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Solved Paper : September 2025 (Suggested Answers)
Solved Paper : January 2026 (Suggested Answers)
CHAPTER
SECURITY ANALYSIS
PART 1 THEORY
Q.1 The closing value of Sensex for the month of October, 2007 is given below:
You are required to test the weak form of ef cient market hypothesis by applying the run test at 5% and 10% level of signi cance. Following value can be used
Value of t at 5% is 2.101 at 18 degrees of freedom.
Value of t at 10% is 1.734 at 18 degrees of freedom.
Value of t at 5% is 2.086 at 20 degrees of freedom.
Value of t at 10% is 1.725 at 20 degrees of freedom.
[Nov. 2008] [8 Marks]
Ans.:
SECURITY ANALYSIS
+
Total of sign of price changes (r) = 08
No. of Positive changes = n1 = 11
No. of Negative changes = n2 = 08
rµ = 12 12 2nn nn + + 1
µ = 2118 118 ×× + + 1
= 176/19 + 1 = 10.26
^ rσ = ( ) ( ) 121212 2 1212 2(2 ) 1 nnnnnn nnnn++−
^ rσ = ( ) ( ) ××××−− ++− 2 2118(2118118) 118(1181)
= ( ) 2 176157 4.252 19(18) × = = 2.06
Since too few runs in the case would indicate that the movement of prices is not random. We employ a two-tailed test for the randomness of prices.
Test at 5% level of signi cance at t.05 using t - table at 18 degrees of freedom. The lower limit.
= ^ r tx µ−σ
= 10.26 - 2.101 × 2.06 = 5.932
Upper limit
= µ + t × ^ rσ = 10.26 + 2.101 × 2.06 = 14.588
At 10% level of signi cance at 18 degrees of freedom
Lower limit
= 10.26 - 1.734 × 2.06 = 6.688
Upper limit = 10.26 + 1.734 × 2.06 = 13.832
As seen, the value of r lies between these limits. Hence, the market exhibits weak form of ef ciency.
Q.2 Closing values of BSE Sensex from 6th to 17th day of the month of January of the year 200X were as follows:
Calculate Exponential Moving Average (EMA) of Sensex during the above period. The 30 days simple moving average of Sensex can be assumed as 15,000. The value of exponent for 30 days EMA is 0.062. Give detailed analysis on the basis of your calculations.
[May 2018] [Nov. 2009] [6 Marks] Ans.:
Conclusion: The market is bullish. The market is likely to remain bullish for short-term to medium term. On the basis of this indicator (EMA), the investors/ brokers can take long position.
SECURITY ANALYSIS
Q.3 Mention the various techniques used in economic analysis. [May 2011] [4 Marks]
Ans.: While making investment decisions, two approaches can be used. The first is the fundamental Analysis and the second is the technical analysis. In fundamental analysis the intrinsic value of the equity stock is determined by making a forecast of earnings and dividends of stock and discounting them at an appropriate rate considering the risk. One of the key variables that an investor must monitor in order to carry out fundamental analysis is Economic analysis.
Techniques used in Economic analysis :
Some of the techniques used for economic analysis are:
(
a) Anticipatory Surveys : They help investors to form an opinion about the future state of the economy. It incorporates expert opinion on construction activities, expenditure on plant and machinery, levels of inventoryall having a definite bearing on economic activities. The future spending habits of consumers are taken into account.
(
b) Barometer/Indicator Approach : Various indicators are used to find out how the economy shall perform in the future. The indicators have been classified as under:
(i) Leading Indicators: They lead the economic activity in terms of their outcome. They relate to the time series data of the variables that reach high/low points in advance of economic activity.
(ii) Roughly Coincidental Indicators : They reach their peaks and troughs at approximately the same time in economy.
(iii) Lagging Indicators: They are time series data of variables that lag behind in their consequences vis-à-vis economy. They reach their turning points after the economy has reached its own already.
(c) Economic Model Building Approach: The steps used are as follows:
(i) Hypothesize total economic demand by measuring total income (GNP) based on political stability, rate of inflation, changes in economic levels.
(ii) Forecasting the GNP by estimating levels of various components viz. consumption expenditure, gross private domestic investment, government purchases of goods/services, net exports, etc.
(iii) After forecasting individual components of GNP, add them up, to obtain the forecasted GNP.
(iv) Comparison is made of total GNP thus arrived at with that from an independent agency for the forecast of GNP and then the overall forecast is tested for consistency. This is carried out for ensuring that both the total forecast and the component wise forecast fit together in a reasonable manner.
Q.4 Closing Values of BSE Sensex from 6th to 17th day of the month of January of the year 20xx were as follows :
Calculate Exponential Moving Average (EMA) of Sensex during the above period. The 30 days simple moving average of Sensex can be assumed as 35,000. The value of exponent for 30 days EMA is 0.064.
Provide analyzed conclusion on the basis of your calculations. (Calculations should be up to three decimal points.) [Nov. 2019] [8 Marks]
Ans.: 1 2 3
Conclusion: The market is bullish. The market is likely to remain bullish for short-term to medium term. On the basis of this indicator (EMA), the investors/ brokers can take long position.
Q.5 Mr. X is of the opinion that market has recently shown the Weak Form of Market Ef ciency. In order to test the validity of his impression he has collected the following data relating to the movement of the SENSEX for the last 20 days.
You are required:
To test the Weak Form of Market Ef ciency using Auto-Correlation test, taking time lag of 10 days. [Jan.
Ans.
= 0.624 a = Y -b X = 7.56 - 0.624 (-21.66) = 21.08
r = 0.405
There is moderate degree of correlation between the returns of two periods hence it can be concluded that the market does not show the weak form of ef ciency.
