**13**answerable questions with

**0**answered.

Roll No……… | |

Total No. of Questions — 5] | [Total No. of Printed Pages — 4 |

Time Allowed : 3 Hours | Maximum Marks : 100 |

Answer all questions. |

Wherever appropriate, suitable assumption should be made by the candidates. |

Working notes should form part of the answer. |

Marks |

1. | (a) | M/s ABC Ltd. is to acquire a personal computer with modem and a printer. Its price is Rs. 60,000. ABC Ltd. can borrow Rs. 60,000 from a commercial bank at 12% interest per annum to finance the purchase. The principal sum is to be repaid in 5 equal year-end installments. ABC Ltd. can also have the computer on lease for 5 years. The firm seeks your advise to know the maximum lease rent payable at each year end. Consider the following additional information:
| 12 | (0) | ||||||||||||||||||||||||||

(b) | A mutual fund made an issue of 10,00,000 units of Rs. 10 each on January 01, 2008. No entry load was charged. It made the following investments:
During the year, dividends of Rs, 12,00,000 were received on equity shares. Interest on all types of debt securities was received as and when due. At the end of the year equity shares and 10% debentures are quoted at 175% and 90% respectively. Other investments are at par. Find out the Net Asset Value (NAV) per unit given that operating expenses paid during the year amounted to Rs. 5,00,000. Also find out the NAV, if the Mutual fund had distributed a dividend of Re. 0.80 per unit during the year to the unit holders. | 8 | (0) | |||||||||||||||||||||||||||

2. | (a) | An investor holds two stocks A and B. An analyst prepared ex-ante probability distribution for the possible economic scenarios and the conditional returns for two stocks and the market index as shown below:
The risk free rate during the next year is expected to be around 11%. Determine whether the investor should liquidate his holdings in stocks A and B or on the contrary make fresh investments in them. CAPM assumptions are holding true. | 10 | (0) | ||||||||||||||||||||||||||

(b) | What are the limitations of Credit Rating? | 4 | (0) | |||||||||||||||||||||||||||

(c) | Following Financial data are available for PQR Ltd. for the year 2008 :
You are required to:
| 8 | (0) | |||||||||||||||||||||||||||

3. | (a) | Closing values of BSE Sensex from 6th to 17th day of the month of January of the year 200X were as follows :
Calculate Exponential Moving Average (EMA) of Sensex during the above period. The 30 days simple moving average of Sensex can be assumed as 15,000. The value of exponent for 30 days EMA is 0.062. Give detailed analysis on the basis of your calculations. | 6 | (0) | ||||||||||||||||||||||||||

(b) | XYZ company has current earnings of Rs. 3 per share with 5,00,000 shares outstanding. The company plans to issue 40,000, 7% convertible preference shares of Rs. 50 each at par. The preference shares are convertible into 2 shares for each preference shares held. The equity share has a current market price of Rs. 21 per share.
| 8 | (0) | |||||||||||||||||||||||||||

(c) | What is the impact of GDRs on Indian Capital Market? | 6 | (0) | |||||||||||||||||||||||||||

4. | (a) | You have been provided the following Financial data of two companies:
Company Rama Ltd. is acquiring the company Krishna Ltd., exchanging its shares on a one–to–one basis for company Krishna Ltd. The exchange ratio is based on the market prices of the shares of the two companies. Required:
| 10 | (0) | ||||||||||||||||||||||||||

(b) | An investors is considering the purchase of the following Bond:
| 4 | (0) | |||||||||||||||||||||||||||

(c) | A firm had been paid dividend at Rs.2 per share last year. The estimated growth of the dividends from the company is estimated to be 5% p.a. Determine the estimated market price of the equity share if the estimated growth rate of dividends (i) rises to 8%, and (ii) falls to 3%. Also find out the present market price of the share, given that the required rate of return of the equity investors is 15.5%. | 6 | (0) | |||||||||||||||||||||||||||

5. | (a) | M/s Omega Electronics Ltd. exports air conditioners to Germany by importing all the components from Singapore. The company is exporting 2,400 units at a price of Euro 500 per unit. The cost of imported components is S$ 800 per unit. The fixed cost and other variables cost per unit are Rs. 1,000 and Rs. 1,500 respectively. The cash flows in Foreign currencies are due in six months. The current exchange rates are as follows:
After six months the exchange rates turn out as follows:
| 12 | (0) | ||||||||||||||||||||||||||

(b) | A study by a Mutual fund has revealed the following data in respect of three securities:
The standard deviation of market portfolio (BSE Sensex) is observed to be 15%.
| 8 | (0) |