CASE STUDY NO.

Mr. Darshan is Qemployed in aDarshan

1.1 – If Mr. private implements
firm and earns
hisRs 8 lakhs
plan per year. Out
of investments of this
using he spends
leveraged moneyRs 7for
lakhs
the per
newyear. His stockwb
investment,
promises a return of 13%. He plans to invest Rs 40,000 in this and for this he will need a leverage of 1.5 to finance th
He has life insurance policies of Rs 35 lakhs. He has an outstanding housing loan of Rs 30 lakhs. His other assets, excluding
He also has investments in other sources and he expects his investments1.to 16% grow at 9% over the long term. The infl
Mr. Darshan is currently of 42 years and wishes to
2. 19% retire at 60 and his life expectancy is
3. 20%
4. 22%

Q1 Earning 800000
Expenses 700000
Investment Retrun 13%
Invest 40000
Self investment 16000
Borrow amount 24000
Borrowing Cost 9%
Borrowing Cost 2160
Nominal Rate(Investment in 9%
Inflation rate 7.50%

Earning Age (60-42) 18

Q 1.1 Total Retrun (ROI: Return 5200

Borrow Cost 2160
Net Income (Total return-B 3040
Retrun on Equity 19.00%

Q 1.2 - The company in which Mr. Darshan was planning to invest on the basis of his stock brokers recommendation and i
offering only 9% return. What will be his returns now ?
Q 1.2 9%

Q 1.3 – What is the discount rate for working out Mr. Darshan’s Insurance plan ?
1. 1.395%
2. 1.501%
3. 2.000%
4. 1.756%
 Q1.3 Discount Rate= Real rate of retrun

Real rate of Return 1.395%

Q 1.4 – What is Mr. Darshan’s human life value ?

1. Rs. 1,39,77,987
2. Rs. 1,26,62,575
3. Rs. 2,14,74,744
4. Rs. 2,22,78,634
Q1.4 Human Life Value ($12,656,479.14)
($12,656,479.14)

CASE STUDY NO. 2

The public issue of Secure Industries Ltd is priced at Rs 75. The book value of its equity shares is Rs 24. The current Ea
by 10 % next year.
wishes to invest in this IPO using outside finance(loan) in which he will get a leverage of 2 times at a finance cost of 2.

Q 2.1 – Calculate the historic Price to Book value at which the IPO is bought out.

1. 3.63
2. 3.12
3. 4.00
4. 3.21

Explanation : The formula for Historic Price to Book ie P/B ratio is = Market Price
= 75 / 24

= 3.125

Q 2.2 – Calculate the forward Price to Earning (PE) Ratio for this IPO.

1. 8.30
2. 8.77
3. 9.74
4. 10.88

Explanation : The formula for Forward PE ratio

 = 75 / (7 x 1.1) [ 10% growth in Rs 7 ]

= 75 / 7.7

Q 2.3 - If Secure Industries Ltd allots the shares in the ratio 4 for 10, what will be the cost for these shares for M
1. 75.41
2. 81.63
3. 79.80
4. 78.12

75*10 750
X=750/3=250
500
12.5
3.125

Q4. The shares of Secure Industries Ltd are expected to list at Rs 77.50. In such a scenario, what should be the minim
suffer a loss ?

1. 50%
2. 58.50%
3. 60%
4. 75 75%
2.5

50%

CASE STUDY NO. 3 (As at is aayega)

Mr. Gupta, an Indian resident invests in Mutual Funds regularly. He has an ongoing SIP which is currently valued at Rs 2,00,00
this will continue for 12 more months. The yield on SIP is estimated to be 1% pm. As Mr. Gupta is expecting some monies and
pm for 18 months. This new SIP can yield 1.25% pm.
Mr. Gupta has a son named Pranav. Mr. Gupta plans to send Pranav to USA for higher studies in the field of medical sciences
and this will go up by 10% pa over the next 5 years. The rupee is also likely to depreciate by 3% against t
 Q 3.1 – What will be the value of Mr. Gupta’s ongoing SIP in one year ?

1. Rs. 501677
2. Rs. 574606 Right
3. Rs. 542427
4. Rs .500411

Old SIP New SIP

PV -200000
PMT -25000 -12000
Rate 1% 1.25%
nper (Time) 12 18

$542,427.58 $240,554.30

Q 3.2 - Mr. Gupta plans to start a new SIP of Rs 12000 pm. What will be its value at the completion of SIP perio

1. Rs 214688
2. Rs 230876
3. Rs 240554
4. Rs 248214

Q 3.3 - What is the amount Mr. Gupta will need in five years for his son Pranav’s education ?

1. Rs 36,84,870
2. Rs 41,74,634
3. Rs 39,28,749
4. Rs 43,11,000

CASE STUDY NO. 6

Following are the assets and liabilities of Mr. Parag

Assets : House costing Rs 25 lacs but now valued at Rs 40 lacs. Equity Shares – Rs 7 lacs, Debentures Rs 3 lacs, Long Term Fixe
Deposits – Rs 2 lacs, Car Rs 4 lacs, SUV Rs 6 lacs, Open Ended Equity Schemes – Rs 6 lacs, Open Ended Debt Schemes – Rs 5 lacs,
lac.
Liabilities : Housing loan – Rs 12 lacs, Loan from friends – Rs 5 lacs, Vehicle loan Rs 4 lacs and Credit ca

Q 6.1 - What is Mr. Parag’s leverage ratio ?

 1. 20.22% Leverage Ratio = Total Liabilities / Total Assets
2. 23.18%
3. 27.30% 24.72%
4. 24.72% right Answer

Q 6.2 – Calculate the value of Mr. Parag’s liquid assets.

