cases is ` 2,200. You are required…

EVA of X Ltd. with the help of following information: Profit and Loss Statement ` lac Balance Sheet ` lac Revenue 1500 PPE 1500 Selling, General & Admin. Exp. (SGA) -300 1950 615 Equity 1050 600 Non-Current Borrowings 150 Direct Costs Interest -585 Current Assets 450 -15 Reserves Tax Expense @30% -180 Current Liabilities Provisions 420 150 600 1950 Assume that Bad Debts provision of ` 30 Lac is included in the SGA, and same amount is reduced from the…

PKR Ltd. has made purchases worth USD 8,00,000 on 1st May 2020 for which it has to make a payment on 1st November 2020. The present exchange rate is INR/USD 75. The company can purchase forward dollars at INR/USD 74. The company will have to make an upfront premium @ 1 per cent of the forward amount purchased. The company can hedge its position with the following expected rate of USD in foreign exchange market on 1st May 2020: PKR…

You as a dealer in foreign exchange have the following position in GBP on 31st October, 2019: Balance in the Nostro A/c Credit 2,00,000 Purchased a bill on London 1,60,000 Opening Position Overbought 1,00,000 Sold forward TT 1,20,000 Forward purchase contract cancelled 60,000 Remitted by TT 1,50,000 Draft on London cancelled 60,000 Decide the steps would you take, if you are required to maintain a credit Balance of GBP 65,000 in the Nostro A/c and keep as oversold position on…

JB Consultancy Group has determined relative utilities of cash flows of two forthcoming projects of its client company as follows: Cash Flow in ` -150000 -100000 -40000 150000 100000 50000 10000 Utilities 40 -100 -60 -3 40 30 20 10 NOVEMBER 2024 EXAMINATION REVISION TEST PAPER ADVANCED FINANCIAL MANAGEMENT The distribution of cash flows of project X and Project Y are as follows: Project X Cash Flow (`) Probability Project Y Cash Flow (`) Probability -150000 - 100000 150000 100000…

B Bank Ltd. has entered into a plain vanilla swap through on Overnight Index Swap (OIS) on a principal of ` 10 crore and agreed to receive MIBOR overnight floating rate for a fixed payment on the principal. The swap was entered into on Monday, 10th July 2017 and was to commence on and from 11th July 2017 and run for a period of 7 days. Respective MIBOR rates for Tuesday to Monday were: 8.75%, 9.15%, 9.12%, 8.95%, 8.98% and…