1. Assuming that the firm pays Income tax at 50% rate.

compute the after tax c ost of capital in the follcwing

CASES : {i) A 9.5 preference share sold at par. {iii A perpetual bond sold at par" coupon ratc of interest at 11.50 per cent. {iii) A ten-year 7 per cent, Rs. 100 bo:nd sold at Rs- 94. {iv} A preference share sold at Rs. 100 with per cent dividend, redeemable at Rs. 110 in five years. v) Are equity share selling at a current market price cf Rs. 24 and paying a current dividend of Rs.75 per share which is expected to grow at a rate of 7 per cent. 2. What is Industry analysis ? Bring out its relevance thel the security analyst. 4-Discuss the CAPM and iis application in portfclic selection. L'-xpiain the reiationship between SML, CML and Characteristic Line" What is portfolio performance evaluation ? Explain the various melhads o{ portfolio performance evaluation. (a) What do you understand by Investment? Explain the steps involved in the investment process. (b) Mr. Vamsi is considering the purchase of a bond currently selling at Rs. 878.50. The bond has four years to maturity, face value of Rs. 1,000 and 8% coupon rate. The next annual interest payment is due after one year from today. The required rate of return is 10%. Calculate the intrinsic value (present value) of the bond. Should Vamsi buy the bond ? Calculate the yield to maturity of the bond.
3. a) What is market efficiency ? Explain the various anomalies in efficient market hypothesis. b) What is portfolio revision ? Why does it arise ? Discuss the various constraints in portfolio revision.

3. Write short notes on any four of the following : Capital market line Technical analysis Efficient portfolio Price-earnings approach 4. Prashanlh's Holdings Ltd., an investmenl company has invested in equity shares of a blue chip company. lts Risk free return (R0 : 9% Expected total return {Rm} : 16% Market sensitivity index Bi) : 0.9 Calculale the expected rate of return on the investment made in the security. {ii) GVK Company's current market price of a share is Rs. 46 .and dividend per share is Rs. 3'50. If the capitalization rate is 9 per cent, what is the dividend qrowth rate ? 7 .Write short notes on any four of the following : Speculalion Zero Coupon Bcnds Elliot Wave Theory Odd Iot Theory Efficient Frontier What are the major criticisms of the technical analysis? Do the technical analysis and the fundamental analysis give complementary information about securities for making informal decisions? Explain. 5. (a) Discuss the Markowitz Theory of Portfolio Selection. How does Markowitz Theory help in planning an investor's portfolio ? Distinguish between current yield and yield to mafurity of a fixed income security. How

are these yields calculated? Discuss. (b) Prashanth Ltd., is intending to acquire substantial shares in GVK Ltd. to acquire control in the company. The beta factor of GVK Ltd.'s shares is 1.60 and its current market price is Rs. 190 and the company is consistently paying a dividend of Rs. 46 p.a. The risk free market rate of interest is 12% and the rate of return expected on such securities in the market is 18%. You are required to value the share of GVK Ltd. (b) An aggressive Mutul Fund promises an expected rate of return of 18% with a standard deviation of 22%. On the other hand, a conservative mutual fund promises an expected rate of return of 16% and fluctuations of 13%. (i) In which of the funds would you like to invest? (ii) Would you like io invest in both the funds? (iii) If you can borrow money from you provident fund at an opportunity cost of 15%, in which fund would you invest your money? What is the purpose of technical analysis? Why does technical analysis receive little support from academically oriented students of Investments? What is a diversified portfolio? What type of risk is reduced through diversification? How many securities are necessary to achieve this reduction in risk? Calculate the weighted average of expected return and Beta factor of the portfolio. What do you understand by a Mutual Fund? Discuss the various types of mutual fund schemes available in the Indian capital market. How is the Net Asset Value (NAV) of a MutuaI Fund Unit Calculated ? Write short notes on any FOUR of the following: (a) Efficient Market Hypothesis (b) Securities Market (c) Dollar Cost Averaging (d) Dow Theory (") Holding Period Return (f) Beta Coefficient