Revised portfolio Beta

answered 1 hr ago

Hi Sir, in class you said we can do in normal way i.e. (revised portfolio value*beta)/ revised portfolio or using changes % i.e. change in portfolio /change in index to find out the revised portfolio beta. but when i did try to compute portfolio beta in normal way i got answer of 2.2943 but where as your answer is 2.2923. i am attaching my calculation for your reference. please correct me sir

latest answer

Did u Make all computations in excel without round off?

B. Dinesh

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How does the new portfolio's Beta will increase to 1.45

answered 3 hrs ago

Hi Sir, to increase the beta of the portfolio to 1.45, you told us to borrow 1.3 crores from risk free security by shorting it and invest that 1.3 crores again in x & y ltd shares in their existing proportions. even we increase the amount of investments in those securities, since we invested in the same proportion the overall beta of the portfolio will still remain 1.15 right ? please provide me the calculation of how the revised beta will be 1.45 . i have attached my calculation for your reference. please correct me if anything is wrong in it.

latest answer

I numerator add one more number (-1.3 x 0) because we have shorted Rf in denominator add one more number ( -1.3) because we have shorted Rf Numerator will now be 7.245 Denominator will be 5 7.245 / 5 = 1.45

B. Dinesh

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Ill3

answered 1 day ago

Sir in sum I'll 1 and 2, 3 The x-xmean sum is =136.32 and y-ymean sum is 196.86 =136.32*196.86/9=2982 co variance coming i don't know where I'm missing.

latest answer

Okay sir thank you I will work out that .

HEMAVATHYSUBRAMANI SUBRAMANI

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Calculation of exponent in exams

answered 2 days ago

Hi sir, while computing theoretical future price you have computed in excel. But how should we note in notes. e^10.5%×(58/365) how to compute this value in notes. Please provide the solution

latest answer

Check my video on calculator tricks in introduction chapter

B. Dinesh

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Discount rate

answered on 14-May-24 11:11

Sir under both the methods discounting nominal cash flow with nominal rate and real cash flow with real rate, NPV shd come same know, In class room soln third while solving using nominal cash flow, third year discount rate shd be 0.7118

latest answer

Thanks for highlighting will correct it

R Yashwanth Kumar

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Query in the illustration

answered on 12-May-24 07:17

Hi sir, May I know why the annual cash flows are divided by the discount rate (10%/0.10) to arrive at the present value of cash flows? It seems like it has something to do with the term 'till perpetuity', but I'm unable to catch the logic behind it.

latest answer

When we get same amount of money till perpetuity with growth: the formula is (D1 / Ke-g) When g is 0 then formula becomes D1 / Ke

Ruthvik Reddy

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Interest rate is per month not per annum.

answered on 10-May-24 11:10

Hi sir, while computing the cost of carrying we have to multiply the spot with interest rate for 3 months. In the question they have given interest rate as 15% PER MONTH. SO the formula for cost of carrying should be [ Spot*15% per month* 3 months]. But what you have taken is [spot*15%per month*3 months/12 months]. Why we have to divide it by 12, even though they have given the interest rate PER MONTH ?

latest answer

What i solved in class is monthly compounding

B. Dinesh

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Release of working cap

answered on 08-May-24 21:05

Usually we take release of working cap at end but wanted to understand why do we do that since it is a sunk cost deployed in business and would be utilized in operations right?

latest answer

understood, thanks a lot!

Priyanka Udeshi

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inflation

answered on 07-May-24 20:16

Sir in this question, ICAI has not adjusted the inflation in each yrs revenue and costs. I understand you'd done it similar to an Illustration solved earlier but how do we interpret whether inflation rates are to be adjusted in the CFs (where real/ nominal is not mentioned)

latest answer

Depends on question if icai does not provide clarity yuu have to make an assumption. In this question too one can assume no inflation and work like icai

Priyanka Udeshi

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Mutual funds

answered on 07-May-24 05:47

Illustration 8 answer is not 12.64 it is 12.76(12/.94)

latest answer

No. Solution is correct. Please have a re look at formula and our notes P 590. Check icai material page 8.16 too https://resource.cdn.icai.org/74835bos60509-cp8.pdf

abin c s

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