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Debt-Equity and its effect on Beta of Equity
AFM
answered on 23-Apr-25 14:11
You've mentioned that the value of equity increases with an increase in the portion of debt. Can you please elaborate on that and part iii) of the illustration as a whole?
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Equity
Ruthvik Reddy Adala
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Returns used in Treynor Ratios
AFM
answered on 23-Apr-25 07:24
It is mentioned in one of the previous videos that the actual returns are used in Sharpe and Treynor Ratios for Portfolio Evaluation. However, in Illustration 67, expected returns are used to compute the Treynor Ratios. Is it because there was no mention of the actual returns in the question?
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Formula
Ruthvik Reddy Adala
CA Final
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260
Index value
AFM
answered on 22-Apr-25 15:53
Sir, today(maturity date for sensex) at 3.30pm, the value of index was at 79,475.63, but later sometime it changed to 79,595.59. The value of put option for 79600 at 3.30pm - Rs. 4.95 and the value of call option for 76000 -Rs. 0.05. Is that changed because there should be no arbitrage possibility. Because i thought that the intrinsic value for put option will be Rs. 124.37 and the total profit will be around Rs. 2487.4 (124.37*20)
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You would not have fresh buyers at 0.05 paise unless someone wants to square off existing positions of sold puts to release margin.
Nitin Raj
CA Final
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278
Black Scholes Model
AFM
answered on 22-Apr-25 16:16
Have questions come from Black Scholes model asked in recent attempts, is it preferable to do in the end, if there is shortage of time?
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Okay sir, thank you
Raviteja Kusumanchi
Qualified CA
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Cumulative Normal Distribution Table Values
AFM
answered on 21-Apr-25 11:00
When we are concerned about the worst case (risk / abnormal losses), we consider -ve SDs (LHS) from mean, and since the cumulative normal distribution value is seen cumulatively from the +ve tail (RHS) towards the -ve SDs, we calculate the remaining percentage to denote the area of -ve SDs. Whereas analysing the chance of getting best case (abnormal gain), we consider +ve SDs (RHS) from mean, and since the cumulative normal distribution value is seen from the -ve tail (LHS) towards the +ve SDs, we calculate the remaining percentage to denote the area of +ve SDs. Am I right, sir?
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Yes
Denz Philip
CA Final
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Equity shares
AFM
answered on 20-Apr-25 20:19
In point ii the wording is that equity shares are reduced to Rs 25 and not by Rs 25, can't we do 6 L *25 ?
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Sir, understood it now ! I mis understood your solution
Hrishikesh Pradhan
Qualified CA
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266
SPAC
AFM
answered on 20-Apr-25 19:55
Can we say that SPAC is same as reverse merger ?
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In reverse merger there may or may not be listing issues In spac the company is specifically formed for acquisition There is no such thing in reverse merger
Hrishikesh Pradhan
Qualified CA
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280
Value of options
AFM
answered on 20-Apr-25 12:16
Sir, could you explain a) How the expected value of options is equal to the value of futures b) Are "Value of futures = Value of options" and " Value of options = PV of expected payoff" applies only in risk neutral world or this concept applies also in real world
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Options
Nitin Raj
CA Final
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Case scenario -3 ICAI
AFM
answered on 20-Apr-25 12:24
Greetings sir! In the case scenario 3 bit (iii) they asked to give optimum strategy as per standard deviation , on SD the answer is option d but in answers they have given option b based on CV. Can you please give me clarification and which one we need to go in exams sir?
latest answer
I know i discussed this at minute 10 in the YT video on this https://youtu.be/m8YjMxwhDcA?si=JIASKa_QAxcxI46D
Priya Bhimani
CA Final
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Portfolio Risk
AFM
answered on 19-Apr-25 13:39
Sir, in question if they ask us to find the Portfolio Risk means, what are they asking us to find? Is it Variance or Standard deviation be it Sharpe Index model or other model? Also if they are asking us to find the risk of a particular security means should we stop with Variance or we need to find SD? Risk is Variance or SD ?
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Yes when they ask for systematic and unsystematic risk risk you have to compute variance When they say just risk compute variance and SD
Mohanbabu N
CA Final
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