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NUMERICALS (UNIT1-UNIT2)

A company with IPO 25000 share bids range is 70 to 80. Bids received by the exchange are as follows;
What should be the allotment price?

Bids Quantity Rate

A 2000 75

B 10,000 78

C 12,000 72

D 15,000 70

E 3000 80

F 4000 79

G 6000 76

52,000
* The two will be denied, allotment price is 75.
Bids Quantity Rate Cum. Quantity

E 3000 80 3000

F 4000 79 7000

B 10,000 78 17,000

G 6000 76 23,000

A 2000 75 25,000

C 12,000 72

D 15,000 70
• Price earning ratio is 10 times. 40% dividend declared , face value of
the share is Rs 10. Opening Price/buying price is Rs 200. Determine
total return if closing price is 230
𝐷+(𝑃1−𝑃0)
• × 100
𝑃0
4+(230−200)
• × 100= 17%
200
• Current yield 4/200 = 2 %
• Capital Yield 30/200 = 15 %
• Total Return = Current yield + Capital Yield
• PE is 8 times DPR (dividend pay out ratio is 50%). The share has
decreased by 5% in capital value during the year. Calculate CY, CY +
TR. Dividend declare during the year is 40.

𝐷+(𝑃𝑖−𝑃0)
Tr = × 100
𝑃0
40+(640−673.684)
= × 100
673.684
40+(−33.684)
= 673.684 × 100
= 0.937
Total return = capital + current
0.937 = – 5 + current
0.937 – 5 = current
4.37 = current
Relative Return
• PO = 500
• P1 = 400

• (At = 1) retention ratio of 20%


• (At = 1) PE is 8 times. Determine RR
• PER = MPS/EPS
• 8 = 400/EPS
• EPS = 400/8
• EPS = 50
• DPR = 80 x 50 = 40
• RRe = 100 + NR
• = 100 (- 12)
• = 88%
Real return
Cumulative Wealth Index
• Ques:-
• Year Total Ret
• 1 12%
• 2 -7%
• 3 15%
• 4 5%
• 5 -11%
Compound Annual Growth Rate
1
𝑓𝑣 𝑛
• CAGR = −1
𝑝
• The current investment of rupees 10,000 will yield 15,000 rupees after 6 years, calculate
the CAGR.
1
15000 6
• CAGR = −1
10000

• =(1.5)0.167 −1
• = 1.07 −1
• = 0.07
• = 7%
CAGR
CAGR , RR , Tax adjusted
• Investor has invested in some units of mutual funds worth 7lakhs,
after 20 months he has sold all the units for 9lakhs applicable tax rate
on this individual is 20%. Calculate tax adjusted annualised real return
from this investment if inflation rate is 6% p.a.
Calculate all measures of unsystematic risk
• Year =1,2,3,4,5
• Return= 15,-6,12,7,-3
Beta
• Beta is a sensitive measure of likely change in security returns with
respect to change in market returns.
• Beta = change in Security return (SR)/Change in market return (MR)
• Example : if beta is -2.2 times and market is increased by 5 % ,
determine the likely change in SR
• -2.2*5=-11
• Security has increased by 12% in return . ∆𝑀𝑅 = 15 % (negative)
determine the likely change in SR, when market increase by 20%.
12%
• BETA =
−15%
• = -0.8%
∆𝑆𝑅
• BETA =
∆𝑀𝑅
∆𝑆𝑅
• -0.8 =
20%
• -16% = ∆SR
Calculation of Beta