1.      Rs 10 lacs
2.      Rs 8 lacs
3.      Rs 6 lacs
4.      Rs 16 lacs

Q 6.3 – Calculate the Networth of Mr. Parag.

1.      Rs 57 lacs Networth= Total Asset-Total liability

2.      Rs 72 lacs 67
3.      Rs 67 lacs
4.      Rs 89 lacs

Q 6.4 – Calculate Mr. Parag’s solvency ratio.

1. 75% Solvency Ratio = Networth / Total Assets

2. 80%
3. 60%
4. 65%

How to calculate Modified Duration

Change in Rates

CASE STUDY NO. 5

Mrs. Menon is a safe investor and invests regularly in Fixed Deposits and Bonds. She is planning to invest in a 8% bonds of XYZ
but will be redeemable at a good premium of 6%. The interest is paid annually and the time duration o
The bonds were being traded at Rs 103 after 1 year.

Q 5.1 – Calculate the YTM these bonds of XYZ Ltd on issue.

 1. 8.35%
2. 9% Right answer
3. 9.20%
4. 9.80%

Q 5.2 – Calculate the revised YTM these bonds of XYZ Ltd after one year ?

1. 8%
2. 8.1%
3. 8.4%
4. 9.1%

Q 5.3 – Calculate the modified duration if after one year of the issue, 3.60 is the modified duration ?

1. 3.00 Duration 3.6

2. 3.32 Midify Duration= Duration/1+YTM
3. 3.68 3.32075750168344
4. 4.22
3.321

Q 5.4 – When the price was quoting at Rs 103, due to an announcement by RBI, the interest rates (yields) went up by 5
bonds of XYZ Ltd one year after the issue.

1. 101.35 Interest rate went up by

2. 102.44 0.5
3. 100.20 Bond price will be change by= Modify Duration* change in inte
4. 103.74
1.66037875084172
 Star Mutual Fund has two popular schemes - Scheme A and Scheme B. The NAV of Scheme A went from Rs 20 to Rs 21 dur
of Scheme B moved from Rs 30 to Rs 31. The Standard Deviation for Scheme A is 1.2% and for Scheme B is 1.4%, whereas th
The benchmark index moved from 6000 to 6100 during this period.

A B Nifty
1 20 30 6000
2 21 31 6100
Absolue Return 5.00% 3.33% 1.67%
Excess return 3.33% 1.67%
Sharpe Ratio 2.78 1.19
Tenor Ratio 3.03% 1.19%

S.d 1.20% 1.40%

Beta 1.1 1.4

Question 1 What is the absolute

return of Scheme A ?
(a) 4.10%
(b) 3.87%
(c) 5.24%
(d) 5.00% Right Answer

Question 2 What is the absolute

return of Scheme B ?
(a) 3.98%
(b) 3.33% right
(c) 2.73%
(d) 4.96%

Question 3 Calculate the excess

return of Scheme B
when compared to
benchmark return.
(a) 1.00%
(b) 1.23%
(c) 1.67% right
(d) 2.33%

Question Calculate the Sharpe

4 Ratio for Scheme A.

(a) 1.67 Sharpe Ratio= Excess Retrun/Standard Deviation

 (b) 3.88 277.77777777777800%
(c) 4.67 2.78
(d) 2.78

Question Calculate the Treynor

5 Ratio of Scheme B.

(a) 1.18 1.19%

(b) 2.88
(c) 1.02 Tenor Ratio= Excess Retrun/Beta
(d) 3.84

If Beta is 1.2 and market move 10% then Beta is 12 (10*1.2)%

Following are the details of income and expenses etc of Mr. Sayyed for the month of

Mr. Sayyed works in a company where he gets a monthly gross salary of Rs 30000 and this includes a PF contribution of Rs 30
in PF.

There are some deductions in his salary as under :

Loan repayments - Rs 3500, TDS - Rs 1000 & Investments – Rs 3000 The monthly expenses of his ho
Mr. Sayyed also has a monthly SIP going on in which Rs 2000 are deducted directly from his bank account. He plans to use th
current cost is Rs 3 lakhs.

Mr Sayyed has received Rs 3000 as dividends from some old equity shares held by

Other 3000
mr. sa
salary 30000
pf employer -3000
pf self -3000
other deduLOAN -3500
TDS -1000
INVEStment -3000
Net take home salary 16500

monthly exp 17500

Q 8.1 – The net take home salary of Mr. Sayyed for the month of January is

1. Rs 20600
2. Rs 18300
3. Rs 16 Right
4. Rs 19500

Q 8.2 The Saving Ratio of Mr. Sayyed is

1. 30.15%
2. 25.75% Savings Ratio = Savings per year/Annual Income
3. 33.33 right
4. 36.36%

Q 8.3 The SIP in which Mr. Sayyed is investing can give a monthly return of 1%. Calculate th

1. Rs 79,745
2. Rs 81,877
3. Rs 85,231
4. Rs 86 Right answer

Q 8.4 Assuming that the village house which Mr. Sayyed plans to buy, appreciates by 14% pa, w

1. Rs 426000
2. Rs 438114
3. Rs 44 Right
4. Rs 507416

CASE STUDY NO. 10

Mr. Kumar has invested in both Equity Shares and Debt. The yearly expected return from Equity shares is 14% and from De
0.4 (negative).
The standard Deviation of Equity shares is 9% and Debt is 4%

Equity Debt
Retrun on equity 14% 8%
S. d. 9 4
Correlation -0.4

Q 10.1 – Calculate the returns of Mr. Kumar if he invests 25% in Equity Shares and 75% in Debt.

