Section A (1 Mark)
______________ is a manifestation of mental accounting that can cause people to take on more risk as their wealth increases.

Section B (2 Mark)
Ram born in 1950 has a life expectancy at birth of 65 years. Sita his wife born in 1955 has a life expectancy at birth of 70 years. Assuming that the life expectancies have not changed. Ram is planning to buy an annuity to be paid to him or his wife till anyone of them is alive. Assuming Ram will retire on attaining age 58 i.e. in
2008, what should be the time period of the annuity?

Section C (4 Mark)
An investor Mr. Dayal, executes a Long Strangle by buying a Rs. 4300 Nifty Put for a premium of Rs. 23 and a Rs 4700Nifty Call for Rs 43. The Nifty is at 4500 The Net Payoff of Long Strangle
* If Nifty closes at 4100
* If Nifty closes at 5300

Section B (2 Mark)
In 2011-12, an individual receives a net dividend of £648. The equivalent gross income is:

Section C (4 Mark)
The probability distribution of the rate of return on ABC stock is given below:

What is the standard deviation of return?