Question 1

Section C (4 Mark)

Read the senario and answer to the question.

Calculate the retirement corpus required by Raman to generate his post-retirement expenses.

Options :

A : Rs. 64,97,596

B : Rs.71,24,232

C : Rs. 74,36,638

D : Rs. 63,27,856

Answer: B

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)

If the intrinsic value of a stock is greater than market value, which of the following is a reasonable conclusion?

Options :

A : The stock has a low level of risk.

B : The stock offers a high dividend payout ratio.

C : The market is undervaluing the stock.

D : The market is overvaluing the stock.

Answer: C

Question 4

Section B (2 Mark)

The assumptions concerning the shape of utility functions of investors differ between conventional theory and prospect theory. Conventional theory assumes that utility functions are __________ whereas prospect theory assumes that utility functions are __________.

Options :

A : Concave and defined in terms of wealth; s-shaped (convex to losses and concave to gains) and defined in terms of loses relative to current wealth

B : Convex and defined loses relative to current wealth; s-shaped (convex to losses and concave to gains) and defined in terms of loses relative to current wealth

C : S-shaped (convex to losses and concave to gains) and defined in terms of loses relative to current wealth; concave and defined in terms of wealth

D : S-shaped (convex to losses and concave to gains) and defined in terms of wealth; concave and defined in terms of loses relative to current wealth

Answer: A

Question 5

Section B (2 Mark)

Compute YTM of a bond with par value of Rs.1000/-, carrying a coupon rate of 8% and maturing after 10 years. The bond is currently selling for Rs.850/-.

Options :

A : 9.50%

B : 11.50%

C : 10.44%

D : 8.50%

Answer: C