SFM

244 IMPORTANT
QUESTIONS
FOR NOV 2022

By CA Mayank
Kothari
Applicable for New syllabus
Nov 22 Attempt
support@conferenza.in
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SFM COMPILER 3 & 4 EDITION IMPORTANT QUESTIONS
4 Edition Q. No. CONCEPT NAME 3 Edition Q. No.

2. RISK MANAGEMENT
2 1 Day and 1O Days VAR 2

6 Weekly, Monthly, Semi-Annually 6

12 Currency VAR 12

13 VAR-Reverse Calculation 13

14 Z Score Probability 14
3. SECURITY ANALYSIS
3 Exponential Moving Average (EMA) 3

4 Run Test 4

5 Auto-Correlation Test New Que. in 4th Edtn.

4. SECURITY VALUATION
6 Walters Model & Optimum Dividend Payout 5

7 Walters Model & Optimum Dividend Payout 6

15 Earnings Model 15

18 Gordon’s Model 18

20 Gordon’s Model 20

22 Gordon’s Model & Sustainable Growth Rate 22

24 Sustainable Growth Rate 24

32 Five Stage Dividend Discount Model 29

34 Six Stage Dividend Discount Model 31

37 Maximum Price of Equity Share 35

38 H Model 36

41 FCFE & Gordons Growth Model 39

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SFM COMPILER 3 & 4 EDITION IMPORTANT QUESTIONS
4 Edition Q. No. CONCEPT NAME 3 Edition Q. No.

45 EV Multiple 43
52 Value of Right & Ex Right Price of Shares 49

53 Value of Right - Rights On and Ex Right 50

54 Right Issue and Fresh Issue of Shares 51

68 Value of Bond with Forward Rates 65

69 Value of Bond with Di erent Yields 66

70 Pro t or Loss on Investment in Bond 67

73 Realised YTM 70

76 Value of Bond, Duration and Volatility 73

86 Convexity 81

89 Convexity 84

90 Bond Immunisation 85

91 Bond Immunisation 86

96 Convertible Bonds 91

99 Convertible Bonds 94

100 Break Even MP & Ideal Conversion Period of Bonds Pg. 312 Vol. 1 Q1 (c)

101 Convertible Bonds & Duration 95

104 Bond Refunding 98

109 Maximum Debt that can be issued 103

112 Money Market Instrument - Treasury Bill 106

114 Money Market Instrument 108

117 Money Market Instrument - Commercial paper 111

123 Money Market Instrument - Certi cate of Deposit 117

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SFM COMPILER 3 & 4 EDITION IMPORTANT QUESTIONS
4 Edition Q. No. CONCEPT NAME 3 Edition Q. No.

125 Bond Value & Bond Equivalent Yield 119

127 Repo - Dirty Price , Haircut Adjustment 121

129 Repo - Dirty Price, First Leg & Second Leg(Repayment) 123

131 Repo Rate, Dirty Price, Clean Price Pg. 338 Vol. 1 Q1 (b)

5. PORTFOLIO MANGEMENT

7 Risk Reduction through Diversi cation 6

14 Value Added or Active Return of Portfolio 12

18 Beta using Correlation Analysis 16

26 Beta and CAPM 24

32 CAPM and Gordon’s Growth Model Pg. 310 Vol. 1 Q6 (a)

38 CAPM with Inflation and Gordon’s Growth Model 35

39 CAPM 36

45 CAPM 42

49 CAPM and Portfolio Beta 46

53 CAPM & Beta 50

55 CAPM and Portfolio Beta 52

57 CAPM 54

59 Reducing & Increasing Portfolio Beta 55

61 Return due to Net Selectivity, Returns due to

57
Higher Risk Assumed

64 Arbitrage Pricing Theory (APT) 60

65 Arbitrage Pricing Theory (APT) 61

68 CAPM and Arbitrage Pricing Theory (APT) 64

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SFM COMPILER 3 & 4 EDITION IMPORTANT QUESTIONS
4 Edition Q. No. CONCEPT NAME 3 Edition Q. No.

