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Topics: Life insurance, Insurance, Term life insurance Pages: 21 (4297 words) Published: December 3, 2013
Investment planning

1.
The May futures contract on XYZ Ltd. closed at Rs. 3,940 yesterday. It closes today at Rs. 3,898.60. The spot closes at Rs. 3,800. Raju has a short position of 3,000 in the May futures contract. He further sells 2,000 units of May expiring put options on XYZ with a strike price of Rs. 3,900 for a premium of Rs. 110 per unit on the same day. What is his net obligation to/from the clearing corporation today? - Marks : 4 (a) Pay Rs. 3,44,200..

(b) Receive Rs. 3,44,200.
(c) Receive Rs. 6,40,000.
(d) Pay Rs. 95,800.
2.
A client purchased a zero coupon bond 6.5 years ago for Rs. 525. If the bond matures today and the face value is Rs. 1,000, what is the average annual compound rate of return (calculated semi-annually) that the client realised on her investments? - Marks : 4 (a) 10.40%

(b) 5.08%
(c) 11.34%
(d) 10.16%

3.
Mohan invested Rs. 10,000 in XYZ mutual fund on 1/1/2000. He received cash dividends of Rs. 200, Rs. 300, Rs. 200 &Rs. 300 on 31/12/2000, 31/12/2001, 31/12/2002 & 31/12/2003 respectively. He reinvested all the dividends received in the fund. He sold the fund on 1/1/2004. What is the IRR if he sold the fund for Rs. 15,000? - Marks : 4 (a) 8.53%

(b) 8.83%
(c) 8.00%
(d) 10.67%

4.
The NAV of a debt oriented Mutual Fund is 22.25 cum dividend. It has declared a dividend of 6%, record date being 25th June 2006. Calculate the dividend receivable by an individual investor if he holds 10,000 units - Marks : 2 (a) Rs. 4,653.60

(b) Rs. 6,000.00
(c) Rs. 5,158.50
(d) Rs. 5,250.00

5.
Consider that an investor writes a covered call on XYZ share. Spot price is Rs. 38, Exercise price is Rs. 40 and a 3 month call on XYZ share is traded at Rs. 3. What is the initial cash flow incurred at the time of investment? - Marks : 2 (a) Rs. 37

(b) Rs. 41
(c) Rs. 38
(d) Rs. 35

6.
Dividend received by the writer of a Call during the life span of an Option __________. - Marks : 2 (a) can be pocketed by the writer
(b) has to be given to the buyer of the option, only if he eventually exercises the option (c) increases the premium value by an equivalent amount
(d) decreases the strike price

7.
Risk free return rate is 8%. You expect that the return on market would be 14%. The expected return of Security A with Beta of 0.70 is ________. - Marks : 2 (a) 17.8%
(b) 15.4%
(c) 12.2%
(d) 18.2%

8.
If a Company declares and pays dividend, this transaction will________. - Marks : 2 (a) reduce stockholders equity
(b) increase liabilities
(c) decrease net income
(d) not affect total assets

9.
The " Trigger option " in a mutual fund refers to a facility ___________. - Marks : 1 (a) Enabling pre - determined exit from a scheme once a certain profit level has been attained (b) Enabling pre - determined entry into a scheme once a certain NAV level has been attained (c) similar to an SIP

(d) Similar to an SWP

10.
If a new issue was offered to the public at 15 times earnings but the market was pricing similar shares at 19 times, this would be_______. - Marks : 1 (a) an example of low gearing
(b) a situation where the investor cannot take a position
(c) an appalling proposition to the investor
(d) a bargain not to be missed

11.
In the calculation of the present value of shares, increasing the growth factor (all other things being equal) will cause the value to________. - Marks : 1 (a) Stay the same
(b) Decrease
(c) Increase
(d) Increase then Decrease

12.
The bid-ask spread is________. (A) Broker's commission (B) Dealer's gross income from a transaction (C) Larger for illiquid securities than for liquid ones. - Marks : 1 (a) (C) only
(b) (B) only
(c) (A), (B) & (C)
(d) (A) only

13.
Bond prices are sensitive to the coupon rate of the bond and the maturity term of the bond. Bond prices are less sensitive to changes in interest rates when the bonds have_______. - Marks : 1 (a) large coupon rate and short maturity

(b) large coupon and long maturity
(c) small coupon...
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