Capital investment in US based Equity fund (t0) = $ 71,428.57

Investment Value (t1) = (71,428.57 x 15%) + 71428.57 = 82,142.86

Investment value in Indian Rupee = 82,142.86 x 65 = 53,39,285.62

Return in Rupee term = Rs. 53,39,285.62 – Rs. 50,00,000 = Rs. 3,39285

i.e. 6.79 % and not 15%

Application Supported by Blocked Amount – This is a facility where the application in a New Fund Offer (NFO) is accompanied by an authorization to the bank to block the amount of the application money in the investor’s bank account.

The benefit of ASBA is that the money goes out of the investor’s bank account only on allotment. Until the money is debited the investor keeps earning Savings Bank Interest.

The correlation coefficient is obtained by dividing the covariance by the product of the individual standard deviations.

Correlation Coefficient = Covariance / (Std deviation of Stock 1 X Std deviation of Stock2)

Hence Covariance = Correlation * (Std deviation of Stock 1 X Std deviation of Stock2)

Covariance = 0.8488 * 0.2041 * 0.2944 = 0.051

Promoters can dilute or offload their holding in listed companies by conducting an Offer for Sale (OFS), where existing shares are sold on the stock exchange, allowing investors to buy directly from the promoters.

Under the ASBA (Application Supported by Blocked Amount) facility, investors can apply using their bank accounts for both Public Issues and Rights Issues. ASBA ensures that the application amount is blocked in the bank account until the allotment process is completed for these types of issues.

The fees payable by the merchant banker on the grant of a certificate of registration is typically payable to the Securities and Exchange Board of India (SEBI) and not to the ‘Association of Investment Bankers of India (AIBI).’

Every merchant banker is required to submit complete particulars of any transaction for the acquisition of securities of any Body Corporate whose issue is being managed by that merchant banker within 15 days from the date of entering into such a transaction, as per regulatory requirements.

he cannot raise money through public issue – If a promoter has been barred from accessing the capital market by SEBI due to insider trading, he is not eligible to come out with a public issue until the regulatory restrictions are lifted.

No advertisement shall be issued giving any impression that the issue has been fully subscribed or oversubscribed during the period the issue is open for subscription, as per regulatory guidelines to ensure fair and transparent practices in the subscription process.

Mergers can involve companies of different sizes or stature, and they are not necessarily limited to equal or comparable entities. Mergers can occur between companies with varying scales and market positions.

The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 aim to ensure greater transparency, fairness, and equitable treatment for all investors in the context of substantial acquisition of shares and takeovers.

For the Senior Citizens Savings Scheme (SCSS) in India, an account can be extended for a block of 3 years after maturity by the account holder, subject to certain conditions

On settlement date, both the spot and the futures are at the same level. This is known as the spot-future convergence. The carry cost of buying spot and selling futures on settlement date is zero, since settlement is on the same day as the contract expiration day. Therefore, on expiration day, spot and future prices of the same underlying is identical.

To find the future value of money adjusted for inflation, you use the formula FV = PV × (1 + inflation rate)^number of years. In this case, it would be Rs. 10 lakh multiplied by (1 + 10%) raised to the power of 10 years.

When the market yield increases after the bond’s issuance, the bond price decreases. The price can be calculated using the present value of future cash flows, considering the new yield. In this scenario, the price is expected to be lower, and option b) Rs 98.29 is a plausible result.

Public limited companies are required to make the public offer only in dematerialized form if the offer size is more than Rs. 10 crore. This regulation promotes the use of electronic or dematerialized securities in the capital market.

Net worth of an individual is the total assets minus the total liabilities. When a person pays off his debts, the liabilities reduce. This results in an improvement of his net worth.

Covariance and Correlation are statistical terms used to describe the relationship between two investments. Covariance tells you how the two are related, whether positively or negatively and Correlation gives the degree to which two variables tend to move together. A positive Covariance between two stocks indicates that they have a positive relationship and will move together in the same direction.

