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

(e) All (I), (II) and (III) above.
< ans >

28.
The implied price of a non-callable bond is Rs.112 and the observed price of a callable bond is Rs.105.45. Duration of the non-callable bond is 4.5years. The delta of the call choice is 0.672. What is the option-adjusted duration?

(a) 1.432 (b) 1.567 (c) 3.212 (d) 3.527 (e) 1.257.
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29.
subsequent info is pertaining to 4 similar residential properties.

Property
Net Operating Income (p.a.) (Rs.)
Market Value (Rs.)

House No. 1
18,000
3,50,000

House No. 2
20,000
3,65,000

House No. 3
24,000
3,95,000

House No. 4
28,000
4,20,000


The capitalization rate is

(a) 5.84% (b) 7.19% (c) 13.91% (d) 19.81% (e) 23.37%.
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30.
Which of the subsequent reasons are actual for the close-ended mutual fund for the current price being less than the NAV?

I. Investors’ doubt about the abilities of the fund’s management.

II. Lack of sales effort.

III. Riskiness of the fund.

IV. Lack of marketability of the fund’s units.

(a) Both (I) and (II) above (b) Both (III) and (IV) above

(c) (I), (II) and (III) above (d) (I), (III) and (IV) above

(e) All (I), (II), (III) and (IV) above.
< ans >





END OF part A









part B : issues (50 Marks)

This part consists of ques. with serial number one – 5.

ans all ques..

Marks are indicated against every ques..

Detailed workings should form part of your ans.

Do not spend more than 110 - 120 minutes on part B.

1. The Expected Earnings of Mehta Investment Trust (MIT) for the next 4 years are Rs.200 crores, Rs.350 crores, Rs.500 crores and Rs.625 crores respectively. There are 10 crores outstanding units for MIT with a face value of Rs. 100 every. The expected dividend payments in the next 3 years are Rs.10, Rs.20 and Rs.25 respectively. MIT will also pay Rs.212.50 per unit at the end of the fourth year when the investment trust terminates. The needed return on equity for the investment trust is 10%.

Earning:   Approval pending.