1. 14% Equity
 2. 8% Debt
3. 11.5%
4. 9.5%

Q 10.2 – If Mr Kumar is investing 15% in equities and 85% in debt, what can you conclude from

1.      Mr. Kumar is married and has children who are studying
2.      Mr. Kumar is a very senior person (age more than 70-75 years) and has no family s
3.      Mr. Kumar is a young married person with no children
4.      Mr Kumar is unmarried and no immediate responsibility or family to support

Right Answer is 2

Q 10.3 – Calculate the Weighted Standard Deviation of the portfolio if the weightage is

1. 2.04% Equity
2. 2.94%S. d. 9
3. 3.74%Weighed S.d. 25%
4. 4.01%Correlation -0.4

Q4 Debt ka weitage S.d. 6 kaise aayega

Equity
S. d. 9
Weighed S.d. 71%
Correlation -0.4

New Question

Equity Debt
Retrun on equity 15% 6%
S. d. 10 3
Correlation -0.3

Q 10.3 – Calculate the Weighted Standard Deviation of the portfolio if the weightage is

e 20% 3%
d 80% 0.048
 7.80%
case study 12

Mr. Y, aged 40, has the following goals ahead of him. (1)Son's post-graduate education: Due in Year 8. Current co
years.
Likely Inflation 15% p.a. (2) Daughter's marriage: Scheduled in end of Year 12. Current cost Rs 1,2

(3)He also has plane to buy a home after 15 year which current cost is 75,00,000
(4)He also has plan to tour to UK at the age of 58. current cost of that is 300000. Cost of which is likely to increas

He is also Mr. Y has provided a corpus of Rs 5,00,00,000 towards these four needs. The corp
yielding 10% p.a. Ignore taxation.

Age 40

PV
Rate
Nper1
Nper2
X
Y
X+Y

Year1
Year2
Bank interest
Nper

0
Q12.1 - How much money will need to be set apart from the corpus at the end of Year 8, to finance the son's post-g
will earn 10% interest
($12,514,184.44)

Q 12.2 - What is the likely outflow on account of daughter's marriage in the year it is planned?
$39,230,354.71
 Q 12.3 - What is the likely outflow on account of Tour to UK in the year it is planned?
$1,667,975.19

Q 12.4 - How much will be left in the corpus after all goals are fulfilled (assume that he does not set apart m
119730482.340647

Corpus Interest on Corpus

1 50000000
2 55000000
3 60500000
4 66550000
5 73205000
6 80525500
7 88578050
8 97435855
9 101061394.774922
10 104131781.668574
11 114544959.835432
12 125999455.818975
13 99369046.6918597
14 109305951.361046
15 120236546.49715
16 91208457.9524375
17 100329303.747681
18 110362234.122449
19 119730482.340647
5000000
5500000
6050000
6655000
7320500
8052550
8857805
9743585.5
10106139.4774922
10413178.1668574
11454495.9835432
12599945.5818975
9936904.66918598
10930595.1361046
12023654.649715
9120845.79524375
10032930.3747681
11036223.4122449

age 40
 Mr. Z, aged 42 years, is working in a leading company. His net savings are Rs 45,000 p.m. Based on salary growth and other f
retirement at age 55. This does not include monthly contributions of Rs 12,000 to various funds towards retirement corpu
retirement. The retirement corpus by the end of the year will be Rs 20 lakhs, entirely in debt, which will yield 8.5% p.a. on ave
retirement corpus, his savings and investments will amount
to Rs 75 lakhs by the end of the year, 1/3 of which will be in equity. He has a practice of investing, at the end of each year, hi
ratio of 40:60. In the long run, he expects equity to yield 12% and debt to yield 9%. At the end of age 55

He expects inflation of 8% and post-retirement investment return on his portfolio at 10%. His current expen

Assume zero date as the end of age 52. Calculations are to be done on annual basis. Ignore taxation and interest income o

Salary
45000
Mr. Z age 42
540000

1 Savings
Till 55 age
1 Savings
Provident Fund 12000 p.m. 144000

one time investment 1/3 75 Lakh

60% of Savings investment E
12% E Yield on Equity
7500000 Closing Balance
2. Invesment

one time investment 2/3 75 Lakh

40% of Savings investment E
9% E Yield on Equity
Closing Balance

one time investment 20 Lakh

2000000 Prvident fund
8.5% E Yield on Equity
3. retirement Closing Balance

Q 11.1 - On retirement, how much will Mr. Z have in his retirement corpus?

a. Rs. 110 LAKH

b. Rs. 50,65,910
c. Rs. 44,81,442
d. Rs. 48,65,917

Q11.2 - At the end of Age 55, what percentage of Mr. Z's portfolio will be in debt (excluding retirement corpus)?

47%
Q 11.3 - If he re-invests the entire retirement corpus in debt, what percentage of Mr. Z's portfolio will be in debt when he re

57%

Q 11.4 - What is the corpus requirement to ensure that he is able to sustain the same standard of living for 75 years after re

a. Rs. 14,496,632
b. Rs. 13,861,919
c. Rs. 15,239,389
d. Rs. 15,254,894

Question 6
The public issue of Secure Industries Ltd is priced at Rs 60. The book value of its equity shares is Rs 20. The current Earning p
next year.
Mr. Kushal who regularly invests in IPO’s wishes to invest in this IPO using outside finance(loan) in which he will get a leverage
till the shares are allotted.

