Fortune India (FMCG) Ltd. Net worth (Rs.in lakhs) 21,000 24,000 No. of shares (Rs. in lakhs) 1,500 3,000 Book value of shares Rs. 14 Rs. 8 Question 4 (a) What are the investors’ rights & obligations under the Mutual Fund Regulations? Explain different methods for evaluating the performance of Mutual Fund. (b) The Investment portfolio of a bank is as follows: Government Bond Coupon Rate Purchase rate (F.V. Rs. 100 per Bond) Duration (Years) G.O.I. 2006 11.68 106.50 3.50 G.O.I. 2010 7.55 105.00 6.50 G.O.I. 2015 7.38 105.00 7.50 G.O.I. 2022 8.35 110.00 8.75 G.O.I. 2032 7.95 101.00 13.00 Face value of total Investment is Rs. 5 crores in each Government Bond. Calculate actual Investment in portfolio. What is a suitable action to churn out investment portfolio in the following scenario? 1. Interest rates are expected to lower by 25 basis points. 2. Interest rates are expected to raise by 75 basis points. Also calculate the revised duration of investment portfolio in each scenario. (c) You sold Hong Kong Dollar 1,00,00,000 value spot to your customer at Rs. 5.70 & covered yourself in London market on the same day, when the exchange rates were US$ 1 = H.K.$ 7.5880 7.5920 Local inter bank market rates for US$ were Spot US$ 1 = Rs. 42.70 42.85 Calculate cover rate & ascertain the profit or loss in the transaction ignore brokerage. (8 + 8 + 4 = 20 Marks)
PAPER – 2 : MANAGEMENT ACCOUNTING AND FINANCIAL ANALYSIS 31 Answer (a) Investors’ rights and obligations under the Mutual Fund Regulations: Important aspect of the mutual fund regulations and operations is the investors’ protection and disclosure norms. It serves the very purpose of mutual fund guidelines. Due to these norms it is very necessary for the investor to remain vigilant. Investor should continuously evaluate the performance of mutual fund. Following are the steps taken for improvement and compliance of standards of mutual fund: 1. All mutual funds should disclose full portfolio of their schemes in the annual report within one month of the close of each financial year. Mutual fund should either send it to each unit holder or publish it by way of an advertisement in one English daily and one in regional language. 2. The Asset Management Company must prepare a compliance manual and design internal audit systems including audit systems before the launch of any schemes. The trustees are also required to constitute an audit committee of the trustees which will review the internal audit systems and the recommendation of the internal and statutory audit reports and ensure their rectification. 3. The AMC shall constitute an in-house valuation committee consisting of senior executives including personnel from accounts, fund management and compliance departments. The committee would on a regular basis review the system practice of valuation of securities. 4. The trustees shall review all transactions of the mutual fund with the associates on a regular basis.
- Spring '18
- Net Present Value, Fortune India Ltd.