Advanced Financial Management - November 2023

August 1, 2023, an investor has a portfolio consisting of 5 securities as shown below: Security Market Price (%) | No. of Shares | Beta A 60.00 450 0.87 B 320.00 850 1.31 Cc 640.00 200 0.94 D 130.00 500 0.66 E 480.00 600 1.50 The cost of capital for the investor is 20% p.a. compounded. The current NIFTY value is 19,500. NIFTY futures are available with expiry for 3 months (Oct-23) and 4 months (Nov-23) and are currently quoted…

(a) Following is the information available pertaining to shares of Omni Ltd.: Current Market Price (3 % 420.00 Strike Price (?) % 450.00 Maximum Price (%) expected in next 3 months’ time % 525.00 Minimum Price (%) expected in next 3 months’ time % 378.00 Continuously Compounded Rate of Interest (p.a.) (%) 8.00% et 1.0202 From the above: (i) Calculate the 3 months call option by using Binomial Method and Risk Neutral Method. Are the calculated values under both the…

(a) The following information of AB Ltd., is available below: Market Value per share - % 20 per share Equity Share Capital - 12,00,000 shares @ the face value of 7 10 per share. The company is planning to issue Rights Shares to the existing shareholders and raise 7 60,00,000 to finance a new project. You are required: (i) To calculate the ex-right price of shares and the value of right, if (a) The company offers one right share for…

(a) The following information is provided relating to the acquiring Company R Ltd. And the target Company K Ltd.: @ The Institute of Chartered Accountants of India Particulars R Ltd. K Ltd. Promoter Holding 50% 60% Share Capital (# in lakh) 100 50 Free Reserves & Surplus (# in lakh) 400 250 Paid up value per share (@) 100 10 Free Float Market Capitalization (#in lakh) 200 64 P/E Ratio (times) 20 8 For deciding the swap ratio, weights are…

(a) An import customer booked a forward contract with the bank on 10"April for USD 20,000 due on 10"June at 49.4000. The bank covered its position in the market at ¢ 49.2800. The exchange rate for dollar in the interbank market on 10'June and 20'June were: 10% June 20" June Spot USD 1 = %48.8000/8200 48.6800/7200 Spot/ June 48.9200/9500 48.8000/8500 Spot/July 49.0500/0900 48.9300/9900 Spot/August 49.3000/3500 49.1800/2500 Spot/September 49.6000/6600 49.4800/5600 Exchange margin is 0.10% Interest on outlay of funds 12% Calculate…

(a) The following information is given for three companies that are identical in size, activities and operations, except for their capital structure: Particulars A B Cc Total Capital Invested 10,00,000 | 10,00,000 | 10,00,000 Debt/ Assets Ratio 0.75 0.60 0.25 Shares Outstanding 8,960 13,300 30,100 Pre-tax cost of debt 12% 10% 14% Operating Income (EBIT) 2,50,000 2,50,000 2,50,000 Beta Values 1.25 1.00 0.875 @ The Institute of Chartered Accountants of India The tax rate is uniform 30% in all cases.…