Price
Book Value
Current EPS

Q 6.1 – Calculate the historic Price to Book value at which the IPO is bought out.
1. 3.63
2. 3.00 Historic Price to Book ie P/B ratio is = Market Price Per Share / Book Value Per Share
3. 4.00 3
4. 3.21

Q 6.2 – Calculate the forward Price to Earning (PE) Ratio for this IPO.
1. 8.30 Forward PE ratio =Current Price / Forward Earnings
2. 10.00
3. 9.74 10
4. 10.88

Q 6.3 - If Secure Industries Ltd allots the shares in the ratio 4 for 10, what will be the cost for these shares for Mr. Kushal ?
1. 64.22 Price 60
2. 65.10 If 10 shares alloted 600
3. 62.00 Own Invest 200
4. 63.00 Borrowing Amount 400
Borrowing Cost 12
Borrowing Cost/Share 3
Per share cost 63

Q 6.4 – The shares of Secure Industries Ltd are expected to list at Rs 62.00. In such a scenario, what should be the m
suffer a loss ?

1. 50% Price
2. 58.50% If 10 shares alloted
3. 60% Own Invest
4. 75% Borrowing Amount
Borrowing Cost
Borrowing Cost/Share
Per share cost

Question 12
Mr. Gupta, an Indian resident invests in Mutual Funds regularly. He has an ongoing SIP which is currently valued at Rs 3,00,00
this will continue for 12 more months. The yield on SIP is estimated to be 1.25% pm. As Mr. Gupta is expecting some monie
15000 pm for 18 months. This new SIP can yield 1.25% pm.
Mr. Gupta has a son named Pranav. Mr. Gupta plans to send Pranav to USA for higher studies in the field of medical sciences
and this will go up by 10% pa over the next 5 years. The rupee is also likely to appreciate by 3% against t

Following are the assets and liabilities of Mr. Gupta

Assets : House costing Rs 35 lacs but now valued at Rs 50 lacs. Equity Shares – Rs 7 lacs, Debentures Rs 3 lacs, Long Term Fix
Deposits – Rs 2 lacs, Car Rs 4 lacs, SUV Rs 6 lacs, Open Ended Equity Schemes – Rs 8 lacs, Open Ended Debt Schemes – Rs 5 lac
3 lac.
Liabilities : Housing loan – Rs 15 lacs, Loan from friends – Rs 5 lacs, Vehicle loan Rs 4 lacs and Credit ca

OLD SIP
PV -300000
PMT -20000
Nper 12
Rate 1.25%
$605,433.58

Q 12.1 – What will be the value of Mr. Gupta’s ongoing SIP in one year ?
1. Rs. 605,434 $605,433.58
2. Rs. 674606
3. Rs. 612427
4. Rs .590411

Q 12.2 – Mr. Gupta plans to start a new SIP of Rs 12000 pm. What will be its value at the completion of SIP period ?
1. Rs 314688
2. Rs 307,341
3. Rs 240554
4. Rs 2998214

Q 12.3 - What is the amount Mr. Gupta will need in five years for his son Pranav’s education ?

1. Rs 36,84,870
2. Rs 41,74,634
3. Rs 35,06,379 $3,506,379.33
4. Rs 43,11,000

Q 12.4 – Calculate Mr. Gupta solvency ratio.

1. 75.50%
2. 77.30% Solvency Ratio= Net Worth 77.31%
3. 82.30% Networth= Total Assets- Tota 83.5
4. 80.50%

Question 24

Mr. Kumar has invested in both Equity Shares and Debt. The yearly expected return from Equity shares is 15% and from Debt
returns is – 0.3 (negative).
The standard Deviation of Equity shares is 10% and Debt is 3%.

Equity
Return 15%
S. d. 10%
Correlation -0.3
Q 24.1 – Calculate the returns of Mr. Kumar if he invests 20% in Equity Shares and 80% in Debt

1. 8.4% Equity
2. 7.8% Return 15%
3. 7.00% invest 20%
4. 9.5% 3.00%

Q 24.2 – Calculate the Weighted Standard Deviation of the portfolio if the weightage is Equity 20% and Debt 80%.

1. 2.12% Equity
2. 3.62% S. d. 10%
3. 2.62% W. s.d. 20%
4. 4.01% Correlation -0.3

Q 24.3 – If Mr Kumar is investing 20% in equities and 80% in debt, what can you conclude from this asset allocation ?

1. Mr. Kumar is married and has children who are studying

2. Mr. Kumar is a very senior person (age more than 70-75 years) and has no family support
3. Mr. Kumar is a young married person with no children
4.Kumar is unmarried and no immediate responsibility or family to support

Q 24.4– the Weighted Standard Deviation 6, then what is the weightage of debt in portfolio.

1. 50%- TO 55%
2. 45% TO 50 % S. d.
3. 35% TO 40% W. s.d.
4. 25% TO 30% Correlation

S. d.
W. s.d.
Correlation
 Question 18
Mr. X Leaving in US, He has wide range of investment in his account. He Wife is leaving in India who is in India with his minor s
of his minor son. He also want that his wife to become owner of all his asset in he is holding in his demote account jointly. He
given POA to his sister to manage the account. His father is also leaving in his fam

Q 18.1 If Mr. X want to name his holding to his wife, So He has Given Instruction for the same. What his sister to cant not do

A) His sister can make his wife a join holder his wife so that she will automatically become holder of his asset.
b) His sister can make his wife, Nominee to bring her name in name in account.
c) She can not add as a joint holder and can not add as nominee as well.

Q 18.2 He Mr. X came India than which of the following point of POA would become Invalid.
a) A POA typed on plan paper
b) A POA typed on No-Judicial Stamp Paper and notarized in India.
c) A POA Types and signed by holder at last page and Granter at All the page

Q 18.3 He Mr. X went back to US than which of the following point of POA would become Invalid.
a) A POA typed on plain paper
b) A POA typed on No-Judicial Stamp Paper and notarized in India.
c) A POA Types and signed by holder at last page and Granter at All the page

Q 18.4 As MR. M is having some investment in the name of his Minor child. And minor child have various account as well. W
following account will not be closed.

