QUESTION 45 The Investment portfolio of XYZ Ltd. as on 31.03.2020 consisted of the following: (Rs. in lacs) Current Investments Cost Fair Value as on 31.03.2020 (1) 1000 Equity Shares of A Ltd. 7 (2) 500 Equity Shares of B Ltd. 10 15 (3) 1000 Equity Shares of C Ltd. 15 12 Total 30 34 Give your comments on the following: (i) The company wants to value the above portfolio at Rs. 30 lakhs being lower of cost or fair market value. (ii) Company wants to transfer 1000 Equity Shares of C Ltd. from current investments to long term investments on 31.03.2020 at cost of Rs. 15 lakhs.

QUESTION 45 The Investment portfolio of XYZ Ltd. as on 31.03.2020 consisted of the following: (Rs. in lacs) Current Investments Cost Fair Value as on 31.03.2020 (1) 1000 Equity Shares of A Ltd. 7 (2) 500 Equity Shares of B Ltd. 10 15 (3) 1000 Equity Shares of C Ltd. 15 12 Total 30 34 Give your comments on the following: (i) The company wants to value the above portfolio at Rs. 30 lakhs being lower of cost or fair market value. (ii) Company wants to transfer 1000 Equity Shares of C Ltd. from current investments to long term investments on 31.03.2020 at cost of Rs. 15 lakhs.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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QUESTION 7 1. Determine the volatility for the following three stock portfolio Asset A Allocation 30% 45% 25% Expected return 8.6% 9.5% 12.7% Expected 25% 32% 42% standard deviation Correlation B A 1.00 0.84 0.72 0.84 1.00 0.96 0.72 0.96 1.00 31.62% 9.59% 30.97% O 32.74%
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Portfolio management Q8
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TABLE 5.3 Risk and return of investments in major asset classes, 1927-2018 Average Risk premium Standard deviation max min T-bills 3.38 na 3.12 14.71 -0.02 T-bonds 5.83 2.45 11.59 41.68 -25.96 Stocks 11.72 8.34 20.05 57.35 -44.04
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V Quiz# 5 (Q) The following are estimates for four risk assets (A,B,C,D). The portfolio P is an equal weighted portfolio of the four risk assets. weight B Systematic Residual Total risk (S.D.) risk (S.D.) risk(S.D.) Stock A 0.25 0.8 16% 30% 34.0% Stock B 0.25 1.0 20% 35% 40.3% Stock C 0.25 1.2 24% 45% 51.0% Stock D 0.25 1.4 28% 40% 48.8% Portfolio P 1.00 Calculate systematic risk (standard deviation of systematic return) of the portfolio (%) Calculate residual risk (S.D.) of the portfolio (%) 3Calculate Pearson correlation between returns of A and B (Round to the third decimal place) 4 Explain why The CAPM is not testable (10-30words)
Years 123 45 Probability 0.1 0.2 0.35 0.2 0.15 Investment A 300 350 280 460 500 Investment B 850 560 450 680 700 Investment C 500 600 700 800 900 a) If the investor wants to invest in any two of the above investments equally, which combination of two investments you select based on the portfolio risk? Assume that the correlation between the investments is -0.75 b) From a corporate perspective is unique risk (o) or beta risk (B) the more important consideration? Does it matter?
Question 3 The table below provides the end-of-year share prices (in GB pence) for Centrica plc and National Express Group plc the end-of-year values for the FTSE 100 Index, which is a proxy for the market portfolio, M. YEAR Centrica plc National Express Group plc Market Portfolio, M 2002 224.7 151.5 199.5 205.8 292.6 187.4 3940.4 2003 4476.9 4814.3 5618.8 6220.8 6456.9 4434.2 5412.9 2004 337.7 2005 2006 2007 2008 235.5 327.6 293.0 256.1 465.2 451.7 545.4 607.1 168.8 207.1 243.6 2009 2010 2011 2012 2013 268.1 317.8 291.6 348.3 309.6 5899.9 5572.3 5897.8 6749.1 216.1 206.5 290.9 2014 6566.1 6242.3 7142.8 2015 292.5 254.9 2016 204.0 301.9 223.5 133.1 136.1 2017 337.8 7687.8 2018 366.2 393.9 6728.1 7542.4 2019 Source: Yahoo Finance. Required: (a) Calculate the systematic risk (82 x o, the non-systematic risk (o2) – (8? x o?) and the total risk (of) of the equity shares of Centrica and National Express Group. (b) Which company's returns are better explained by the market's returns? (c)…
Course : Portfolio Management
Question 3 The table below provides the end-of-year share prices (in GB pence) for Centrica plc and National Express Group plc the end-of-year values for the FTSE 100 Index, which is a proxy for the market portfolio, M. | YEAR Centrica plc National Express Group plc Market Portfolio, M 2002 224.7 292.6 187.4 337.7 465.2 451.7 3940.4 151.5 199.5 2003 4476.9 2004 4814.3 2005 2006 205.8 5618.8 6220.8 6456.9 4434.2 235.5 2007 2008 327.6 293.0 256.1 268.1 545.4 607.1 2009 168.8 5412.9 207.1 243.6 216.1 5899.9 5572.3 5897.8 6749.1 2010 2011 2012 2013 317.8 291.6 348.3 309.6 292.5 204.0 223.5 133.1 206.5 2014 290.9 6566.1 6242.3 7142.8 7687.8 6728.1 7542.4 2015 2016 2017 254.9 301.9 337.8 2018 366.2 2019 136.1 393.9 Source: Yahoo Finance. Required: (a) Calculate the systematic risk (B2 x a, the non-systematic risk (o) – (B? x o2) and the total risk (of) of the equity shares of Centrica and National Express Group. (b) Which company's returns are better explained by the market's returns? (c)…