Q.6 Describe briefly on which principles Technical Analysis is based. [Dec. 2021] [4 Marks]
Ans. : Technical Analysis is a method of share price movements based on a study of price graphs or charts on the assumption that share price trends are repetitive, that since investor psychology follows a certain pattern, what is seen to have happened before is likely to be repeated.
4.8
SECURITY ANALYSIS
Technical analysis is based on the following three principals:
(i) The market discounts everything
(ii) Price moves in trends
Technical analysis considers price movements and ignores fundamental factors.
So, technical analysts generally have the view that a company’s share price includes everything including the fundamentals of a company.
Technical analysts believe that prices move in trends.
In other words, a stock price is more likely to continue a past trend than move in a different direction.
(iii) History tends to repeat itself
Technical analysts believe that history tends to repeat itself.
Technical analysis uses chart patterns to analyze subsequent market movements to understand tends.
Q.7 Closing Values of NIFTY Index from 3rd to 12th day of the month of January 2022 were as follows:
Days Date Closing Values of NIFTY Index
1 03/01/2022 17626
2 04/01/2022 17805
3 05/01/2022 17925
4 06/01/2022 17746
5 07/01/2022 17813
6 10/01/2022 18003
7 11/01/2022 18056
8 12/01/2022 18212
The simple moving average of NIFTY Index for the month of December 2021 was 17174.
You are required to calculate :
(i) The value of exponent for 15 days EMA.
(ii) The Exponential Moving Average (EMA) of NIFTY during the above period. (Calculations to be done up to 2 decimals only).
(iii) Analyse the buy & sell signal on the basis of your calculations [May 2022][8 Marks]
Ans.: Part (i) Calculation of EMA
EMA = 2 No.ofdays1 + = 2 151 + = 0.125
Part (ii) 1 2 3 4 5 6
Part (iii) Conclusion : The market is bullish. The market is likely to remain bullish for short term to medium term. On the basis of this indicator (EMA), the investors/brokers can take long position.
Q.8 In a rational, well ordered and efficient market, technical analysis may not work very well”. Is it true? List out the reasons for this statement regarding Technical Analysis. [Nov. 2023] [4 Marks]
Ans.: The reasons for the statement “In a rational, well ordered and efficient market, technical analysis may not work very well” are as follows:
(i) Most technical analysts are not able to offer a convincing explanation for the tools employed by them.
(ii) Empirical evidence in support of random walk hypothesis cast its shadow over the usefulness of technical analysis.
(iii) By the time an uptrend and down trend may have been signalled by technical analysis it may already have taken place.
(iv) Ultimately technical analysis must be a self-defeating proposition. With more and more people employing it, the value of such analysis tends to decline.
Q.9 The Closing values of NSE Nifty from 2nd January, 2024 to 11th January, 2024 were as follows:
You are required to:
(i) Calculate Exponential Moving Average (EMA) of Nifty during the above period. The previous day exponential moving average of Nifty can be assumed as 21,500. The value of exponent for 31 days EMA is 0.062.
(ii) Give brief analysis on the basis of your calculations. [May 2024] [6 Marks]
Ans.: Computation of EMA
Conclusion: The market is bearish. The market is likely to remain bearish for short-term to medium term. On the basis of this indicator (EMA), the investors/ brokers can take short position.
ADVANCED FINANCIAL MANAGEMENT (AFM) | CRACKER
AUTHOR : K.M. Bansal, Anjali Agarwal
PUBLISHER : Taxmann
DATE OF PUBLICATION : February 2026
EDITION : 13th Edition
ISBN NO : 9789375612162
NO. OF PAGES : 588
BINDING TYPE : Paperback
DESCRIPTION
Advanced Financial Management – CRACKER (Previous Exams Solved Papers) is a focused, exam-intelligence resource for CA Final – Group I | Paper 2, designed to decode ICAI's assessment patterns in AFM and convert them into a marks-optimised preparation strategy. Built on quantified exam analytics rather than mere question reproduction, the book analyses chapter-wise mark allocation, recurring valuation and risk-management themes, and the balance between practical computation and theory-based application. It integrates chapter-wise mark distribution, multi-attempt trend analysis, ICAI Study Material mapping, and fully solved papers up to January 2026, enabling targeted, outcome-driven preparation for the May/September 2026 examinations. The Present Publication is the 13th Edition, authored by CA. (Dr) K.M. Bansal & CA. Anjali Agarwal, with the following noteworthy features:
• [Solved Past Examination Papers up to Jan. 2026] Fully solved ICAI papers from Nov. 2024, May 2025, Sept. 2025, and Jan. 2026, aligned with ICAI's suggested-answer format
• [Chapter-wise Marks Distribution (Multi-Year)] Consolidated marks matrix (2024–2026) high lighting high-weight chapters such as Portfolio Management, Mutual Funds, Security Valuation, Derivatives, and Interest Rate Risk Management
• [Previous Exams Trend Analysis – Question Level] Detailed mapping of questions by chapter, marks, compulsory status, and practical/theory classification across attempts
• [Sub-topic Wise Question Arrangement] Past exam questions organised at the sub-topic level to mirror ICAI's testing approach and avoid fragmented revision
• [Chapter-wise Comparison with ICAI Study Material] Direct alignment with ICAI Study Material to ensure syllabus parity and exam relevance
• [Case Scenario Based MCQs – 30 Marks] Dedicated MCQ chapter reflecting ICAI's consistent case-based assessment pattern
• [Additional Solved Practice Questions] Extra questions to strengthen numerical accuracy, valuation logic, and exam readiness