1. Bank Account
2. Demat Account
3. Mutual Fund Account
A)     1 & 3 right
B)     2 & 3
C)     1 & 2
D)     1, 2 & 3

Question 14 Systematic risk of stock is 5 and market return in tenure is 1.65% calculate stock return in same period ?
(a) 10.40%
(b) 8.25% Beta is measure of Systemetic risk
(c) 6.50% stock return in same period= Beta*Market retrun in tenor
(d) 3.35% 8.25%

CASE STUDY NO. 7

Mr. Dixit has invested Rs 100000 in a debenture which will give 11% return. He has used a leverage of 1.5 times

Q 7.1 Out of the Rs 1 lac invested by Mr. Dixit, how much funds were of his own ?
1. Rs. 50000
2. Rs. 40000 Investment
3. Rs. 45000 Rate
4. Rs. 30000 Own Investment
Borrowning amount
Borrowed Money rate
Borrowing Cost

Q7.2 What amount of interest was paid by Mr. Dixit on borrowed funds ?
1. Rs. 6100
2. Rs. 5400
3. Rs. 4900
4. Rs. 6350

Q 7.3 Calculate Mr. Dixit’s net return. Investment

1. Rs. 5400 Rate
2. Rs. 11000 Own Investment
3. Rs. 6500 Borrowning amount
4. Rs. 5600 Borrowed Money rate
Borrowing Cost

total Retrun
Borrowing Cost
Net Retrun

Q 7.4 What is the Return on Equity of Mr. Dixit ?

1. 12% Return on Equity = Net Return / Own funds invested x 100

2. 14% 14.00%
3. 16%
4. 18%

CASE STUDY NO. 9

 CASE STUDY NO. 9

Mr. Mohit is a married man of age 43. He has a good job and he also saves regularly. He intends to send his daughter for hig
current cost of such education is Rs 15,00,000 per annum and this is incurred at the end of each year for 2 years. T
His has one more daughter whose marriage is scheduled at the end of 7th year and which will cost Rs 1,00,00,0
Mr. Mohit has saved Rs 2,00.00,000 to meet these two expenses by investing in both equity and debt

Q 9.1 - How much money will Mr. Mohit need to be set aside from the corpus at the end of Year 5, to finance the daughte
apart will earn 6%interest.

1. Rs. 6290234
2. Rs. 6074532 PV
3. Rs. 5737488 PMT
4. Rs. 5270968 Rate
Nper1
Nper2

Nper
rate

Total education cost requirement at the end of 5th Year=3017035.78+3273199.20

Discount the FV of 6th Year cost to the end of 5th Year : Discount Rate @ 6%

Q 9.2 – How much money will be required on account of daughter's marriage in the year it is planned?

1. Rs. 1,47,32,877
2. Rs. 1,94,87,171
3. Rs. 2,01,74,002
4. Rs. 2,33,55,444

Q 9.3 How much will be left in the corpus after both goals are fulfilled (assume that he does not set apart money

1. Rs. 68,11,877
2. Rs. 61,47,354 Left
3. Rs. 71,96,211
 4. Rs. 75,23,085

Question 2

A company issues a debenture of face value Rs. 100 with a coupon rate of 11% and these debentures are now
redeemed in 5 years at a premium of 5%. Calculate the current yiel

(a) 10.13%
(b) 10.57%
(c) 11.39%
(d) 11.78%
0
1
Other Question 2
Q 5.1 – Calculate the YTM these bonds of Comapany on issue. 3
4
5
 CASE STUDY NO. 1

t of this
sing he spends
leveraged moneyRs 7for
lakhs
the per
newyear. His stockwhat
investment, broker
willhas
be recommended an investment
his return on equity ? which
or this he will need a leverage of 1.5 to finance the investment. He can borrow at 9% pa.
ng loan of Rs 30 lakhs. His other assets, excluding his residential house are worth Rs 90 lakhs.
tments1.to 16%
grow at 9% over the long term. The inflation rate is likely to be around 7.5%.
nd wishes to
2. 19% retire at 60 and his life expectancy is 70 years.
3. 20%
4. 22%

Leverage 1.5X
Own X
1X 1.5X 2.5X(=40000/2.5=16000) Total investme 2.5X
Own Invest X

ROE Net return/Own investment

Tota

basis of his stock brokers recommendation and in which he would have got 13% return, is now
eturn. What will be his returns now ?
 1.395%

($12,656,479.14)

ue of its equity shares is Rs 24. The current Earning per share is Rs 7 and this is likely to rise
Mr. Kushal who regularly invests in IPO’s
get a leverage of 2 times at a finance cost of 2.5% for the period till the shares are allotted.

hich the IPO is bought out.

ric Price to Book ie P/B ratio is = Market Price Per Share / Book Value Per Share

planation : The formula for Forward PE ratio is – Current Price / Forward Earnings
 [ 10% growth in Rs 7 ]

9.74025974025974

10, what will be the cost for these shares for Mr. Kushal ?

Total Investment with X+2X= 3X 200

Self investment 400
Loan amount 12
Total Borrowing Cost 3 60 63
75 78.125 Borrowing Cost Per share

0. In such a scenario, what should be the minimum allotment so that Mr. Kaushal does not
suffer a loss ?

Breakeven means no profit no loss

75 77.5 Borrowing Cost Per share

50%

TUDY NO. 3 (As at is aayega)

ngoing SIP which is currently valued at Rs 2,00,000. In this SIP he is contributing Rs 25000 pm and
pm. As Mr. Gupta is expecting some monies and so he is planning to start a new SIP of Rs 12000
hs. This new SIP can yield 1.25% pm.
for higher studies in the field of medical sciences. The expenses for such studies is Rs 20,00,000
e rupee is also likely to depreciate by 3% against the USD during this period.
 Education
-2000000

13.00%
5 Years

$3,684,870.36

will be its value at the completion of SIP period ?

his son Pranav’s education ?