70 Sharpe’s Index Model (SIM) 66

73 Sharpe’s Index Model (SIM) 69

77 Beta, Alpha and Security Market Line 73

79 Market Lines - Security Characteristics Line 75

84 Portfolio Evaluation Measures - Sharpe,

80
Treynor, Jensen’s Alpha

85 Portfolio Evaluation Measures -

81
Sharpe and Treynor

86 11 Concepts in 1 Question 82

87 Portfolio Return and Portfolio Risk 83

88 Optimum Portfolio Theory 84

89 Portfolio Rebalancing Theory - CPPI 85

90 Portfolio Rebalancing Theory - Buy & Hold

86
Polity, Constant Ratio Plan

91 Portfolio Rebalancing Theory - Constant Ratio Plan 87

92 Minimum Variance (Risk) Portfolio 88

94 Sharpe’s Index Model (SIM) 90

95 Stock Lending Scheme Pg. 378 Vol. 1 Q2 (b)

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SFM COMPILER 3 & 4 EDITION IMPORTANT QUESTIONS
4 Edition Q. No. CONCEPT NAME 3 Edition Q. No.

7. MUTUAL FUNDS

2 Holding Period Return on Reinvestment

2
of Dividend and CG

4 Holding Period Return 4

6 Front End and Back End Load 6

7 Entry Load (Front End Load) 7

10 Mutual Funds Earnings & Investors Bene t 10

12 E ective Yield 12

14 E ective Yield (Reverse Calculation) 14

17 Dividend Reinvestment, Bonus & Growth Plan 17

18 Dividend Reinvestment and Bonus Plan

18
(Reverse Calculation)

19 Dividend Reinvestment and Bonus Plan

Pg. 312 Vol. 1 Q1 (b)
(Reverse Calculation)

20 NAV 19

25 NAV 24

27 NAV 26

29 NAV 28

30 NAV (Reverse Calculation) Pg. 343 Vol. 1 Q4 (b)

34 NAV 32

36 NAV using Sharpe Ratio, Tryenor Ratio,

Pg. 305 Vol. 1
Standard Deviation

37 Fund Manager’s Fees 34

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SFM COMPILER 3 & 4 EDITION IMPORTANT QUESTIONS
4 Edition Q. No. CONCEPT NAME 3 Edition Q. No.

38 Return Before Management Expenses 35

39 Dividend Equalization Method 36

40 NAV (Reverse Calculation) Pg. 337 Vol. 1 Q1 (a)

8. DERIVATIVES ANALYSIS & VALUATION

6 Futures Pricing 6

8 Futures Pricing 8

9 Contango and Backwardation 9

10 Forward Pricing 10

13 Initial Margin and Mark to Market Pg. 306 Vol. 1 Q2 (b)

14 Initial Margin and Mark to Market Pg. 358 Vol. 1 Q3 (a)

18 Open Interest 16

19 Return on Short Selling 17

22 Arbitrage with Futures Contract 20

24 Arbitrage with Futures Contract 23

28 Hedging with Futures 27

30 Hedging with Futures 29

32 Hedging with Futures 31

34 Hedging with Futures (Reverse Calculation) Pg. 314 Vol. 1 Q3 (b)

38 Reducing Portfolio Beta 35

40 Hedge Ratio 37

41 Hedging with Futures 38

43 Hedging with Futures 40

44 Hedging with Futures 41

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SFM COMPILER 3 & 4 EDITION IMPORTANT QUESTIONS
4 Edition Q. No. CONCEPT NAME 3 Edition Q. No.

