NISM V-C Case Studies — Practice Questions
Worked, numerical questions of the kind the exam's 2-mark section sets — CAGR, units bought and redeemed with loads, Sharpe ratios, capital gains, margin of safety and currency effects on international funds.
15 questions on Case Studies in the ScoreSetu bank — each with a detailed explanation and, where useful, a memory hook.
What this topic covers
- CAGR and returns arithmetic
- Units, NAV and loads
- Sharpe ratio comparisons
- Capital gains and currency effects
Free sample questions
1. The unit capital of scheme X is Rs 200 and the unit capital of scheme Y is Rs 100. Scheme X return is Rs 18 and the return of scheme Y is Rs 12. Scheme Y has borrowed funds of Rs 50 and the interest payable is 5%. Scheme X has no borrowed funds. Which scheme has higher return as a percentage of unit capital ?
- A. Scheme X
- B. Scheme Y ✅
- C. Both are giving equal returns
- D. Insufficient data
Answer: B — Scheme Y
Why: Return of Scheme X Scheme X has given Rs 18 on a unit capital of Rs 200 which equals to 9% ( 18 / 200 x 100 ) Return of Scheme Y Scheme Y has given Rs 12. The interest cost on borrowed funds is 5% of Rs 50 = Rs 2.5 So the net return is 12 - 2.5 = Rs 9.5 So the return of scheme Y is Rs 9.5 on a unit capital of Rs 100 which equals to 9.5 % ( 9.5 / 100 x 100 ) Thus the return as a percentage of unit capital is higher for scheme Y (9.5%) than scheme X (9%)
💡 Deduct borrowing interest before % return: Y=(12-2.5)/100=9.5% beats X=18/200=9%.
2. Over 18 months, the growth option of a scheme has gone up from Rs 10 to Rs 16. How much is the CAGR?
- A. 60%
- B. 40%
- C. [(16 ÷ 10)^(18÷12)] -1
- D. [(16 ÷ 10)^(12÷18)] -1 ✅
Answer: D — [(16 ÷ 10)^(12÷18)] -1
Why: Compounded annual growth(CAGR) in wealth during the period is calculated, using the compound interest formula viz. (Closing Wealth ÷ Opening Wealth) ^(1/n) – 1, where ‘n’ is the time period in years. (^ means 'raise to') In the above question, the period is 18 months = 18/12. But since its 1 / (18/12) it becomes 12/18.
💡 Formula: CAGR = (Close/Open)^(1/n) - 1, n in YEARS -> 18 months means exponent 12/18.
3. An Indian fund invested USD 15mn in a foreign fund, when the exchange rate was Rs 46.67 = 1 USD. Over a period of time, the portfolio appreciated to USD 18mn, when the exchange rate was Rs 45 = 1 USD. What is the rupee portfolio return?
- A. 13.47%
- B. 15.71% ✅
- C. -6.54%
- D. 17.39%
Answer: B — 15.71%
Why: Investment of Indian fund in Rupees = 15 mn x 46.67 = Rs 700 mn Portfolio value after a period in Rupees = 18 mn x 45 = Rs 810 mn Potfolio Profit = 810 - 700 = Rs 110 mn Percentage return = 110 / 700 x 100 = 15.71%
💡 Rupee return: convert USD at each FX -> (18mn x 45 - 15mn x 46.67) / (15mn x 46.67) = 15.71%.
Practise all 15 Case Studies questions
Plus the full 340-question NISM V-C bank and real-feel mock exams.