CASE STUDY NO. 6

he assets and liabilities of Mr. Parag

– Rs 7 lacs, Debentures Rs 3 lacs, Long Term Fixed Deposits – Rs 10 lacs, Short Term Bank Fixed
– Rs 6 lacs, Open Ended Debt Schemes – Rs 5 lacs, Liquid Schemes – Rs 5 lacs, Saving Bank a/c Rs 1
lac.
nds – Rs 5 lacs, Vehicle loan Rs 4 lacs and Credit card outstanding Rs 1 lac.

Asset Liability
House 40 Housing Lo
 Equity Share 7 Loan
o = Total Liabilities / Total Assets Debentures 3 Veh. Loan
FD 10 Credit card
Sh. FD 2
Car 4
SUV 6
MF EQUITY 6
Open End Debt 5
Liquied Asset 5
Bank Saving 1
89
right Answar

tal Asset-Total liability

Right Answer

o = Networth / Total Assets

75.28%

CASE STUDY NO. 5

nds. She is planning to invest in a 8% bonds of XYZ Ltd. These bonds are being issued at face value
e interest is paid annually and the time duration of these bonds is 5 years.
e being traded at Rs 103 after 1 year.

YTM: Yield to Maturity=IRR()

 Menon Face value of Stock 10
Face Value of Bonds -100
Coupan Rate 8
Redeem 106 9% other solution
After one year Price of Bond -103
Coupan is paid for 5 year dur 5

0 -100
1 8
2 8
3 8
4 8
5 114 (=106+8 redeemable)
CAGR=IRR() 9.003% Companded annual growth rate (CAGR)

0 -103
1 8
2 8
3 8
4 114 (=108+6 redeemable)
YTM= 8.409% Companded annual growth rate (CAGR)

sue, 3.60 is the modified duration ?

0 -103
1 8 Midify Duration= Duratio
2 8 K
3 8
4 114 (=106+8 redeemable)
YTM= CAGR= IRR() 8.409% Companded annual growth rate (CAGR)

by RBI, the interest rates (yields) went up by 50 basis points. Calculate the revised price of
YZ Ltd one year after the issue.

l be change by= Modify Duration* change in interest rate

103 101.34
 NAV of Scheme A went from Rs 20 to Rs 21 during a particular period. In the same period NAV
e A is 1.2% and for Scheme B is 1.4%, whereas the Beta for Scheme A is 1.1 and Scheme B is 1.4.
moved from 6000 to 6100 during this period.

AB Return= (Ending value- Beginning Value)/Beginning Value

Excess return= Scheme Return- Market Return

Excess Retrun/Standard Deviation

Excess Retrun/Beta

nd market move 10% then Beta is 12 (10*1.2)%

nd expenses etc of Mr. Sayyed for the month of January.

30000 and this includes a PF contribution of Rs 3000 from the employers. He also invests Rs 3000
in PF.

e deductions in his salary as under :

ments – Rs 3000 The monthly expenses of his household are Rs 17500.

irectly from his bank account. He plans to use this SIP money to buy a house in his village whose
rrent cost is Rs 3 lakhs.

as dividends from some old equity shares held by him.

sip
pmt -2000 House
pv 0 House
RATE 1% inflation
Income from salary 30000 TOTAL 36 year
income deom devidend 3000 $86,153.76
Income of jan Month 33000 Fv function lagana

totaal saving 11000

SAVING 33.33% Percent

= Savings per year/Annual Income

can give a monthly return of 1%. Calculate the total value of his SIP investments in 3 years.
SIP -2000
RATE 1%
TOTAL 36

$86,153.76

Sayyed plans to buy, appreciates by 14% pa, what will be its value after 3 years ?

House -300000
Inflation 14%
Nper 3
$444,463.20

CASE STUDY NO. 10

ed return from Equity shares is 14% and from Debt is 8%. The co-relation between Equity and Debt returns is –
0.4 (negative).
Deviation of Equity shares is 9% and Debt is 4%.

uity Shares and 75% in Debt.

25% 3.50%
 75% 6.00%
9.50%

s and 85% in debt, what can you conclude from this asset allocation ?

ren who are studying

age more than 70-75 years) and has no family support
on with no children
mediate responsibility or family to support

a=weated of equty+return of equity

d Deviation of the portfolio if the weightage is Equity 25% and Debt 75%.

Debt Variance= a^2+b^2+2abR (R is the Correlation)

4
75% a^2 5.0625
b^2 9
2abR -5.4
Variance 8.6625
S.d. (squrroot of Var 2.943212530552

Debt Variance= a^2+b^2+2abR (R is the Correlation)

4
29% a^2 40.8321
b^2 1.3456
2abR -5.92992
Variance 36.24778
S.d. 6.020612925608

d Deviation of the portfolio if the weightage is Equity 20% and Debt 80%.
 son edu
rate
nper
pmt
st-graduate education: Due in Year 8. Current cost Rs 20,00,000 p.a. to be incurred at the end of each year for 2 pv
years.
Scheduled in end of Year 12. Current cost Rs 1,25,00,000. Inflation is assumed to be at 10% p.a.

me after 15 year which current cost is 75,00,000, likely to increae by 12% p.a.
that is 300000. Cost of which is likely to increase by 6%. Rupee also getting depreciate by 4% against the GBP.

