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mutual fund
AFM
answered on 21-Jun-25 19:50
sir in the above sum why isn't opening investment value not included? (400*19) but in illustration number 36 you have included it so what is the difference between those two questions? [Video Time Stamp: 04:40]
latest answer
At 4.40 we are computing just income Per unit and not yet computed NAV We compute NAV at 7.00 minutes
P AKSHAYA
CA Final
★ 260
1
310
Coefficient of Variation/Variance
AFM
answered on 20-Jun-25 10:18
Sir, what is the appropriate formula for calculating the Coefficient of Variation (CV) in this context? Should it be: Standard Deviation / NPV, or Standard Deviation / Expected Cash Flows (Mean Cash Flows)? If both formulas are technically possible, will they give the same outcome in decision making, or can the project rankings change depending on which base is used? Also, when both NPV and mean cash flows are available, which one is more appropriate or preferable to use in evaluating and comparing projects? [Video Time Stamp: 03:39]
latest answer
It is expected CF or NPV as applicable is that case for projects NPV as denominator is preferred. They will not ask a question where both are provided - if such a situation arises compute using both
Murali Thripuraboina
CA Final
★ 3K+
1
301
Change in Book Value
AFM
answered on 18-Jun-25 10:34
I just want to know if the book value changes which leads the Net Cash outflow to change as per below or not *Scenario 1: Book Value = ₹10,000 (→ Capital Gain situation) Capital Gain = ₹50,000 − ₹10,000 = ₹40,000 Capital Gain Tax = ₹40,000 × 40% = ₹16,000 After-tax Scrap Value = ₹50,000 − ₹16,000 = ₹34,000 Net Cash Outflow = ₹20,50,000 − ₹34,000 = ₹20,16,000 * Scenario 2: Book Value = ₹60,000 (→ Capital Loss situation) Capital Loss = ₹50,000 − ₹60,000 = ₹(10,000) Capital Loss results in tax saving = ₹10,000 × 40% = ₹4,000 After-tax Scrap Value = ₹50,000 + ₹4,000 = ₹54,000 Net Cash Outflow = ₹20,50,000 − ₹54,000 = ₹19,96,000
latest answer
Yes the principle and working is correct
Shinisha Rose R
CA Final
★ 5K+
1
273
Return computation method
AFM
answered on 18-Jun-25 07:28
Sir, why are we using simple interest method only?? Is it solely for the purpose of simplifying calculation??
latest answer
In mutual funds chapter unless they specifically use word IRR, you will compute simple returns and annualised by multiplying or dividing by 12 as the case may be Even if they use word yield as far as this chapter is concerned in all ICAI problems they have used simple returns and not compounded returns
Jaswanth P
CA Final
★ 0
1
325
Aribitrage
AFM
answered on 18-Jun-25 12:15
Since the theoretical futures price is usually higher than the spot price due to cost of carry and other factors, does that mean the probability of success in arbitrage—by shorting futures and buying in the cash market—is 100%, regardless of market movement in REAL WORLD as i aware the fact that there will be brokerage and other costs [Video Time Stamp: 12:39]
latest answer
There is no free lunch in the world. Arbitrage opportunities are either too small or vanish quickly unless one has inside information If brokerage and other costs are causing -ve drag in cash market, you will have basis risk, taxes and brokerage issues in futures also.
Manikyam
CA Final
★ 0
7
340
Another method - Is it correct
AFM
answered on 16-Jun-25 16:26
can we use the below method for alternative 2. [Video Time Stamp: 12:24]
latest answer
Yes You can. No issues
Shinisha Rose R
CA Final
★ 5K+
1
300
Interest rate risk management
AFM
answered on 16-Jun-25 08:15
Sir in this illustration no.22 there is gain only as what they wants is swap only and cost is less than the other alternative in which they are paying rates which are actually there.
latest answer
Ok sir thanks my mistake
Akshat Sharma
CA Final
★ 510
2
242
Adjustment logic
AFM
answered on 15-Jun-25 10:10
Sir, Could u please explain the logic why the income distributed is added as an adjustment in the return formula, for mutual fund, this is an outgoing fund right
latest answer
Return
Abhinav K A
CA Final
★ 2K+
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280
Clarification on Adjusting Dividend Yield for Futures Pricing
AFM
answered on 13-Jun-25 21:22
"Sir, kindly a doubt — in the futures price, why we took full 4.8% p.a. dividend, when duration is only 6 months and only 50% of stocks pay dividend? Shouldn’t we take 1.2% (half year and 50%) as effective yield?" [Video Time Stamp: 04:24]
latest answer
4.8% p.a is dividend it can be paid any time, Some will pay in jan and some in June The Q says 50% of these stocks pay dividend Nowhere it says 50% of stick will pay half dividend in next 6 month. It only says of teh total dividend payable 50% of stocks will do so in next 6 months
Athmaja S
CMA Final
★ 230
1
313
Decision to Sell Shares Based on Intrinsic Value
AFM
answered on 13-Jun-25 11:22
Sir according to this calculation, the intrinsic value of the shares is lower than the current market price, so it is advised to sell the securities now. However, suppose the investor follows this advice and sells all his shares now or next year, but then the market price unexpectedly rises to ₹75 later on. In that case, if he wants to buy back the shares, he will have to pay a much higher price than what he sold them for. So, he lost his profit too . Ignoring the dividend and all other aspects. So this conclusion pertains to the year which we have calculated only.?
latest answer
Okay Sir. Thank you.
K Vamshi
CA Final
★ 14K+
2
264