SVKM'S NMIMS

ANIL SURENDIIA MODI SCHOOL 0F COMMERCE/SCHOOL OF COMMI]RCI]

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AcademicYear: 2022-2023

Program B.Sc. Finance Year: I Semester: I

Subject: Financial Markets & Institutions Batch: 2022-2025

Date : 07 January 2023 Time:01.00 pin to 03.00 pin 2 airs)

No. of pages: 02-

// Marks:50
FINAL HXAMINATION
Instructions:

1. All questions are compulsory.

2. Figures to the right indicate full marks.
3. Normal and Scientific calculators are allowed. Financial calculators are strictly not
allowed.

Q1. Answer the following questions. All sub-questions are compulsory.

a) New Fund Offer of Wealth Wise Mutual Fund opened on April I, 2022 and closed on
April 20, 2022. It is a Hybrid scheme which made an issue of 10,00,000 units at Rs.10
per unit. No entry load was arged. It made the following investments:

Particulars Amount quR)

5,000 Equity shares of ICT Ltd. ens. 250 per share 12,50,000

Portfolio of select stocks from NIFTY 50 75,00,000

8°/o Government Securities (at par) 12,50,000

Total 1'00'00'000

By the end of the year, accrued dividend was Rs.12,00,000 and operating expenses paid
during the year amounted to Rs 5,00,000. Interest on Government Securities was received
as and when due. At the end of the i.ear. the market value of the Portfolio of select NIFTY
50 stocks \`-as up b}. Rs.25 lakhs. ICT Ltd. is a newly listed company whose shares were
allotted to the }Iunral Fund scheme under an Initial Public offer at an issue price of Rs.250.
It u-as listed at Rs.275 and \`-as trading at a premium of Rs.50 to its Issue Price at the end
of the \'ear. Other in\.estments \\-ere at par. Total number of units remain unchanged at the
end of the `-ear.

You are required to calculate: (8 marks)

i. The Net Asset value per unit at the end of the year.
ii. The Net Asset value per unit at the end of the year, if the fund distributed adividend
of Rs 0.55 per unit to its unit holders.
Round off answers to 2 decimal points

What is exit load in a mutual fund scheme? Give an example to show how it impacts
redemption price. ,/i (2 marks)
 b) How is a Mutual Fund set up and who regulates it? EXplain the typical structure of a
Mutual Fund covering the meaning and role of following entities: (10 marks)
(i) Sponsor (ii) Trustee Company (iii) Asset Management Company

Q2. Answer the following questions. All sub-questions are compulsory.

a) Ms. Maneka Sarena wants to place 4 different purchase orders in the equity market
today. Following information is available regarding the same:

Sr.No Name of stock Qty Priceflis.) Other information

1 Pitcher Motors Ltd.
2 Jassun Industries Ltd.
2,000 344 Regularly traded, impact cost >1%,
volatility = 3.85%
800 1,701 Traded on more than 80% of trading
days in previous 6 months with
impact cost <1 %, volatility = 2.01%

3 SND Life Insurance Ltd. 1,200 I,250 Traded on NSE and BSE once per
weekTraded only on BSE once per week
4 Zen Bank Ltd. 3300 161

You are required to:

(i) Calculate the total value of initial margins rvalue at Risk + Extreme loss
margin) to be paid by Ms. Saxena. (8 marks)
(ii) Ms. Saxena is exploring investment in mid-cap stocks. Kindly explain what are
mid-cap stocks? (2 marks)

b) Mr. Hinduja has been following the stock of Siphon}' Hotels Ltd. which has been rising
since the past few months due to strong rebound in travel and tourism post-covid and a
boost in hospitality sector. However, he believes that the company may have had a
weaker than expected profit margin last quarter and the price may fall sharply intraday
after quarterly results are announced. He shorts the stock at Rs. 315 to buy it later in
the day at around Rs.298. But if his prediction falls then he wants to limit the loss to a
maximum of 3% on selling price.
i. State the type of order be should place and at what price. (2 marks)
ii. Explain the concept of an `Order driven trading system'. In light of your answer,
state whether NSE and BSE have order driven trading systems or not. (3 marks)

c) Write a short note on "Primary dealers." (5 marks)

Q3. Answer the following questions. Attempt AH±£2 out of 3 sub-questions.

a) State any 3 points of distinction between Financial and Commodity derivatives and
explain in brief how a corrmodity derivative can be used for short hedge. (5 marks)
b) Explain the concept of forward contract and give one example. (5 marks)
c) What is Need Assessment and Need Based Selling in the context of marketing of
financial products? (5 marks)

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