MCQ for CA Final SFM - Chapter 3 Portfolio Management

Sample Multiple Choice Questions (MCQ's) for CA Final - Paper 2 - Strategic Financial Management - Chapter 3: Portfolio Management - For Practice relevant for May/Nov 23 Examinations

 

Q:1 Pearl Ltd. expects that considering the current market prices, the equity shareholders as per Moderate Approach, should get a return of at least 15.50% while the current return on the market is 12%. RBI has closed the latest auction for 2500 crores of 182 day bills for the lowest bid of 4.3% although there were bidders at a higher rate of 4.6% also for lots of less than' 10 crores. What is Pearl Ltd's Beta?

 

1. 1.674
2. 1.464
3. 1.642
4. 1.494

Answer: 2

 

Q:2 With the help of following data determine the return on the security X.

 

Factor	Risk Premium with the Factor	𝝱i
Market	4%	1.3
Growth Rate of GDP	1%	0.3
Inflation	-4%	0.2

Risk Free Rate of Return is 8%.

 

1. 15.7%
2. 11.4%
3. 12.7%
4. None

Answer: 3

 

Q:3 A stock costing ₹ 120 pays no dividends. The possible prices that the stock might sell for at the end of the year with the respective probabilities are:

 

Price	Probability
115	0.1
120	0.1
125	0.2
130	0.3
135	0.2
140	0.1

 

Calculate the expected return.

 

1. 5.0833%
2. 7.0833%
3. 7.0633%
4. 3.0833%

Answer: 2

 

Q:4 The historical rates of return of two securities over the past ten years are given. Calculate the Covariance

 

Years:	1	2	3	4	5	6	7	8	9	10
Security 1 (Return per cent)	12	8	7	14	16	15	18	20	16	22
Security 2: (Return per cent)	20	22	24	18	15	20	24	25	22	20

 

 

1. -0.8
2. -0.3
3. -0.5
4. -0.9

Answer: 1

 

Q:5 Your client is holding the following securities:

Particulars of Securities	Cost ₹	Dividends ₹	Market Price ₹	BETA
Equity Shares: Co.X Co.Y Co.Z	8,000 10,000 16,000	800 800 800	8,200 10,500 22,500	0.8 0.7 0.5
PSU Bonds	34,000	3,400	32,300	0.2

Assuming a Risk-free rate of 15% calculate:

Simple Average return of the portfolio

 

1. 15.39%
2. 15.49%
3. 15.89%
4. 16.39%

Answer: 2

 

Q:6 Amal Ltd. has been maintaining a growth rate of 12% in dividends. The company has paid dividend @`3 per share. The rate of return on market portfolio is 15% and the risk-free rate of return in the market has been observed as10%. The beta co-efficient of the company’s share is 1.2. 

You are required to calculate the expected rate of return on the company’s shares as per CAPM model

 

1. 13%
2. 11%
3. 16%
4. 10%

Answer: 3

 

CA Final - Paper 2 - SFM - Chapter 4   

 

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