5,00,00,000 towards these four needs. The corpus is invested in a mix of debt and equity
yielding 10% p.a. Ignore taxation.

Son Daughter Home UK

-2000000 -12500000 -7500000 -300000
15% 10% 12% 10.0%
8 12 15 18
9
$6,118,045.73 $39,230,354.71 $41,051,743.19 $1,667,975.19
$7,035,752.58
$13,153,798.31

$6,118,045.73
$7,035,752.58
10%
1
($6,396,138.71) ($12,514,184.44) Because Bracket is miuns value

us at the end of Year 8, to finance the son's post-graduate education? Assume the amount set apart
will earn 10% interest

ter's marriage in the year it is planned?

to UK in the year it is planned?

re fulfilled (assume that he does not set apart money in the 10% corpus mentioned in Q1)?

Cash Out flow

Put % value manual in this case

$6,118,045.73
$7,035,752.58

$39,230,354.71

$41,051,743.19

$1,667,975.19

Post graduation Daughter Marriage Home UK

PV -2000000 -12500000 -7500000 -300000
Inflation 15% 10% 12% 10.0%
Nper 8 12 15 18
9
$6,118,045.73 $39,230,354.71 $41,051,743.19 ###
$7,035,752.58
$13,153,798.31

Year1 $6,118,045.73
Year2 $7,035,752.58
Bank interest 10%
Nper 1
($6,396,138.71) ($12,514,184.44)
 Corpus Interest on Corpus Cash Out flow
1 50000000 5000000
2 55000000 5500000
3 60500000 6050000
4 66550000 6655000
5 73205000 7320500
6 80525500 8052550
7 88578050 8857805
8 97435855 9743585.5 $6,118,045.73
9 101061394.77492 10106139.4774922 $7,035,752.58
10 104131781.66858 10413178.1668574
11 114544959.83543 11454495.9835432
12 125999455.81898 12599945.5818975 39230354.70901
13 99369046.69186 9936904.66918598
14 109305951.36105 10930595.1361046
15 120236546.49715 12023654.649715 41051743.19443
16 91208457.952438 9120845.79524375
17 100329303.74768 10032930.3747681
18 110362234.12245 11036223.4122449 1667975.194048
19 119730482.34065

45,000 p.m. Based on salary growth and other factors, he expects this to rise by 10% p.a. till his
12,000 to various funds towards retirement corpus. These are expected to grow by 8% p.a. till
entirely in debt, which will yield 8.5% p.a. on average. Besides his own residential house and the
his savings and investments will amount
a practice of investing, at the end of each year, his disposable savings into debt and equity in the
ld 12% and debt to yield 9%. At the end of age 55, .

eturn on his portfolio at 10%. His current expenses are Rs 40,000 per month.20year

nnual basis. Ignore taxation and interest income on savings and contributions during the year.

43 44 45 46 47 48
594000 653400 718740 790614 869675.4 956642.9
 155520 167961.6 181398.528 195910.41024 211583.24306 228509.9

2500000 3156400 3927208 4829716.96 5883651.3952 7111495

356400 392040 431244 474368.4 521805.24 573985.8
300000 378768 471264.96 579566.0352 706038.16742 853379.4
3156400 3927208 4829716.96 5883651.3952 7111494.8026 8538860

5000000 5687600 6460844 7329815.96 8305744.9964 9401132

237600 261360 287496 316245.6 347870.16 382657.2
450000 511884 581475.96 659683.4364 747517.04968 846101.9
5687600 6460844 7329815.96 8305744.9964 9401132.2061 10629891

12159532.92 14189396.3916 16512627.009 19168751

60.28% 58.53% 56.93% 55.45%
2000000 2325520 2691150.8 3101297.146 3560817.8137 4075071
155520 167961.6 181398.528 195910.41024 211583.24306 228509.9
170000 197669.2 228747.818 263610.25741 302669.51416 346381
2325520 2691150.8 3101297.146 3560817.81365 4075070.5709 4649961

Total Money 15260830.066 17750214.20525 20587697.58 23818713

Total Debt 10431113.106 11866562.81005 13476202.777 15279853

Perchantage of De 68% 67% 65% 64%

debt (excluding retirement corpus)?

ge of Mr. Z's portfolio will be in debt when he retires?

the same standard of living for 75 years after retirement?

Question 6
of its equity shares is Rs 20. The current Earning per share is Rs 5 and this is likely to rise by 20 %
next year.
tside finance(loan) in which he will get a leverage of 2 times at a finance cost of 3% for the period
the shares are allotted.

60
20
5 Rise by 20% next y 6 Forward Earning

rket Price Per Share / Book Value Per Share

atio =Current Price / Forward Earnings

be the cost for these shares for Mr. Kushal ?

 Leverage 3X=600= 200

Rs 62.00. In such a scenario, what should be the minimum allotment so that Mr. Kaushal does not
suffer a loss ?

60
600 Leverage 3X=600= 200
200
400
12
2
62.00 60.00%

Question 12
ngoing SIP which is currently valued at Rs 3,00,000. In this SIP he is contributing Rs 20000 pm and
1.25% pm. As Mr. Gupta is expecting some monies and so he is planning to start a new SIP of Rs
onths. This new SIP can yield 1.25% pm.
for higher studies in the field of medical sciences. The expenses for such studies is Rs 25,00,000
e rupee is also likely to appreciate by 3% against the USD during this period.

he assets and liabilities of Mr. Gupta

s – Rs 7 lacs, Debentures Rs 3 lacs, Long Term Fixed Deposits – Rs 15 lacs, Short Term Bank Fixed
– Rs 8 lacs, Open Ended Debt Schemes – Rs 5 lacs, Liquid Schemes – Rs 5 lacs, Saving Bank a/c Rs
3 lac.
ds – Rs 5 lacs, Vehicle loan Rs 4 lacs and Credit card outstanding Rs 50,000.

