Questions

Question 1

PVF for refunding bond decisions

Answer 1

New Int. rate x (1-t)

Question 2

Calculation of duration?

Answer 2

year, cash flow, P. V., proportion of bond value, proportion of bond value x time Years.

Question 3

volatility of bonds?

Answer 3

Duration ÷ 1+ yields

Question 4

Expected market price
If Increase in required yields by- basis points

Answer 4

M.P. - (M.P. x basis points)

Question 5

Variance formulae

Answer 5

(4)/N OR IF PROBABILITIES THEN MULTIPLIED BY PROBABILITIES

Question 6

Minimum risk formulae

Answer 6

A%= Var- covar/
Var+ var- 2cov

Question 7

Beta formulae

Answer 7

Sxy- n xb yb/
SY2- n(yb)2

Question 8

Sys risk formulae

Answer 8

B2 x Market variance

Question 9

Characteristics line

Answer 9

alpha + Beta x Rm= Y(bar)

Question 10

Beta if only 2 values given

Answer 10

R,- R2/
Rm1- Rm2

Question 11

what is Security line?

Answer 11

Ri= alpha + Beta (Risk Premium)

Question 12

Covariance between 2 Stocks

Answer 12

B1 × B2 x variance of market return

Question 13

Treynor ratio

Answer 13

Return actual- Risk free rate/
Beta

Question 14

Risk free rate for 7% trading at 140

Answer 14

Rf= coupon rate/ market price

Question 15

The decision regarding change of composition may be taken by

Answer 15

Comparing divided yield b expected return

Question 16

For return dividend yield × by

Answer 16

Market value

Question 17

We show how well the Fund will be compensated for the risk undertaken due to
inclusion of stocks of Economy A in the portfolio by

Answer 17

Sharpe or any ratio

Question 18

How to allocate
the between security B and C to ensure that portfolio is on minimum
variance set?

Answer 18

use of concept of critical line

i.e. WA= a + b.WB (If weight of A is known)

Question 19

Portfolio variance using Sharpe Index Model:

Answer 19

Systematic variance + unSystematic Variance
( Unsysvariance . Weight Sq.)

Question 20

formula for no.of futures to be traded if value of B is to be reduced

Answer 20

No. of futures= Portfolio (B-B)/
value of futures

Question 21

Calculation of wacc

Answer 21

Cost of Equity x equity% + cost of debt (1-t) debt%