Question 246
Section C (4 Mark)
Nifty is presently at 2694. Mr. XYZ expects Nifty to fall. He buys one Nifty ITM Put with a strike price Rs.
2800 at a premium of Rs. 132 and sells one Nifty OTM Put with strike price Rs. 2600 at a premium Rs. 52.
What would be the Net Payoff of the Strategy?
* If Nifty closes at 2359
* If Nifty closes at 3561
Nifty is presently at 2694. Mr. XYZ expects Nifty to fall. He buys one Nifty ITM Put with a strike price Rs.
2800 at a premium of Rs. 132 and sells one Nifty OTM Put with strike price Rs. 2600 at a premium Rs. 52.
What would be the Net Payoff of the Strategy?
* If Nifty closes at 2359
* If Nifty closes at 3561
Question 247
Section C (4 Mark)
Navin Corporation, a manufacturer of do-it-yourself hardware and housewares, reported earnings per share of Rs2.10 in 1993, on which it paid dividends per share of Rs0.69. Earnings are expected to grow 15% a year from 1994 to 1998, during which period the dividend payout ratio is expected to remain unchanged. After
1998, the earnings growth rate is expected to drop to a stable 6%, and the payout ratio is expected to increase to 65% of earnings. The firm has a beta of 1.40 currently, and it is expected to have a beta of 1.10 after 1998.
The Risk Free rate is 6.25%.
What is the value of the stock, using the two-stage dividend discount model?
Navin Corporation, a manufacturer of do-it-yourself hardware and housewares, reported earnings per share of Rs2.10 in 1993, on which it paid dividends per share of Rs0.69. Earnings are expected to grow 15% a year from 1994 to 1998, during which period the dividend payout ratio is expected to remain unchanged. After
1998, the earnings growth rate is expected to drop to a stable 6%, and the payout ratio is expected to increase to 65% of earnings. The firm has a beta of 1.40 currently, and it is expected to have a beta of 1.10 after 1998.
The Risk Free rate is 6.25%.
What is the value of the stock, using the two-stage dividend discount model?
Question 248
Section C (4 Mark)
Roger deposits Rs. 10,00,000 in a bank account on 1st March 2005 and another Rs. 5,00,000 on 1st March
2011. He wants to withdraw all of this money with interest on 1st March 2015. If the account pays ROI of
11% p.a. compounded quarterly what amount can he withdraw from this account?
Roger deposits Rs. 10,00,000 in a bank account on 1st March 2005 and another Rs. 5,00,000 on 1st March
2011. He wants to withdraw all of this money with interest on 1st March 2015. If the account pays ROI of
11% p.a. compounded quarterly what amount can he withdraw from this account?
Question 249
Section B (2 Mark)
After making an investment, assume that an investor overhears a news report that has negative implications regarding the potential outcome of the investment he has just executed. How likely is he to then seek information, if he exhibits self attribution bias, that could confirm that you've made a bad decision?
After making an investment, assume that an investor overhears a news report that has negative implications regarding the potential outcome of the investment he has just executed. How likely is he to then seek information, if he exhibits self attribution bias, that could confirm that you've made a bad decision?
Question 250
Section B (2 Mark)
X Ltd. has given a dividend of Rs. 3 per share last year. The company is growing at a constant rate of 5 % every year and the investor's required rate at this share is 12 % per annum. Find out the Intrinsic value of this share.
X Ltd. has given a dividend of Rs. 3 per share last year. The company is growing at a constant rate of 5 % every year and the investor's required rate at this share is 12 % per annum. Find out the Intrinsic value of this share.