Admire Classes

Q.1. The expected return and Beta of three securities are as follows:
Securities X Y Z
Expected Return (%) 14.0 14.0 12.0
Beta Factor 1.5 1.4 0.7
If risk free rate is 7% and market return are 12%, which of the above securities are over, under or
Correctly, valued in the market? What should be your strategy?

Q.2.Statement showing valuation and strategy :

Solve the following for Joy Ltd:
Particulars Initial Price Market Price (at the Beta factor
end of the year) (Rs.)
Bulbul Ltd. 13 19 1.25
Sparrow Ltd. 20 25 1.00
Oriole Ltd 24 30 1.33
Risk free return may be taken at 10%.

Q.3.
Particulars Initial Dividend/Interest Market Price (at the Beta factor
Price end of the year) (Rs.)
A Ltd. 25 2 50 0.8
B Ltd. 35 2 60 0.7
C Ltd. 45 2 135 0.5
D Ltd. 1000 140 1005 0.99

Risk free return may be taken at 14%

You are required to calculate:
1. Expected Rate of Return of Portfolio in each using CAPM.
2. Average Return of Portfolio.

Q.4.The expected return and Beta of three securities are as follows:

Securities X Y Z
Expected Return (%) 18.0 11.0 15.0
Beta Factor 1.7 0.6 1.2
If risk free rate is 9% and market return are 14%, which of the above securities are over, under or
Correctly, valued in the market? What should be your strategy?