Mutual funds offer investors the facility to automate their investment and redemption transactions to meet their needs from the investment. Systematic investment plans (SIP), Systematic withdrawal plans (SWP), Systematic transfer plans (STP) and switches are some of the facilities provided.

Since the amount is required after a short term period of 6 months, Short term debt fund be the right investment option.

Ministry of Corporate Affairs exercises supervision over the three professional bodies, namely, Institute of Chartered Accountants of India (ICAI), Institute of Company Secretaries of India (ICSI) and the Institute of Cost Accountants of India (ICAI) which are constituted under three separate Acts of the Parliament for proper and orderly growth of the professions concerned.

There is no incentive for investment in KVP and Interest on KVP is taxable on accrual basis and will be taxed as Income from Other Sources. deduction under section 80C is not allowed on this investment. TDS is not deductible on Interest on KVP.

The ‘PMT’ function in Excel can be used to calculate the periodic investments required.

Investments in Gold, Commodities and Real estate have the potential to beat inflation over a long period. The interest on bonds is fixed.

In Active Funds like Diversified Equity Funds, the Fund manager does a lot of buying / selling. Also a lot of research work goes into it. So the cost of fund management are higher. On the other hand, in an Index Fund, the fund manager has to invest in only those stocks which are in the index it follows (Eg. Nifty). So there is no research required and no churning of stocks as per market conditions. So the fund management cost is very low.

The primary market, also called the new issue market, is where issuers raise capital by issuing securities to investors.

Disclosures to Clients – 1. An investment adviser shall disclose to a prospective client, all material information about itself including its business, disciplinary history, the terms and conditions on which it offers advisory services, affiliations with other intermediaries and such other information as is necessary to take an informed decision on whether or not to avail its services. 2.Any remuneration and consideration received by its subsidiaries for distribution or execution services for which the investment advice is provided to the client

If there is an abnormal price movement in an index, defined in percentage terms, the exchange can suspend trading. If the trigger time is at or after 1:00 pm upto 2.30 pm and the market has moved by 10%, the market is halted for 15 minutes.

Losses from business or profession can be set off against income from the same head or other heads of income. Losses can be carried forward for a period of 8 years. Losses from house property can be carried forward for a period of 8 years. Losses from speculative business can be carried forward for a period of 4 years.

Small Savings Schemes are a set of savings instruments managed by the central government with an aim to encourage citizens to save regularly irrespective of their age. They are popular as they not only provide returns that are generally higher than bank fixed deposits but also come with a sovereign guarantee and tax benefits.

The Indian government has instituted a number of small saving schemes to encourage investors to save regularly. The main attraction of these schemes is the implicit guarantee of the government, which is the borrower.

Corporates, Banks, Financial Institution and Non-Banking Finance Companies (NBFCS) raise funds by issuing equity shares, preference shares, bonds, convertible bonds, commercial paper, certificates of deposits and securitized paper. Governments raise funds through government securities (G-Sec). Such securities are short term (usually called treasury bills with original maturities of less than one year) or long term (usually called Government bonds or dated securities with original maturity of one year or more).

The dividend yield is the amount a company pays to its investors as dividends in comparison with the current market price of the stock Dividend Yield Ratio = Dividend Per Share/Market Value Per Share

Mutual funds offer a route to investing in asset classes such as equity, debt, gold and real estate. As holders of the mutual fund units, investors (unit holders) are the beneficial owner simplifying that any returns or losses generated from the investment is to the account of the investor.

Market risk refers to the risk of the loss of value in an investment because of adverse price movements in the market. Systematic risk or market risk refers to those risks that are applicable to the entire financial market or a wide range of investments. These risks are also known as undiversifiable risks, because they cannot be eliminated through diversification. Systematic risk is caused due to factors that may affect the economy/markets as a whole, such as changes in government policy, external factors, wars or natural calamities.

A call option is In The Money if the market price (spot price) is above the strike price.

Financial Planning is a six-step process and the first step is to establish and define the client-planner relationship. The planning process begins when the client engages a financial planner and describes the scope of work to be done and the terms on which it would be done.