LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
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B.Com. DEGREE EXAMINATION –COMMERCE
FIFTH SEMESTER – APRIL 2007
CO 5401 – PERSONAL INVESTMENT
Date & Time: 03/05/2007 / 1:00 – 4:00 Dept. No. Max. : 100 Marks
SECTION – A
Answer ALL questions: ( 10 x 2 = 20 )
- What do you mean by investment?
- Define the term Return.
- What is FVIFA?
- Give the meaning of Beta?
- What is meant by portfolio?
- For what ‘compounding’ is used in bond valuation?
- How bonus shares differ from rights shares?
- What do you mean coupon rate?
- Velan expects to receive Rs.2000 annually for 5 years at the end of each year. What is the
present value of this annuity at the discount rate 9%?
- A Rs.1,000 bond matures in 20 years and offers a 9% coupon rate. The required rate of return is
11%. Compute the bond value.
SECTION – B
Answer any five questions: ( 5 x 8 = 40 )
- Give a brief account of capital asset pricing model?
- Explain in detail about systematic and unsystematic risks.
- Stocks are considered to be risky, but bonds are not – This statement is not fully
correct. Elucidate.
- Explain the methods of valuation of equity shares.
- Write note on mutual fund.
- Explain the primary objectives that affect that selection of investment?
- Mr.Madhu seeks to invest Rs.1,00,000 for 3 years. He will receive an annual interest of 12%.
Should he invest in annual, semi-annual or quarterly compounding? Which is beneficial?
- A finance company advertises that it will pay a lumpsum of Rs.44,650 at the end of five years
to investors who deposit annually Rs.6,000 for 5 years. What is the interest rate implicit in this
offer?
SECTION – C
Answer any TWO questions: ( 2 x 20 = 40 )
- Explain the various factors the investor should consider in security analysis.
- Give a brief account of various investment alternatives available to the personal
investor other than stock and debentures.
- Write note on: (a) Sweat equity (b) Pre-emptive right (c) default risk (d) Yield to
maturity and (e) Time value of money