Investment Analysis in Public Shares

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

The proportion of a public issue of shares allocated to various categories of investors is decided by?

Stock exchange

SEBI

Issuer (correct)

Registrar and Transfer agent

In a leveraged investment in an IPO, the profits to the investor depend upon?

Issue price & listing price (correct)

Cost of borrowing and period of borrowing

Interest paid and issue price

Shares allotted and listing premium

A high turnover in a stock is an indicator of which of the following?

Higher price

Lower returns

Lower volatility

Higher liquidity (correct)

Which of the following may make VKP Ltd unsuitable for Mr. A as a conservative investor?

PE ratio higher than peer average Signup and view all the answers

The PEG ratio of the company classifies it as?

Undervalued Signup and view all the answers

Mr. A is attracted by the high dividend yield of the stock. Which of the following is a likely feature of the investment going forward?

Low earnings growth Signup and view all the answers

A decrease in interest rates is likely to see a greater impact on the price of which bond?

30 year bond with 2 years to maturity Signup and view all the answers

A nomination made in a mutual fund folio?

Can be cancelled by the first holder in a jointly held account Signup and view all the answers

In a jointly held folio, the PAN and KYC process has to be complied with by?

All the joint holders Signup and view all the answers

An NRI returning to India and becoming a Resident Indian has to do which of the following with respect to holdings in a demat account?

Change the existing account status to resident Signup and view all the answers

Mr. D holds investments in UPP equity scheme. He makes an investment in an MIP of the same mutual fund. Will it be held under the same folio?

Can be held in either the same folio or different folio Signup and view all the answers

A request for dematerialization of securities may be rejected if?

Dematerialization request is not accompanied by R&T verification of signature Signup and view all the answers

Ms. L takes a loan against her mutual fund holdings. Only a portion of her units are required as security. How will she give effect to this?

Transfer the required portion to a new folio and mark a lien on it Signup and view all the answers

Which of the following is an indication of indebtedness?

Leverage Ratio Signup and view all the answers

Current cost is translated into a cost in the future using which of the following formulae?

P X (1 + i)n Signup and view all the answers

What is the net take-home salary of Mr. P?

Rs 35,000 Signup and view all the answers

What is the monthly surplus of Mr. P?

Rs 10,000 Signup and view all the answers

Study Notes

Public Issue of Shares

The proportion of a public issue of shares allocated to various categories of investors is decided by the Issuer.

Leveraged Investment in IPO

Profits in a leveraged investment in an IPO depend upon the Issue price & listing price, Cost of borrowing and period of borrowing, Shares allotted and listing premium.

High Turnover in Stock

High turnover in a stock is an indicator of higher liquidity, as investors are actively buying and selling.

Conservative Investor Investing in Equity

PEG ratio lower than 1, Dividend yield lower than the risk-free rate of interest, PE ratio higher than peer average may make a stock unsuitable for a conservative investor.
A PEG ratio lower than 1 classifies the company as undervalued.
A high dividend yield may indicate low earnings growth and low capital appreciation.

Decrease in Interest Rates

A decrease in interest rates is likely to have a greater impact on the price of a 15 year Government security, as long-term bonds are more sensitive to interest rate changes.

Nomination in Mutual Fund Folio

A nomination in a mutual fund folio can be changed by the first holder in a jointly held account and can be changed by all the holders signing for the change.

Jointly Held Folio

In a jointly held folio, the PAN and KYC process has to be complied with by all the joint holders.

NRI Returning to India

An NRI returning to India and becoming a Resident Indian has to change the existing account status to resident with respect to holdings in a demat account.

Investments in Different Schemes by the Same Mutual Fund

Investments in different schemes of the same mutual fund can be held in either the same folio or a different folio depending on the mutual fund policy.

Dematerialization of Securities

A request for dematerialization of securities may be rejected if securities are not dematerialized within the period specified by SEBI or the Dematerialization request is not accompanied by R&T verification of signature.

Loan Against Mutual Fund Holdings

To obtain a loan against mutual fund holdings, the investor can mark lien on the entire holdings, irrespective of the portion required.

Indicators of Indebtedness

Leverage Ratio is an indication of indebtedness.

Current Cost to Future Cost

Current cost is translated into a cost in the future using the formula: P X (1 + i)n, where P is the present value, i is the interest rate, and n is the number of periods.

Net Take Home Salary

Mr. P's net take home salary is Rs 35,000 (Rs 50,000 - Rs 5,000 - Rs 5,000 - Rs 4,000 - Rs 1,000).

Monthly Surplus

Mr. P's monthly surplus is Rs 5,000 (Rs 35,000 - Rs 7,000 - Rs 11,000 - Rs 15,000).

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz covers essential concepts related to public issues of shares, leveraged investments in IPOs, and factors affecting stock liquidity. It also explores metrics important for conservative investors, such as PEG ratios and dividend yields, along with the influence of interest rates on investments. Test your knowledge of these critical investment topics!