CA Final SFM Tax Test: 50 Marks Time: 1 hour 30 minutes Q1. Write a short note on Green Shoe Option [5 mrks] Q2. Pragya Limited has issued 75,000 equity shares of Rs. 10 each. The current market price per share is Rs. 24. The company has a plan to make a right issue of 1 new equity share at a price of Rs. 16 for every four shares held You are required to: 1. Calculate the theoretical post rights price per share 2. Calculate the theoretical value of the right alone 3. Show the effect of the rights issue on the wealth of the share holder, who has 1000 shares assuming he sells the entire rights; and 4. Show the effect, if the same shareholder does not take any action and ignores the issue.[8 marks] Q3. M/s Afga Industries is planning to issue a debenture series on the following terms: Face Value Rs. 100 Term of Maturity 10 years Yearly Coupon Rate Year Rate 1-4 9% 5-8 10% 9-10 14% The current market rate on similar debentures id 15% p.a. The company proposes to price the issue in such a way that it can yield 16% compounded rate of return to the investors. The company also proposes to redeem the debentures at 5% premium on maturity. Determine the issue price of the debentures. [5 marks] Q4. Write a short note on Credit Rating [5 Marks] Q5. A Ltd. has a total sales of 3.2 crores and its collection period is 90 days. The past experience indicates that the bad debt losses are 1.5% on sales. The expenditure incurred by the firm in administering its receivable collection efforts is Rs. 500000. A factor is ready to buy the firm’s receivables by charging 2% commission. The factor will pay advance on receivables to the firm at an interest rate of 18% pa. after withholding 10% as reserve. Calculate the effective cost of factoring to the firm [6 Marks] Q6. Short note on Net Asset Value of a Mutual Fund Scheme [5 Marks] Q7. A Mutual Fund that had a Net Asset Value of Rs 20 at the beginning of the month made income and capital gain distribution of Re.0.0375 and Re.0.03 per share respectively during the month and then ended the month with a Net Asset Value of Rs.20.06. Calculate the monthly return. [4 Marks] Q8. Short note on inter bank participation certificate. [5 marks]

Or Write a note on Exposure netting. [5 Marks] Q9. On January 28, 2010 an importer customer requested a bank to remit SGD 25,00,000 under an irrevocable letter of credit. However due to bank strikes, the bank could effect the remittance only on February 4, 2010. The interbank market rate were as follows: January 28 February 4 Bombay USD1 Rs 45.85/45.90 Rs 45.91/45.97 London Pound 1 USD 1.7840/1.7850 USD 1.7765/1.7775 Pound 1 SGD 3.1575/3.1590 SGD 3.1380/3.1390 The bank wishes to retain an exchange margin of 0.125%. How much does the customer stand to gain or lose due to the delay? (Calculate rate in multiples of 0.0001) [7 Marks]