TYBMS(FINANCE)

Subject-IAPM
Q1.A. Multiple Choice Questions: -
1 Line charts are ideal for beginner traders to use due to their simplicity.

2.Bar charts show a series of vertical lines called price.

3.Constant Growth Model is also known as Gordon Model.

4.Passive portfolio strategy seeks to design a portfolio which is a replica of a

specific index.

5.YTM represents the rate of return earned by the investor if he invests in the
security and hold it till its maturity.

6.Inventory Turnover ratio is computed by dividing the cost of goods sold by

the average inventory.
7. According to dividend discount model, the value of an equity share is equal to the present
value of dividends expected from its ownership plus the present value of the sale price expected
when the equity share is sold.
8. Fundamental analysis attempts to measure a security's intrinsic value.

9.it is well known that during the accumulation phase when the investor is
building assets, he can afford to take More risks.

10.Aggressive portfolio is most suited for people with high-risk appetite as it

will include mostly stocks.

11.The book value per share is the networth of the company divided by the
number of outstanding equity shares.

12.Technical Analysis is based on the assumption that the historical price

movements of stocks give indications about its future performances.

13.An investor with lesser tolerance for risk should take.higher proportion of
bonds.

14..Asset allocation mean determining asset mix of a portfolio.

15. Candlestick chart is not a modified version of a bar chart.

Q.1B.True or False
1. An oscillator is a technical analysis tool-TRUE
2.Moving average rules can easily be programmed into a computer, which then generates
specific buy and sell signals.-TRUE
3. When prices fall below intrinsic value based on fundamentals, the stocks are
purchased.TRUE
4. Candlestick chart is not a modified version of a bar chart.TRUE
5. Liquidity means speed with which an asset can be converted into cash without suffering
any discount to its fair market price-TRUE
6. There is a limit for Mutual Funds on individual company's exposure-TRUE
7.Other things being equal, an investor with greater tolerance for risk should take lower
proportion of stocks in the portfolio-FALSE

8. Candlestick chart is a modified version of a bar chart.TRUE

9. The transaction cost of an active portfolio management will be lower than passive portfolio
management.FALSE

10. Stock turnover ratio is revenue statement ratio.-FALSE

11.The fair value per share is the networth of the company divided by the
number of outstanding equity shares.-False

12.Fundamental Analysis is based on the assumption that the historical price

movements of stocks give indications about its future performances.-false

13.An investor with lesser tolerance for risk should take.lesser proportion of
bonds.-false

14.Asset allocation mean determining asset mix of a portfolio.-TRUE

15. Candlestick chart is not a modified version of a bar chart.-TRUE

Q2.Solve the following

1. The following information is given about a limited company
Profit after tax(50%)-Rs.12,00,000
Market price of equity share-Rs.60
Depreciation -Rs.1,60,000
Equity Capital of Rs.10-Rs.16,00,000
12% Preference share capital -Rs.8,00,000
 Equity dividend paid at 20%

You are required to calculate

1.Dividend Yield on Equity shares
2. Coverage for Equity Dividend

2 .The Following information is available in respect of jeet

Particular Amount(in lakhs)
Equity Share capital(Rs.10 each) 240
14% Preference share capital 150
Profit before tax 80
Tax rate(%) 30%
Proposed dividend 45
Market price per share(Rs) 26
You are required to calculate:
1.Return on total capital Employed
2.Dividend payout ratio

3.The Following information is available in respect of neeta

Particular Amount(in lakhs)
Equity Share capital(Rs.10 each) 300
14% Preference share capital 120
Profit before tax 75
Tax rate(%) 30%
Proposed dividend 35
Market price per share(Rs) 23
You are required to calculate:
1.Earning per share
2.P/E Ratio

4. The following information is given about a limited company

Profit after tax(50%)-Rs.15,00,000
Market price of equity share-Rs.70
Depreciation -Rs.2,60,000
Equity Capital of Rs.10-Rs.15,00,000
12% Preference share capital -Rs.10,00,000
Equity dividend paid at 50%
You are required to calculate
 1.Cover for Preference
2. Earning per share

Q2.Solve the following

1. The Following information is available in respect of Eron ltd.

Particular Amount(in lakhs)

Equity Share capital(Rs.10 800
each)
14% Preference share capital 100
Profit before tax 400
Dividend per share 3

Market price per share(Rs) 150

Tax rate% 30%

You are required to calculate:
1.P/E Ratio
2.Dividend payout ratio
3.Return on total capital employed
2.. The Following information is available in respect of Donal ltd.

