Name of Student ……………………….. Roll Number:……………….

Thapar University Patiala

School of Humanities and Social Sciences
Ph.D. (SemesterI) End Semester Exam DSS-006: Financial Analysis
Day and Date: Monday, 18th May,2015 Max. Time: 3 Hr., Timing: 2 to 5 P.M.
Time: 03 Hours; Maximum Marks (M.M.): 45 Name of Faculty: Dr Rakesh Sharma,
Dr. Harish Kumar Singla

Note: Answer all the questions. Answer all parts of the question at same place.

Q. Question Description M.
No. M
1. a) Discuss the prospect theory and highlight some of the behavioural anomalies 04
described in behavioual finance.
b) What is Efficient Market Hypothesis? Discuss its forms. Also explain why 05
Technical analysis can not hold if markets are efficient.
2. a) A company forecasts to pay a Rs. 8.00 dividend next year, which represents 100% 04
of its earnings. This will provide investors with a 12% expected return. Instead, if
the company decides to plow back 35% of the earnings at the firm’s current return
on equity of 18%. What will be the value of the shares before and after the plough
back decision? Will there be difference between two values? If yes, what is this
known as?
b) A stock has a variance total variance of 2025%, and beta of 1.75 whereas the 05
market variance is 441%. Find out
a. Systematic risk
b. Unsystematic Risk
c. Coefficient of determination
3. a) An inflow of one million is available and it is to be invested in the following bond portfolio 05
in the % specified.
Bond % of Money Duration of Bond (Years)
Invested
A 20 10
B 15 4
C 14 3
D 18 6
E 12 7
F 11 5
G 10 7
The face value of all the bonds is Rs. 1000/- and YTM is 8%. Calculate the
duration of the bond portfolio.
b) A customer has purchased 10 ABC January 50 calls, paying a $2 premium and 10 4
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 ABC January 50 puts, paying a $2 premium. The market price of ABC stock is $50
per share.
i. The buyer of these 10 straddles will have to deposit
ii. The buyer's breakeven points will be:
c) Distinguish between forward contract & future Contract. 03
4. a) Assume you sell 100 shares of Bowie Corporation short at $72. You also buy a 70 03
call option for 5.25 to protect against the stock price going up. Strike price of call
option is $ 75.
i. If the stock ends up at $90, what will be your overall gain or loss?
ii. If the stock ends up at $50, what will be your overall gain or loss?

b) Explain the concept of & differences between divestures demerger & carve out. 04

5. a) What are three form of demerger? How do they differ from each other? 04
b) What is swap? Where it is traded? Discuss the essential features & different types 04
of Swaps.
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