New SIP Education

0 -2500000
-15000 0
18 5
1.25% 7%
$300,692.87 $3,506,379.33
alue at the completion of SIP period ?

av’s education ?

Total Asset Liability

50 15
7 5
3 4
15 0.5
2 24.5
4
6
8
5
5
3
108

Question 24

return from Equity shares is 15% and from Debt is 6%. The co-relation between Equity and Debt
urns is – 0.3 (negative).
on of Equity shares is 10% and Debt is 3%.

Debt
6%
3%
 and 80% in Debt

Debt
6%
80%
4.80% 7.80%

ightage is Equity 20% and Debt 80%.

Debt
3%
80% Variance= a^2+b^2+2abR
a^2 0.0400%
b^2 0.057600%
2abR -0.000288
Variance 0.0688%
w.s.d 2.62%

ou conclude from this asset allocation ?

family support

ebt in portfolio.

Equity Debt
10% 3%
63% 37% Variance= a^2+b^2+2abR
-0.3 a^2 0.3969%
b^2 0.012321%
2abR -0.00041958
Variance 0.3673%
w.s.d 6.06%

Equity Debt
10% 3%
63% 37% Variance= a^2+b^2+2abR
-0.3 a^2 0.3969%
b^2 0.012321%
 2abR -0.00041958
10 3 Variance 0.3673%
w.s.d 6.06%

Question 18
is leaving in India who is in India with his minor son. Mr. X Also has some investment in the name
in he is holding in his demote account jointly. He also not been able mage his account, So he has
e the account. His father is also leaving in his family.

ction for the same. What his sister to cant not do with respect to his instruction.

cally become holder of his asset.

ecome Invalid.

ould become Invalid.

And minor child have various account as well. When minor will become major than which of the
g account will not be closed.

calculate stock return in same period ?

et retrun in tenor

1% return. He has used a leverage of 1.5 times. He borrowed money at 9% pa.

100000 2.5X=100000 X= 40000

11%
40000
60000
9%
5400

100000
11%
40000
60000
9%
5400

11000
5400
5600

ds invested x 100

CASE STUDY NO. 9

rpus at the end of Year 5, to finance the daughter’s higher education? Assume the amount set
art will earn 6%interest.

Daughter Edeucation Marriage

-1500000 -10000000
0 0
15% 10%
5 7
6
$3,017,035.78 $19,487,171.00
$3,469,591.15

1
6%
($3,273,199.20)
$6,290,234.98
Rate @ 6%

r's marriage in the year it is planned?

illed (assume that he does not set apart money in the 6% corpus mentioned in Q9.1)?
upon rate of 11% and these debentures are now trading at Rs 104. These debentures will be
rs at a premium of 5%. Calculate the current yield.

Current Yield= Coupan rate/Current Price

10.58%

-100
11
11
11
11
116
12%
40000
16000
200
400
12
2 60 62
12
 5
4
1
22
Midify Duration= Duration/(1+YTM/k)
Interval 1 year
House
0
-300000
14%
3
$444,463.20
 8.6625
2.9432125305523

sqrt
 daughterrs marr home uk
15% 10% 12% 10%
8 12 15 18

2000000 12500000 7500000 300000

($6,118,045.73) ($39,230,354.71) ($41,051,743.19) ($1,667,975.19)
 49 50 51 52 53 54 55
1052307.234 1157537.9574 1273291.75314 1400620.928454 1540683 1694751 1864226
246790.694704251 266533.95028059 287856.666303038 310885.1996073 335756 362616.5 391625.8

8538859.94293888 10194907.476492 12112819.1481105 14330332.49777 16890345 19841596 23239438

631384.3404 694522.77444 763975.051884001 840372.5570724 924409.8 1016851 1118536
1024663.19315267 1223388.897179 1453538.29777326 1719639.899732 2026841 2380992 2788733
10194907.4764915 12112819.148111 14330332.4977678 16890344.95457 19841596 23239438 27146707

10629891.2806228 12007504.389479 13551194.967492 15280119.21582 17215578 19381254 21803467

420922.8936 463015.18296 509316.701256 560248.3713816 616273.2 677900.5 745690.6
956690.215256056 1080675.3950531 1219607.54707428 1375210.729424 1549402 1744313 1962312
12007504.3894789 13551194.967492 15280119.2158223 17215578.31663 19381254 21803467 24511470

22202411.8659704 25664014.115603 29610451.7135901 34105923.2712 39222850 45042905 51658177

54.08% 52.80% 51.60% 50.48% 49.41% 48.41% 47.45%
4649961.47189729 5291998.8917128 6008352.74778899 6806919.397654 7696393 8686342 9787298
246790.694704251 266533.95028059 287856.666303038 310885.1996073 335756 362616.5 391625.8
395246.72511127 449819.90579559 510709.983562064 578588.1488006 654193.4 738339.1 831920.3
5291998.89171281 6008352.747789 6806919.39765409 7696392.746062 8686342 9787298 11010844

27494410.7576832 31672366.863392 36417371.1112442 41802316.01726 47909192 54830203 62669020

17299503.2811917 19559547.715281 22087038.6134764 24911971.06269 28067596 31590765 35522313

63% 62% 61% 60% 59% 58% 57%

scheme A B index
20 30 6000
21 31 6100

stdv 1.20% 1.40%

beta 1.1 1.4