Particular Amount(in lakhs)

Equity Share capital(Rs.10 1000
each)
14% Preference share capital 600
Profit before tax 350
Dividend per share 4

Market price per share(Rs) 180

Tax rate% 30%

You are required to calculate:
1.P/E Ratio
2.Dividend payout ratio
3.Return on total capital employed

3. From the following details, Calculate the Creditor’s Turnover Ratio

from the following figures. • Credit purchases during 2015 = Rs. 11,00,000 • Creditors + Bills
Payables on 1.1.2005 = Rs.3,00,000 • Creditors + Bills Payables on 31.12.2005 = Rs. 4,00,000
& Calculate (a) Debtors Turnover Ratio • Total Sales - Rs.5,00,000 Sales Returns - Rs.30,000 •
Cash Sales - Rs. 35,000 Debtors – Rs.10,000 • Bills Receivables - Rs.5,000.

4. From the following details, Calculate (a) Debtors Turnover Ratio • Total Sales - Rs.5,00,000
Sales Returns - Rs.30,000 • Cash Sales - Rs. 25,000 Debtors – Rs.10,000 • Bills Receivables -
Rs.05,000.& Calculate the Creditor’s Turnover Ratio from the following figures. • Credit
purchases during 2015 = Rs. 11,00,000 • Creditors + Bills Payables on 1.1.2005 = Rs.5,00,000 •
Creditors + Bills Payables on 31.12.2005 = Rs. 5,00,000

5. Calculate from the following details furnished by Mona ltd.

a) Current Ratios
b) Stock to working capital

Particular Rs
Prepaid expenses 80,000
Debtors 1,50,000
Cash 50,000
Creditors 60,000
Bank overdraft 1,00,000
Outstanding Expenses 80,000
Closing stock 2,50,000
Bill Receivable 70000

6. Calculate from the following details furnished by Kiara ltd.

a) Current Ratios
b) Stock to working capital

Particular Rs
Prepaid expenses 4,00,000
Debtors 8,50,000
 Cash 1,50,000
Creditors 15,00,000
Bank overdraft 2,00,000
Outstanding Expenses 300,000
Closing stock 46,50,000
Bills Receivable 150000

7.Extracts from financial accounts of ABC Co.Ltd are given below:

Particular Year-I
Assets Liabilities
Equity share capital 50,000
General reserve 70,000
10% Preference capital 1,50,000
Opening Stock 90,000 -
Debtors 20,000 -
Payment in advance - -
Bills Receivable 15000 -
Sundry Creditors - 40,000
Provision for tax - 8000
Bank Overdraft - 10,000
Cash and bank balance 2,03000 -
Totals Rs. 328000 328000
Sales for the year Rs.600,000 ; Gross profit Rate -20% and Closing stock is Rs.119000.Profit
before Tax is Rs.310,000
you are required to calculate by using formula.
1.Stock Turnover Ratio
2.Proprietory ratio
3.Current Ratio
8..Extracts from financial accounts of Cabin Co.Ltd are given below:

Particular Year-II
Assets Liabilities
Equity share capital - 80,000
General reserve - 16,500
10% Preference capital - 40000
Opening Stock 40,000 -
Debtors 50,000 -
 Payment in advance - -
Cash in hand 58700 -
Sundry Creditors - 5500
Provision for tax - 2200
Bank Overdraft - 4500
Totals Rs. 1,48700 1,48700
Sales for the year Rs.700,000 ; Gross profit Rate -25% and Closing stock is Rs.109000.Profit
before Tax is Rs.210,000
you are required to calculate by using formula.
1.Stock Turnover Ratio
2.Debt Equity Ratio
3.Current Ratio