NMIMS Semester 3 December 2024 Finance Assignments Capital market and portfolio management Q1. Suppose you are advising a friend who is unsure about investing. What key factors would you explain to them to help them make a more informed decision? Q2. Suppose you had to create a visual representation of stock return distributions. What features would you include to effectively illustrate the characteristics of both types of stock return distribution and their impact on understanding stock performance? Q3a. ABC Ltd earned a net income= ₹4,00,000/- at the end of the year 31st March 2020. Shareholder’s equity on 31st March 2019 = ₹16,00,000/- & on 31st March 2020 = ₹15,00,000/- Calculate ROE for the year ended 31st March 2020. b. Imagine you are an investment adviser and your client decides to invest Rs.10,000/- in multiple investment avenues. He decides to invest 40% in mutual fund and rest in shares. Expected return from mutual fund is 8% & from shares is 12%. Calculate total expected return for your client. . Strategic cost management 1. A leading business school is planning to launch a new post-graduate course in Data Science and Analytics. The course is designed to cater to the growing demand for skilled professionals in this field. The school’s administration is tasked with determining the optimal pricing strategy for the course. The school has conducted market research to understand the demand for the course and the pricing sensitivity of potential students. The research indicates that there is a strong demand for the course, and students are willing to pay a premium for a high-quality education from a reputable institution. However, students are also price-conscious, and the school needs to balance the demand for the course with the need to generate revenue. The school’s administration is considering two pricing methods: cost-plus pricing and break-even pricing. Explain the advantages and disadvantages of cost-plus pricing and break-even pricing in the context of this situation. 2. The management of a retail company, “The Retail Haven,” carries a notion that it has been experiencing declining profits despite a steady increase in sales. The company’s management is concerned about the company’s financial health and has tasked you with conducting a ratio analysis to identify potential areas of concern Particulars Year 1 Year 2 Sale ₹1,00,000 ₹1,20,000 Cost of Goods Sold ₹70,000 ₹80,000 Gross Profit ₹30,000 ₹40,000 Operating Expenses ₹20,000 ₹25,000 Operating Income ₹10,000 ₹15,000 Interest Expense ₹2,000 ₹2,500 Net Income ₹8,000 ₹12,500 Total Assets ₹50,000 ₹60,000 Total Liabilities ₹20,000 ₹25,000 Shareholders’ Equity ₹30,000 ₹35,000 a) You’re required to calculate the following financial ratios for both years: Gross Profit Margin Ratio Net Profit Margin Ratio Return on Assets Ratio (ignore taking average for balance sheet number) Return on Equity Ratio (ignore taking average for balance sheet number) b) Analyze the trends in these ratios and comment if the management is correct. 3. August Ltd. is a medium-sized enterprise operating in the consumer electronics industry. The company has been in business for several years and has a reputation for producing high-quality products. However, the company has been facing increasing competition from both domestic and international rivals. To maintain its market position and drive growth, the company is considering launching a new product. The new product is a cutting-edge gadget that is expected to appeal to a wide range of consumers. The company believes that the product has the potential to become a major success and significantly boost its revenue and profitability. However, before launching the product, the company needs to conduct a thorough analysis to assess its financial viability and potential risks. It is considering launching a new product. The estimated fixed costs for the product are ₹1,000,000 per year, and the variable cost per unit is ₹50. The expected selling price per unit is ₹100. a) Calculate the break-even point in units and in rupees for the new product. If the company expects to sell 20,000 units of the product per year, what will be its profit or loss? b) Calculate the margin of safety in units and in rupees for the new product, assuming expected sales of 20,000 units per year. What does the margin of safety indicate about the product’s profitability? Marketing of financial services Q1. A Finance Head (CFO) of Finance Company is deeply analyzing the criticalities of outside Market environment from Customer point of view. While analyzing Consumer Choices for Financial Services, how CFO & his team can demarcate the ‘Non- Controllable’ Consumer Choices in rendering of Financial Services? Kindly elaborate. Q2. A 60-year-old senior citizen, recently retired from a GM position at an MNC, has received a substantial retirement corpus. Seeking to ensure a comfortable and secure post- retirement life, he approaches an investment planning firm for guidance. What guidelines should the Firm’s Investment Advisor follow in developing a retirement plan for this individual? Q3. a) In case if a NBFC is being set up at Town place and planning to render core financial services to young & mid age Crowd (50% population) what they can enlist as most Distinct Characteristics of Financial Services? Elaborate any 4 to 5 Distinct Financial Services. Q3. b) How a Bank Manager foresee their Customers Important Choices while availing different types of Banking Services? Explain Paradigm as Internal Factors. Taxation- Direct and Indirect Q.1. You are required to compute the taxable income for Mr. Sharan for the Assessment Year 2023-24 from the information provided below: Basic salary – Rs. 20,000 per month Bonus – Rs. 30,000 Cash gift – Rs. 40,000 Arrears of salary – Rs. 10,000 Dearness allowance – Rs. 8,000 per month Insurance premium paid by Employer – Rs. 20,000 per annum Medical expenses paid by employer – Rs. 18,000 Education allowance for his two children – Rs. 600 per month City compensatory allowance – Rs. 2,000 per month He is given lunch allowance – Rs. 100 per day for 250 days during the previous year. He contributes 15% of his salary to a recognized provident fund