Banking and Financial Service (AMCAT)

The unit capital of close-ended funds is fixed and they sell a specific number of units. Unlike in open-ended funds, investors cannot buy the units of a close-ended fund after its NFO period is over.

Equity warrant is an instrument that gives the holder the right to purchase equity shares in a company at a fixed price in future. 

Beta measures systematic risk (or market risk). It is used to calculate cost of EQUITY capital, not debt fund.

Since the account is opened after 10^th March, no interest will be credited for this month and also account is closed in November. Hence, no interest will be credited for this month either.
Hence, number of months = April to October = 7 months

Number of shares = Sum invested/Market value of the share = Rs. 24,000/Rs. 48
= 500
Income = Face value of the share x Number of shares x Rate of dividend = Rs. 60 x 500 x (10/100) = Rs. 3000

Interest accumulated on recurring deposit account = [P n (n + 1) r] / [2 x 12 x 100], where monthly installment, P = Rs. 250, number of months, n = 11, rate of interest, r = 9%
Interest accumulated after 11 months but calculated at the end of every month
= [250 x 11 x 12 x 9] / [2 x 12 x 100] 
= Rs. 123.75

 The charge created in favour of the banker by the customer in case of movable goods handed over to the banker is called pledge.

Dividend is not paid on calls in advance.
Subscribed capital is total capital applied by the public.
Called up capital is capital called by the company but may or may not be paid by the shareholders.

Amount received on issue = Rs. 1,80,000
Amount on redemption = Rs. 2,10,000
Thus, loss = 2,10,000 - 1,80,000 = Rs. 30,000
Option (2) is incorrect because it is applicable if only loss on issue of Rs. 20,000 is considered and Rs. 10,000 premium on redemption is ignored.
Option (3) is incorrect because it is applicable only if loss Rs. 10,000 for premium on redemption is considered and Rs. 20,000 discount on issue is ignored.
Option (4) is incorrect because it is applicable if loss on issue of Rs. 20,000 and Rs. 10,000 premium on redemption are ignored.

 Balance of current a/c is a broader concept than the balance of trade. It includes balance of services and unilateral transfer.

All the earnings and expenditure by way of exports and imports, transfers like remittances and donations, etc. form part of the current account of BOP while foreign investments (direct and portfolio), commercial borrowings, NRI deposits, etc. form part of the capital account of BOP.

 In 1979, the RBI classified money stock in India in the following four categories:
M₁ = Currency with the public, i.e. coins and currency notes + demand deposits of the public known as narrow money
M₂ = M₁ + Post office saving deposits
M₃ = M₁ + Time deposits of the pubic with banks called broad money
M₄ = M₃ + Total post office deposits (excluding National Saving Certificates)

Input purchased = Rs. 50,000
Input tax paid = 8% of 50,000 = Rs. 4000
(Input tax credit available)
Sales = Rs. 100,000
Output tax = 20% of 1,00,000 = Rs. 20,000
Value added tax = Output tax - Input tax credit available = 20,000 - 4000 = Rs. 16,000

The ownership of mutual fund belongs to unit-holders.

A mutual fund unit-holder can sue trustees.

All of the above are applicable to the debt market in India.

If the value of total assets of a fund is 12000 and the fund has issued 900 units, then the NAV of the unit is 12000/900 = 13.33.

Since the similar type of bonds are offering more interest (11%), so a bond with a coupon of 9% will sell below par value.

Unmarried professionals would like to earn high profits and would be willing to take more risk. So, they choose the investment with higher profit-earnings ratio, i.e. 90% in high P/E ratio funds in the market.

Because bonds typically gain less than stocks, over time their costs become a heavier burden. Costs are the most important factor when evaluating bond funds.