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Sharpe Index Model
AFM
answered on 14-Apr-26 18:31
Sir, for finding beta of a stock, we used Sharpe index model formula, but we ignored the error term. Are we assuming that there is no unsystematic risk associated with the stock? [Video Time Stamp: 03:44]
latest answer
If u assume an error term u need 3 equations to solve in order to arrive at 3 variables We have used this method because it simplifies the process Another way to solve for Beta is change in stock return (40-4) —————————————- Change in market return (25-7)
SANJITHA
CA Final
★ 55
1
42
Forex
AFM
answered on 14-Apr-26 18:27
Sir , In this question sub part 2 , why is it not compared with the spot rate on Aug 31 with forward rate ? Instead compared with Current spot rate
latest answer
Method 1 We are comparing a with b and a with c and then are inferring abt comparison of b and c It is easier to compare on unknown variable with a known number and hence we use this approach Method 2 The result will be same as comparing b with c directly We are using method 1 in part 2 because we used same method in part 1 also Answer is same either ways
Prethivi Rajan
CA Final
★ 9K+
1
40
Doubt
AFM
answered on 14-Apr-26 15:11
In previous questions, we considered the interest rate per annum. In this problem, we are taking the interest rate per month for computing the COC. Explain [Video Time Stamp: 02:02]
latest answer
Question specifically says per month interest and prev one specifically say per annum interest
pavan kumar
CA Final
★ 2K+
1
39
if we assume that upfront fees include in forward rate but total amount of cost will same in both case.?
AFM
answered on 14-Apr-26 11:23
then we have to calculated cos of fund assuming premia = ( FV ) multiply by (1-rate) , 64*(1-0.02) = 62.72 hence premia = 64-62.72 = 1.28 per USD =1.28*60000= 76800 i.e cost will be here also . means premia = 2% of 64 ( whether included or not) only we will compare spot rate vs 62.72 for total gain /loss cost remain same in both case. [Video Time Stamp: 08:36]
latest answer
While your though process is right. ICAI awards marks only if you follow their logic refer page 86 solution to illustration 23 https://resource.cdn.icai.org/87851bos-aps2163-ch10.pdf
Vinod Kumawat
CA Final
★ 1K+
1
34
Borrowing - RF Asset
AFM
answered on 14-Apr-26 11:18
Sir, Whether the amount of borrowing against the portfolio, Rs. 91,667 is invested in the market, does it form part of Rs. 12 Lakhs in the second case? [Video Time Stamp: 16:36]
latest answer
Stocks value 12 lacs Less borrowing 91667 net value of portfolio = 1108333
SANJITHA
CA Final
★ 55
1
44
Doubt
AFM
answered on 13-Apr-26 20:30
Here, the dividend is paid on face value, but we are taking the percentage of the dividend on the index. What is the reason? [Video Time Stamp: 16:36]
latest answer
Dividend when stated as paid as as percentage then we consider it on FV When stated as yield we take it as percentage of market value This is standard convention in the market
pavan kumar
CA Final
★ 2K+
1
29
Doubt
AFM
answered on 13-Apr-26 20:35
1. In the above question, the lot size is not mentioned. It says 1 future contract is for the delivery of 50 times the index. 2. Why are we choosing the BSE index for the computation of future price instead of choosing the value of the portfolio, which we did in the previous question? [Video Time Stamp: 15:12]
latest answer
In previous question they asked us to find out value of stock futures Here they have asked us to hedge the portfolio and that hedging cannot happen by entering to portfolio futures by using stock index futures . Here we use index futures adjusting their quantity to ensure beta of portfolio is same as beta of futures
pavan kumar
CA Final
★ 2K+
1
38
FOR CA FINAL AFM IMPORTANT QUESTIONS LIST - UNDER Derivative Analysis Under Options they have mentioned Question no. 38,39 but the p600+ have only questions up to 37 where does the question 38 and 39 come from?..
AFM
answered on 13-Apr-26 18:32
FOR CA FINAL AFM IMPORTANT QUESTIONS LIST - UNDER Derivative Analysis Under Options they have mentioned Question no. 38,39 but the p600+ have only questions up to 37 where does the question 38 and 39 come from?..
latest answer
Thank you 👍
Lingesh Elumalai
CA Final
★ 300
3
46
Doubt
AFM
answered on 13-Apr-26 15:00
1. Can we sell some of our stocks at a time in the cash market? [Video Time Stamp: 19:24]
latest answer
Yes
pavan kumar
CA Final
★ 2K+
1
39
Doubt
AFM
answered on 13-Apr-26 12:17
1.What happens, If the theoretical price is higher than the future price in this example. 2.We are considering bullish every time. What happens if it is a bearish market.
latest answer
Those scenarios are also considered in subsequent examples. Of Theoretical price is higher then Buy Futures in market as they are cheaper than theoretical price Buy cheap sell costly
pavan kumar
CA Final
★ 2K+
1
36