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variance - covariance matrix
AFM
answered on 21-Dec-25 19:02
Are there any videos in other chapters where you have explained the variance - covariance matrix or is this the only one?
latest answer
We solved in risk management chapter on how to arrive at var of a portfolio. Easiest way to remember is ( a+b)^2
Jayanth
CA Final
★ 6K+
1
239
Relating to risk
AFM
answered on 21-Dec-25 10:32
hi sir, In the previous Illustrations(before single index model), standard deviation is considered as risk. And in Single index model - Variance is considered as risk. Why is that? [Video Time Stamp: 19:34]
latest answer
Risk is SD as well as variance write both as answers in exams If some asks your salary and you say 2 lac pm or 24 lac pa - both the answers are correct Same way for sd and variance
Jayanth
CA Final
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1
232
RTP Jan'26 - Derivatives
AFM
answered on 21-Dec-25 10:53
Regarding Derivatives-Futures Q7 In Q7 (i) (1) is there an assumption here that the value of all the securities is the same, i.e. each security has equal weight in the portfolio? Also in (2) Is anyone able to discern the language for the theory part? Unable to understand the concept.
latest answer
Yes you have to assume weight of all securities is same What they are saying in the question is, if market fell by 2% and she earned a profit on portfolio why? Ans: If market fell, she should have earned profit on futures and made loss on actual portfolio But she earned profit because some stocks may not have followed the market - there may have been some unsystematic positive return on some stocks in the portfolio as a result the portfolio value went up despite a fall in markets
Siddharth Kulkarni
CA Final
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161
Market cap
AFM
answered on 19-Dec-25 15:15
Sir, I have a small doubt regarding calculation of market capitalization in acquisition problems. In some questions (for example, Q.24), market capitalization is calculated as post-acquisition market price × total number of shares after acquisition. However, in some other questions (like Q.46 – Day Ltd & Night Ltd), I noticed that market capitalization is found by adding the market capitalization of both companies before acquisition. Sir, could you please clarify in which situations each method should be applied?
latest answer
ok sir
Muhammed Mubaris
CA Final
★ 190
2
200
Replacement Decision
AFM
answered on 17-Dec-25 10:56
Sir, since EAC represents the cost for one full year and is realised at the end of the year for the new machine, the existing machine should also be allowed to operate for at least one year for a meaningful comparison. Therefore, we considered NPVs from the end of Year 1 onwards to take the replacement decision. Am I right, sir [Video Time Stamp: 09:37]
latest answer
No Machine can be replaced now also in which case we have salvage value of 40K right away at point 0 Secondly EAC is arrived at by summing up all discount factors - you basically get a value at period 0 and not at end of period 1
Murali Thripuraboina
CA Final
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202
Doubt regarding expenses not deducted from calculation of NAV
AFM
answered on 17-Dec-25 11:52
Sir, why didn't we deduct 6.68 cr in calculation of NAV whereas we deducted fund operating expenses in computation of NAV in illustration 18 also and in various illustrations also we deducted fund operating expenses can you please explain sir
latest answer
Understood sir
siva chaitanya
CA Final
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2
168
Assumption
AFM
answered on 15-Dec-25 11:26
Sir, in this Question, can I take the assumption that P Ltd acquired C Ltd and solve the question? [Video Time Stamp: 05:01]
latest answer
No Share count will change
Murali Thripuraboina
CA Final
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3
201
Arbitration
AFM
answered on 12-Dec-25 13:48
Sir, In these type of question for the purpose arbitration, is it necessary that loan must be taken and deduction of interest, Can't we solve without assumption loan taken? [Video Time Stamp: 04:07]
latest answer
Arbitrage happens only when there is a buy and sell If u have to buy on spot u need money for which u need to borrow
Sai Eswar Kolli
CA Final
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3
230
Initial Margin
AFM
answered on 12-Dec-25 10:20
Sir, why did we considered Mean + 3SD, why not 4SD or 2SD? How did we make this assumption? [Video Time Stamp: 00:55]
latest answer
Ok Sir, Understood
Sai Eswar Kolli
CA Final
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2
236
Theory guidance
AFM
answered on 11-Dec-25 17:24
Sir, now practical problems can be solved with practice, however how shall we tackle theory because theory also carries good weightage but reading module for theory doesn't seem logical as module is vast. What shall be the approach ?
latest answer
Ok sir ! Noted !! Thank you!
Hrishikesh Pradhan
Qualified CA
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185