47 Pro t and Loss on Option Settlement 44

53 Value of call Option 50

55 Break Even Point in Options 52

60 Two Period Binomial Model 57

63 Black-Scholes Model 60

64 Black-Scholes Model 61

66 Portfolio Replicating Model 63

67 Index Swap 64

9. INTEREST RATE RISK MANAGEMENT

1 Forward Rate Agreement (FRA) 1

4 Forward Rate Agreement (FRA) 4

6 Calculating Theoretical FRA, YTM & Market Price Pg. 360 Vol. 1 Q3 (c)

10 Calculating Theoretical FRA & Arbitrage with FRA 9

11 Calculating Theoretical FRA & Interest Rate Guarantee 10

12 Forward Rate Agreement (FRA) & Interest Rate Futures (IRF) 11

15 Interest Rate Futures (IRF) 14

20 Cheapest to Deliver Bond 19

21 Cheapest to Deliver Bond 20

23 Cap Option 22

24 Cap Option 23

29 Interest Rate Swap 28

31 Interest Rate Swap 30

32 Interest Rate Swap 31

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SFM COMPILER 3 & 4 EDITION IMPORTANT QUESTIONS
4 Edition Q. No. CONCEPT NAME 3 Edition Q. No.

33 Interest Rate Swap - Default 32

34 Interest Rate Swap 33

10. FOREIGN EXCHANGE EXPOSURE & RISK MANAGEMENT

1 Strategies for Exposure Management 1

8 Return for Foreign and Domestic Investor 8

11 Cover Rate 11
15 Cross Rates 15

18 Appreciation and Depreciation on Forward

18
Contract

19 Broken Period Forward Rate 19

26 Appreciation & Depreciation, PPPT

Pg. 373 Vol. 1 Q1 (a)
& Expected Return

27 Appreciation & Depreciation & Expected Return Pg. 348 Vol. 1 Q6 (b)

28 Interest Rate Parity Theory (IRPT) 26

29 Interest Rate Di erential 27

31 Currency Arbitrage with Cross Rates 29

35 Currency Arbitrage with Interest Rate Di erential 33

37 Currency Arbitrage with Interest Rate Di erential 35

40 Currency Arbitrage with Interest Rate Di erential 38

43 Transaction and Economic Exposure 41

49 Investment (Borrowing) of Surplus (De cit)

47
Foreign Currency

51 Investment (Borrowing) of Surplus (De cit) 49

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SFM COMPILER 3 & 4 EDITION IMPORTANT QUESTIONS
4 Edition Q. No. CONCEPT NAME 3 Edition Q. No.

Foreign Currency

52 Investment (Borrowing) of Foreign Currency Pg. 383 Vol. 1 Q5 (b)

53 Investment in Equity or Fixed Interest Bearing Security 50

54 Investment in Equity or Fixed Interest Bearing Security 51

56 Letter of Credit & EEFC Pg. 359 Vol. 1 Q3 (b)

62 Leading or Lagging 58
64 Hedging with Forward Contract 60

69 Hedging with Forward Contract 64

72 Hedging with Di erent Foreign Currency Invoicing Pg. 325 Vol. 1 Q3 (b)

73 Hedging with Home Currency Invoicing,

66
Forward or Futures Contract

76 Hedging with Forward or Futures Contract 69

77 Hedging with Forward or Options Contract 70

80 Hedging with Forward, Options or Money Market 73

85 Hedging with Forward or Money Market 78

86 Hedging with Forward or Money Market 79

87 Currency Swap 80

88 Currency Swap 81

89 Non Deliverable Forward Contract 82

93 Forward Contract - Cancellation before Due Date 86

95 Forward Contract - Extension on Due Date 88

99 Forward Contract - Early Delivery

92
(Delivery before due date)
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SFM COMPILER 3 & 4 EDITION IMPORTANT QUESTIONS
4 Edition Q. No. CONCEPT NAME 3 Edition Q. No.

101 Forward Contract - Early Delivery

94
(Delivery before due date)

102 Forward Contract - Early Delivery

95
(Delivery before due date)

103 Forward Contract - Early Delivery

Pg. 346 Vol. 1 Q6 (a)
(Delivery before due date)

106 Forward Contract - Late Extension

98
(Extension after due date)

107 Forward Contract - Late Extension "New Que.

(Extension after due date) in 4th Edition"

108 Nostro, Vostro & Loro Account 99

109 Nostro, Vostro & Loro Account 100

110 Nostro, Vostro & Loro Account 101

11. INTERNATIONAL FINANCIAL MANAGEMENT

2 Global Depositary Receipts Pg. 345 Vol. 1 Q5 (b)

3 Foreign Company Investing in India 3

4 Issuing Equity Shares for Expansion 4

7 Home Currency Approach - NPV Pg. 310 Vol. 1 Q6 (b)

8 Home Currency and Foreign Currency

Pg. 316 Vol. 1 Q6 (a)
Approach - NPV

10 Home Currency Approach - Inflation, Nominal

& Real Cash Flows - NPV, Modi ed Internal 7
Rate of Return (MIRR)
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SFM COMPILER 3 & 4 EDITION IMPORTANT QUESTIONS
4 Edition Q. No. CONCEPT NAME 3 Edition Q. No.

