LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com DEGREE EXAMINATION – COMMERCE

AT 08

FIFTH SEMESTER – NOV 2006

CO 5401 – PERSONAL INVESTMENT

(Also equivalent to COM 401)

 

 

Date & Time : 08-11-2006/9.00-12.00   Dept. No.                                                       Max. : 100 Marks

 

 

PART – A

                                                                                                                           (10 x 2 = 20)

Answer ALL questions

 

1. Who is a potential investor?

 

2. What is meant by time value of money?

 

3. Narrate the term immunization.

 

4. Why do investors add real estate in their portfolio?

 

5. Define the term credit rating.

 

6. Write a note on sweat equity.

 

7. Mr. Michael plans to send his son for MBA in LIBA. He expects the cost of these

studies to be  Rs.500000.  How  much  should  he  save annually to have a sum of

Rs.500000 at the end of 10 years, if the interest rate is 12%.

 

8. At the time of his retirement, Mr. Basheer is given a choice between 2 options:

• An annual pension of Rs.40000 as long as he lives
• A lumpsum of Rs.200000 at the time of his retirement.

Mr. Basheer expects to live for 15 years and the interest rate is estimated at 15%.

Which option should he choose?

 

9. Beta is 0.7, Rm is 16%, Rf is 8%. Find out the expected rate of return of the security.

Also calculate the Beta of the security which has an expected return of 19%.

 

10. A bond of  Rs.10000,  bearing  a  coupon  rate  of   12% p.a.  payable  quarterly  is

redeemable after 2.5 years at par. What will be the value of bond, if the required rate

of return is 16% ?

 

PART – B

                                                                                                                           (5 x 8 = 40)

Answer any FIVE questions

 

11. What are the secondary objectives of investment?

 

12. “Stocks are considered to be risky, but bonds are not”. This is not fully correct.

Elucidate.

 

13. What is a Mutual Fund? Briefly explain its merits.

 

14. Explain the methods of valuation of Equity Shares.

 

15. Give an account of working of depository system.

 

16. The expected return and their respective probabilities from investment in Securities

A and B are as follows:

Security A		Security B
Expected return	Probability	Expected return	Probability
6	0.10	4	0.10
7	0.25	6	0.20
8	0.30	8	0.40
9	0.25	10	0.20
10	0.10	12	0.10

 

 

 

 

 

 

 

 

Calculate  the standard deviation of the expected return and comment on the risk of

the securities.

 

17. As an investor you expect a interest rate of 18% p.a. M/s. Mothiram Investment Ltd.,

advertises that it will pay a lump sum of Rs.50000 at the end of 6 years, if you deposit

annually  Rs. 5000.  Calculate the rate of interest  offered by the  NBFC?  Would you

accept the offer? Comment.

 

18. The market value of a Rs.1000 par value  bond  carrying  a coupon rate of 12% and

maturing  after 7 years at  Rs.750.  What is the YTM on the bond ? Also compute the

approximate YTM using equation.

 

PART – C

                                                                                                                           (2 x 20 = 40)

Answer any TWO questions

 

19. Discuss the process of investment with relevant examples.

 

20. Explain the factors affecting security analysis.

 

21. Describe the following terms: (4 marks each)

• Scripless Trading
• Public Provident Fund
• Capital Asset Pricing Model
• Diversifiable risk of a security

(e) Features of Warrants

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

TH 16

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 )

 

 

1. What do you mean by investment?

 

2. Define the term Return.

 

3. What is FVIFA?

 

4. Give the meaning of Beta?

 

5. What is meant by portfolio?

 

6. For what ‘compounding’ is used in bond valuation?

 

7. How bonus shares differ from rights shares?

 

8. What do you mean coupon rate?

 

9. 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%?

 

10. 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 )

 

 

11. Give a brief account of capital asset pricing model?

 

12. Explain in detail about systematic and unsystematic risks.

 

13. Stocks are considered to be risky, but bonds are not – This statement is not fully
    correct. Elucidate.

 

14. Explain the methods of valuation of equity shares.

 

15. Write note on mutual fund.

 

16. Explain the primary objectives that affect that selection of investment?

 

 

 

 

17. 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?

 

18. 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 )

 

 

19. Explain the various factors the investor should consider in security analysis.

 

20. Give a brief account of various investment alternatives available to the personal
    investor other than stock and debentures.

 

21. Write note on: (a) Sweat equity (b) Pre-emptive right (c) default risk (d) Yield to
    maturity and (e) Time value of money

 

 

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – COMMERCE

QB 13

FIFTH SEMESTER – November 2008

CO 5401 – PERSONAL INVESTMENT

 

 

 

Date : 05-11-08                     Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00

SECTION-A

(Answer ALL questions)                                              (10X2=20)

1. What do you mean by investment?
2. What is bonus share?
3. Explain the meaning of “Time value of money”.
4. A-owns Rs.1,000 Face value bond with 5-years to maturity. The bond has an annual coupon

rate of Rs.75.The bond is currently priced at Rs.970 at the discount rate of 10%.

