Institute of Chartered Financial Analysts of India (ICFAI) University 2006 Certification Finance Security Analysis – I - Question Paper

64.8025
62.4100
-63.5950

11
-1.0000
-16.1000
1.0000
259.2100
16.1000

12
19.4000
-4.4000
376.3600
19.3600
-85.3600

Total
58.3000
13.2000
865.6900
1246.2500
100.7075

Mean
4.8583
1.1000







4.8583 1.1





SXY = 100.7075

r2 =

b =

=

= 0.0628

a = 1.1 – (0.0628) (4.8583) = 0.7945

r2 =

=

= 0.0019

Hence, there is a small degree of correlation ranging from the returns of 2 periods and therefore we can conclude that index moved in a random manner.



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2. a.

Year
EPS
Growth rate
DP
DPS
Beta
Rf
Rm
Ke (%)
D rate
PV


0
26











1
31.72
22%
0.25
7.93
1.2
5.5
12%
13.3
1.133
7.00


2
38.70
22%
0.25
9.67
1.2
5.5
12%
13.3
1.284
7.54


3
47.21
22%
0.25
11.80
1.2
5.5
12%
13.3
1.454
8.12


4
57.60
22%
0.25
14.40
1.2
5.5
12%
13.3
1.648
8.74


5
70.27
22%
0.25
17.57
1.2
5.5
12%
13.3
1.867
9.41


6
83.76
19.20%
0.32
26.80
1.16
4.5
10%
10.88
2.070
12.95


7
97.50
16.40%
0.39
38.02
1.12
4.5
10%
10.66
2.291
16.60


8
110.76
13.60%
0.46
50.95
1.08
4.5
10%
10.44
2.530
20.14


9
122.72
10.80%
0.53
65.04
1.04
4.5
10%
10.22
2.789
23.32
113.81

10
132.54
8.00%
0.6
79.52
1
4.5
10%
10
3.067
25.93
1296.259

(Terminal value)

Share price as on 31st March 2006
1410.07


b.



Year
DPS
D rate
PV

0




1
7.93
1.13
7.02

2
9.67
1.28
7.56

3
11.80
1.45
8.14

4
14.40
1.64
8.76

5

Earning:   Approval pending.