11 Foreign Currency Approach - Annual CFAT, NPV Pg. 352 Vol. 1 Q1 (b)

12 Indian Company investing in Foreign Country -

8
Adjusted NPV

13 Indian Company investing in Foreign

9
Country (GDR) - NPV

14 Foreign Company Investing in India - NPV Pg. 308 Vol. 1 Q4 (a)

17 External Commercial Borrowing (ECB) 12

18 Indian Company investing in Foreign

13
Country - NPV

12. CORPORATE VALUATION

9 Earnings Capitalisation & Net Asset Value Method 8

12 Net Worth and Dividend Valuation Model 11

14 Chop Shop Approach 13

17 Value of Firm 16

19 Value of Firm 18

21 Value of Share using Free Cash Flow to Equity 20

23 Value of Strategy Based on Present Value

22
of Cash Flows

25 Value of Firm & Value of Equity 23

27 Enterprise Value 25

30 Economic Value Added (EVA) 28

35 Economic Value Added (EVA) 33

38 Economic Value Added (EVA) & Market Value Added (MVA) Pg. 306 Vol. 1 Q2 (a)
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SFM COMPILER 3 & 4 EDITION IMPORTANT QUESTIONS
4 Edition Q. No. CONCEPT NAME 3 Edition Q. No.

40 Economic Value Added (EVA) 37

42 Economic Value Added (EVA) 39

44 Relative Valuation 40

13. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING

8 Post Merger PE, MP, No. of Shares, Market Value 8

9 Post Merger EPS, MP, Market Value 9

14 True Cost of Merger - Equity Based Pg. 313 Vol. 1 Q1 (d)

16 True Cost of Merger - Cash & Equity Based Pg. 332 Vol. 1 Q6 (a)

17 Impact of Merger 15

18 Buy Back of Equity Shares 16

21 Buy Back of Equity Shares Pg. 341 Vol. 1 Q3 (a)

22 EPS, PE Ratio, BVPS, ROE, Growth Rate, Post Merger Pg. 361 Vol. 1 Q 4 (a)

27 Purchase Consideration, No. Of Shares,

24
Post Merger EPS, MP

31 Swap Ratio, Promoters Holding, Post Merger EPS, MP,

28
Free Float Market Cap

33 Swap Ratio, Promoters Holding, Post Merger EPS, MP,

30
Free Float Market Cap

34 PE Ratio, Bonus Ratio, Market Price and Free Float

31
Market Capitalisation

39 Swap Ratio, CAR & Gross NPA, Balance Sheet After Merger 36

41 Maximum and Minimum Exchange Ratio 38

43 Maximum Exchange Ratio 40

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SFM COMPILER 3 & 4 EDITION IMPORTANT QUESTIONS
4 Edition Q. No. CONCEPT NAME 3 Edition Q. No.

45 Maximum Exchange Ratio Pg. 305 Vol. 1 Q1 (a)

47 Maximum and Minimum Share Price 43

49 NPV of the proposed merger 45

50 Before and After Merger Value of Company 46

54 Divestiture Decision Pg. 314 Vol. 1 Q3 (a)

55 Growth rate of Equity Funds 50

56 Corporate Restructuring 51
57 Corporate Restructuring 52

58 Geared and Ungeared Beta 53

60 Geared and Ungeared Beta 55

61 Geared and Ungeared Beta 56

62 Capital Structure Decision 57

63 Capital Structure Decision Pg. 368 Vol. 1 Q6 (a)

14. STARTUP FINANCE

2 NPV of the Venture Capital Project 2