# Sample prelim paper for Nov 2016 TYBMS exams- IAPM

IAPM Prelims

Answer all questions. Each question carries 15 marks. Attempt any 2 sub questions from Q 1-4. All questions in Q5 have to be answered.

Q1 a. What are the factors influencing the selection of investment options.

Q1 b. What are the various tax savings options available to investors to save tax at the same time earn returns.

Q 1 c What is online share trading and what are the benefits of the same.

Q2 a. A portfolio consists of 40% of security A and balance is security B, the probability and returns of each security is given

ProbabilityÂ Â Â Â Â Â  0.1Â Â Â Â Â Â  0.2Â Â Â Â Â Â  0.1Â Â Â Â Â Â  0.2Â Â Â Â Â Â  0.3Â Â Â Â Â Â  0.1

A (%)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  10Â Â Â Â Â Â Â  12Â Â Â Â Â Â Â  8Â Â Â Â Â Â Â Â Â  -2Â Â Â Â Â Â Â Â  12Â Â Â Â Â Â Â  11

B(%)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  12Â Â Â Â Â Â Â  15Â Â Â Â Â Â Â  -1Â Â Â Â Â Â Â Â  5Â Â Â Â Â Â Â Â Â  14Â Â Â Â Â Â Â  8

Calculate the average return and SD of the portfolio

Q2 b. The return of 2 securities and market return are given. Calculate the Beta of each security and comment

X(%)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  12Â Â Â Â Â Â Â  15Â Â Â Â Â Â Â  20Â Â Â Â Â Â Â  -4Â Â Â Â Â Â Â Â  18Â Â Â Â Â Â Â  20Â Â Â Â Â Â Â  10Â Â Â Â Â Â Â  14

Y(%)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  8Â Â Â Â Â Â Â Â Â  12Â Â Â Â Â Â Â  23Â Â Â Â Â Â Â  -2Â Â Â Â Â Â Â Â  15Â Â Â Â Â Â Â  2Â Â Â Â Â Â Â Â Â  -2Â Â Â Â Â Â Â Â  18

Market (%)Â Â Â Â Â  18Â Â Â Â Â Â Â  8Â Â Â Â Â Â Â Â Â  12Â Â Â Â Â Â Â  -6Â Â Â Â Â Â Â Â  10Â Â Â Â Â Â Â  10Â Â Â Â Â Â Â  12Â Â Â Â Â Â Â  15

Q 2 c What is risk and how is it measured

Q3 a Identify the various approaches to construct an ideal portfolio for an investor

Q3 b. What is technical analysis and how is it different from fundamental analysis

Q 3 c Â Following information is available for Ram and Shyam.(in lakhs)

RamÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  Shyam

Equity (FV10)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  250Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  300

15% Preference sharesÂ Â Â Â Â Â Â Â Â Â  100Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  150

PATÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  60Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  65

Proposed dividendÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  35Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  40

MPSÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  22Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  35

Calculate: EPS, PE ratio, Dividend payout ratio, Return on Equity capital

Q4 a. Explain:- Security market line, Efficient market hypothesis, Random walk theory

Q4 b. From the following information, calculate the return on the overall portfolio using the CAPM model. Risk free rate is 10%

Investment optionÂ Â Â Â Â Â Â Â Â  Initial priceÂ Â Â Â Â Â Â Â Â  closing priceÂ Â Â Â Â Â  dividend Â Â Â Â Â Â Â Â Â Â Â Â  beta

BHELÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  2300Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  2400Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  Rs 350Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  0.8

TCSÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  2500Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  3000Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  Rs 500Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  1.1

InfosysÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  3050Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  2990Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  –Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  1.25

Q 4 c Information about 3 portfolios are given. Using Shapre, Treynors and Jeansonâ€™s method, evaluate the portfolios and comment. Risk free rate is 9%

PortfolioÂ Â Â Â Â Â Â Â Â Â Â Â Â  ReturnÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  BetaÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  SD

AÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  12%Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  1.1Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  4

BÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  15%Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  0.8Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  9

CÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  10%Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  1.2Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  16

MarketÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  9.5%Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  1Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  12

Q5. Sita is 50 years old and her husband is 52 Yrs old. Both of them wish to retire in the next 3-4 years. They have an investable surplus of Rs 1 cr. They have a daughter who just got married and is well settled. They do not have any higher aspirations. They come to you for financial advise. Evaluate the process that you would use to construct an ideal portfolio for them and also suggest the various investment alternatives.

Source:- Vipin Saboo Tutorials

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#### vipin0785

Education Qualification: BMS- N M College (University Rank Holder) PGDBM- Sydenham College M Com- College topper Mr Vipin Saboo has been associated with the following institutes as a visiting faculty Lords college, Malad Patkar College, Goregoan Saraf college, Malad Dalmia college, Malad St Andrews College, Bandra Wilson College, Grant Road Thakur college, Kandivili L N College, Kandivili N K College, Malad Dhanukar College, Vile Parle St Xaviers College, Marine Lines Shroff College, Kandivili KES College, Khar Mr.Vipin Saboo also has more than 5 years of industry expertise with corporate like CRISIL, Motilal Oswal Investment Banking and Yes Bank. Mr. Saboo has also published a text book on Logistics and Supply Chain Management for TYBMS Students.

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