Question 1

Section B (2 Mark)

A stock with a Beta of 0.7 currently priced at Rs 50 is expected to increase in price to Rs 55 by year end and pay Rs 1 as dividend. The expected market return is 15% and the risk free rate is 8%. The stock is:

Options :

A : Overpriced, so do not buy it

B : Underpriced, so buy it

C : Properly priced so buy it

D : Properly Priced so do not buy it

Answer: A

Question 2

Section A (1 Mark)

During ''Teen age years'' life stage, typical asset allocation should be

Options :

A : 25% equities, rest in fixed income instruments

B : 50% equities, rest in fixed income instruments

C : 75% equities, rest in fixed income instruments

D : None of the above

Answer: D

Question 3

Section A (1 Mark)

Independent Individualist has __________ risk tolerance

Options :

A : Low

B : Very High

C : Moderate

D : High

Answer: C

Question 4

Section A (1 Mark)

A review of portfolio should be done when

Options :

A : One witnesses a change in micro level factors

B : One witnesses a change in macro level factors

C : One witnesses new products floating in the market

D : All of the above

Answer: D

Question 5

Section B (2 Mark)

After making an investment, assume that an investor overhears a news report that has negative implications regarding the potential outcome of the investment he has just executed. How likely is he to then seek information, if he exhibits self attribution bias, that could confirm that you've made a bad decision?

Options :

A : Very unlikely.

B : Unlikely.

C : Likely.

D : Very likely.

Answer: A