Section C (4 Mark)
Read the senario and answer to the question.
Saxena is considering an attractive investment proposal in which he is being offered two different cash flow choices at the same initial investment of Rs. 2,00,000. According to you which one should he opt for assuming Risk Free Interest Rate is the required rate of return?

A. Plan A should be opted since it has a higher Future Value.

B. Plan B should be opted since it has a lower Present Value.

C. Plan B should be opted since it has a higher Present Value.

D. Plan B should be opted since it has a lower Future Value.

Section C (4 Mark)
Which of the following statements is/are correct?

A. I and II

B. I, II and III

C. III and IV

D. All of the Above

Section B (2 Mark)
If the currency of your country is appreciating, the result should be to ______ exports and to _______ imports.

A. Stimulate, stimulate

B. Stimulate, discourage

C. Discourage, stimulate

D. Discourage, discourage

Section C (4 Mark)
Read the senario and answer to the question.
Raman has invested Rs. 1,50,000, 30% of which is invested in Company A, which has an expected rate of return of 15%, and 70% of which is invested in Company B, with an expected return of 12%. What is the expected percentage rate of return?

A. Rs. 13.17%

B. Rs. 12.90%

C. Rs. 11.59%

D. Rs. 12.57%

Section A (1 Mark)
_______________ reveals that people often focus on short-term financial events to the detriment of their long-term needs.

A. In Equity Reversion

B. Money Illusion

C. Present-biased preferences

D. Inter Temporal Consumption

Section B (2 Mark)
A bond has the following terms:



If you expect the bond to be called at the end of the year, what would be the maximum price you should pay for the bond if comparable yields are 7 percent?

A. 1012.35

B. 1024.39

C. 1028.04

D. 1016.19

Section B (2 Mark)
Consider the multifactor model APT with two factors. Portfolio A has a beta of 0.75 on factor 1 and a beta of 1.25 on factor 2. The risk premiums on the factor 1 and factor 2 portfolios are 1% and 7%, respectively. The risk-free rate of return is 7%. The expected return on portfolio A is __________ if no arbitrage opportunities exist.

A. 13.50%

B. 15.00%

C. 16.50%

D. 23.00%

Section B (2 Mark)
You have been asked to estimate the market value of an apartment complex that is producing annual net operating income of Rs44,500. Four highly similar and competitive apartment properties within two blocks of the subject property have sold in the past three months. All four offer essentially the same amenities and services as the subject. All were open-market transactions with similar terms of sale. All were financed with 30-year fixedrate mortgages using 70 percent debt and 30 percent equity. The sale prices and estimated first-year net operating incomes were as follows:



What is the indicated value of the property using direct capitalization?

A. Rs 3,30,000

B. Rs 3,90,351

C. Rs3,75,000

D. Rs 3,57,000

Section C (4 Mark)
Two friends Neeraj and Kapil, both belonging to the 33.66% tax bracket, have invested Rs. 10 lakhs in a debt-based scheme. The scheme is a regular run of the mill, assembly line product — nothing extraordinary about it.
The scheme has earned a distributable profit of 12%.
Kapil’s financial condition is not good and due to the business losses his assets are to be auctioned.
Neeraj is working in MNC and getting an annual package of Rs. 18 lakhs. This includes Rs. 270000 as dearness allowance (2/3 forms the part of retirement benefit). He is also earning an agricultural income of Rs. 54000.His expenses are Rs. 80000 per month.
Neeraj has also taken a housing loan in joint name of his wife Anita and himself. Property is also in the joint name and their contribution is equal. Annual outflow towards housing loan in terms of repayment of principal and interest is Rs. 300000. Out of this Rs. 198800 is toward interest.
Neeraj has also invested an equal amount in a portfolio consisting of securities A and B. Standard deviation of A is 12.43%; Standard deviation of B is 16.54%; Correlation coefficient is 0.82 Assets held by Neeraj

Section B (2 Mark)
You buy a share of ABC Ltd for Rs. 20. You expect it to pay dividends of Re.1, Rs.1.10 and Rs.1.21 in coming three years. Calculate the growth rate in dividend:

A. 5%

B. 6%

C. 8%

D. 10%

Section A (1 Mark)
In ________, the values exchanged by the contracting parties may not necessarily be equal

A. Aleatory contracts

B. Conditional contract

C. Personal contract

D. Unilateral contract

Section A (1 Mark)
A cognitive heuristic in which people tend to reach conclusions based on the 'framework' within which a situation is presented; e.g. people are more lokely to recommend the use of a new procedure if it is described as having a '50% success rate' than a '50% failure rate'.
Which of the following is most likely consistent with this bias?

A. Anchoring and Adjustment Bias

B. Framing Bias

C. Confirmation bias

D. Overconfidence Bias