Finance Answers

1. From the following information, calculate the volatility of the portfolio and comment

on the relationship among the stocks return.

Day Stock A Stock B Stock C 

1 0.4      2.2      0.6

2 1.1      1.3      0.5 

3 0.9      1.2      1.4

4 1.7      1.9     1.6

The company XYZ’s next year dividend per share is expected to be 4.50. The dividend in subsequent years is expected to grow at a rate of 10% per year. If the required rate of return is 15% per year, what should be its price? The prevailing market price is 80.

2. Assume that there is a perfect and complete capital market and that investors can

invest and borrow money at a unique interest rate of 15%.

(a) Draw the the new transformation curve Ts and show how the introduction of

the capital market extends the set of feasible consumption allocations. What

is the slope of TM?

Using examples point out the risk that led to the global financial crisis of 2008

and suggest how we can prevent recurrence of the same in the future (10marks)

Following particulars has been shared for you. If fixed cost is Rs500000, selling price is Rs60 and Variable cost is Rs20

a. Calculate and describe -Breakeven point (5 Marks)

b. What could be the sales number to earn a profit of Rs 50000, at a Fixed Cost Rs 200000, Variable Cost Rs30 per unit, Selling Price Rs 60 per unit (5 Marks)

In a study among the college students in a tier I city in India, it was found that their ‘behavior’ can be predicted by understanding their ‘intention’, which in turn can be predicted by a host of other factors. All these factors can be grouped into three different variables like ‘attitude’, ‘subjective norms’ and ‘perceived control’. It was also found that these three variables impact each other.

a. Identify the dependent variable and the independent variables. Is there any mediator in the model? Explain in all the cases.

b. Draw the conceptual model.

You have been hired by a firm as a researcher to understand the consumer preferences for one of their product categories within a state in India. After going through the requirements, you realized that you need to discover various qualitative aspects of product preferences from the consumers. Hence, you decided to speak to some groups of consumers at various parts of the state to understand more about the given problem. The management approves your idea of interview and gave you a go ahead. Answer the following questions: Why do we conduct interview in research? Discuss about the structured and unstructured interview process

The organization structure of a Bank’s Treasury unit involves designing of its operations across Front office, Mid-office, and Back office. Describe each of these three operating arms in terms of its nature, purpose / objectives, and the skills / qualifications of the people employed in these 3 operating arms

Historically, only larger Banks had the strength of providing Treasury products & services. Now even smaller banks are into it in a strong way. Enumerate and describe at least 5 purposes for which a Bank Treasury exists

The prevailing market rates are as follows.

INR/USD = Rs. 77.00

Interest rate for a 6 month loan in India = 12% per annum

Interest rate for a 6 month loan in USA = 6% per annum

a. Explain the concept of Interest Rate Parity. What will be the expected 6 -months forward rate for US dollar in India?

b.Compute the Forward premium/discount of USD/INR in the Indian Forex Market?