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

(a)
Book Value of Equity has increased

(b)
Debt to Net worth ratio has declined

(c)
Preference capital to Net worth ratio has increased

(d)
Corporate tax rate has declined

(e)
Rate of return on capital employed (r) and its spread over the interest rate (r–i) has increased.


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17.
The subsequent are the closing prices of Ranbaxy stock on 9 consecutive trading days in the month of April:

Days
Closing Prices (Rs.)

0
440.35

1
460.00

2
455.10

3
473.85

4
457.20

5
463.00

6
451.65

7
449.60

8
464.90


The relative strength index of the Ranbaxy’s stock is

(a)
40.66

(b)
45.16

(c)
48.56

(d)
50.66

(e)
51.66.


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18.
An investor writes five naked call choice contracts. The choice price is Rs.3.50, the strike price is Rs.60, and the stock price is Rs.57. If every choice contract is of 100 shares, the initial margin to be deposited by the investor is

(a)
Rs.4,600

(b)
Rs.5,950

(c)
Rs.7,450

(d)
Rs.7,750

(e)
Rs.8,050.


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19.
Which of the subsequent statement(s) is/are true?

I. Convexity is used for measuring change in bond price for both small and large modifications in yield.

II. Coupon of a bond and convexity are inversely related.

III. Longer the maturity of a bond, smaller the convexity.

IV. Higher the duration of a bond, higher the convexity.

(a)
Only (I) above

(b)
Only (III) above

(c)
Both (I) and (II) above

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

(e)
(II), (III) and (IV) above.


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20.
Consider the subsequent information:

Coupon (Annual)
Yield to Maturity
Maturity

12%
10.5%
15 years


If the YTM increases to 12%, the percentage change in the price of the bond using replaced duration is

(a)
8.065%

(b)
8.375%

(c)
8.765%

(d)
9.265%

(e)
9.675%.


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21.

Earning:   Approval pending.