Should A sell or hold the bond.

 

5. What is the present value cash stream if the discount rate is 14%.

 

Year	0	1	2	3	4
Cash flow(Rs)	5,000	6,000	8,000	9,000	8,000

 

6. Can you suggest a suitable formula to calculate the return on the stock.?
7. Define “ yield to maturity”.
8. Should investment in gold be considered as good investment option? Give reasons for your answer.
9. What is meant by deep discount bond? 10.Write a short note on government securities.

 

SECTION-B

(Answer any FIVE questions)                                         (5X8=40)

11.Compare and contrast between investment and speculation.

 

12.Briefly explain the steps involved in “investment process”.

 

13.Write a brief on the following

1. a) Systematic risk b) Unsystematic risk.

 

14. The market price of an equity share is Rs.100.Following information is available in respect of

dividends , market price and the expected condition of the market after one year.

 

 

Market condition	Probability	Market price (Rs)	Dividend Per share(Rs)
Good Normal Bad	0.25 0.50 0.25	115 107 97	9 5 3

Find out the expected return and variability of returns of the equity share.

 

 

15. A Rs.50,000 bond with 10% coupon rate matures in 8 years and currently sold at 97%

If the bond is a desirable investment for an investor whose required rate of return is 11%,

Calculate the present value of bond and Yield to maturity of the bond.

 

16.List out and explain the classification of life insurance policies .

 

17.Enlist and explain the various fixed income bearing securities.

 

18.Bring out the three approaches available to determine the value of real estate assets.

 

 

SECTION-C

 

(Answer any TWO questions)                              (2×20=40)

 

19.a) Calculate the market sensitivity index and the expected return on the investment from the

following data:

 

Standard deviation of an asset                              2.5%

Market standard deviation                                    2%

Risk free return                                                    13%

Expected return on the portfolio                          15%

Correlation coefficient of portfolio with market  0.8

What will be the expected return on the portfolio if portfolio beta is 0.5% and the risk free

Return is 10%?                                                                                                      (8)

15. b) A company has common stock outstanding in the market with the price earnings ratio of

The annual expected growth in earnings, dividends and price is 7%.The earning per share

Is Rs.2.50, dividend pay out is 60% and the investor wants to hold the stock for 4 years. The

Required rate of return is 15%. What would be the present value?                       (12)

 

20.Discuss in detail the meaning and classification of mutual funds.

 

21.What do you understand by CAPM-theory and explain the assumptions and limitations

of CAPM-theory.

 

 

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – COMMERCE

FIFTH SEMESTER – NOVEMBER 2012

CO 5401 – PERSONAL INVESTMENT

 

 

Date : 10/11/2012             Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00

 

PART – A

ANSWER ALL QUESTIONS:                                                                                                  (10 x2=20)

 

1. What is personal investment?
2. Expand the following terms: (a) FVIFA (b) YTM (c) ETF (d) SIP
3. List out any four risk involved in gambling.
4. Why do investors add insurance into their portfolio?
5. What do you understand by bonus shares?
6. Define risk.
7. Distinguish between bull and bear markets.
8. What is meant by investment in arts and antiques?
9. Calculate the value of a deposit of Rs.5000 today @12% p.a. at the end of two years, if compounding is done quarterly.
10. Calculate the CAPM return of an investment whose Risk Free Return is10%, Market Return is 30% and Beta is 0.6.

 

Part – B

ANSWER ANY FIVE QUESTIONS:                                                                                          (5 x8=40)

 

11. Elucidate the objectives of personal investment.

 

12. Give an account of investment information available to an investor.

 

13. Bring out the advantages and disadvantages of investment in gold.

 

14. What is meant by CAPM? Bring out its basic assumptions.

 

15. How do you classify mutual funds? Briefly explain the various types of mutual funds.

 

16. Chennai Benefit Fund promises you Rs.30,000 at the end of 7 years for an investment of Rs.10000 today. Compute the actual rate of return offered to you.

 

17. Arun wants to buy IOB stock and hold on it for four years. He estimates that Rs.4.50 dividend would be paid by IOB consistently for the said period and he wishes to sell the shares for Rs.100 at the end of the fourth year. Compute the present price of IOB, if Arun expects a return of 10%.

 

 

 

18. From the following information, you are required to calculate the expected returns of investments in A & B with equal probabilities:

Probabilities	Investment A	Investment B
0.2	-10%	3%
0.1	2%	5%
0.4	15%	10%
0.3	28%	16%

 

Part – C

ANSWER ANY TWO QUESTIONS:                                                                                (2 x20=40)

 

19. How do systematic and unsystematic risks affect the investments?

 

20. Explain the following investment alternatives available in India.

• Equity Shares (b) IVP (c) Bank Deposits (d) Commercial Papers (e) Real Estate

 

21. Discuss the risk involved in bond. Give suitable examples.

 

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