Module 11 · Exercises

Warm-up

E11.01 Write the funnel's stages with their time budgets and gate questions.

E11.02 List six idea sources and the kind of mispricing each targets.

E11.03 Define: variant perception; thesis-breaker; pre-mortem; say-do ratio; circle of competence.

E11.04 State the Kelly formula for a binary bet and the continuous approximation; state the max-loss rule.

E11.05 List the four legitimate reasons to sell and three illegitimate ones.

E11.06 State the current STCG and LTCG rates on listed equity, the exemption threshold, and how F&O income is taxed.

E11.07 Name six biases and the process antidote for each.

Core

E11.08 Write a Screener query for "consistent compounders" (10-year sales and profit growth, average ROCE, low leverage) and one for "improving cheap stocks" (P/B, Piotroski proxies); list two traps for each.

E11.09 Run a 30-minute kill test on Kaveri using only the running-example pages; write the one-page sheet and the verdict.

E11.10 Write Kaveri's triage note in eight bullets: unit economics, industry position, say-do, first reverse DCF, variant perception, refutation evidence.

E11.11 Rewrite the Kaveri memo's header, variant perception and three thesis bullets from the bull side, as strongly as the evidence allows.

E11.12 Write four thesis-breakers for a long position in Nirmal Finance at ₹402, each observable and dated.

E11.13 Compute Kelly (numerically) for the reference scenario tree from ₹260, then with a 12% chance of −80%, and the max-loss size at a 2.5% budget; apply the "lower of" rule and the Amber overlay.

E11.14 A ₹1.5 Cr portfolio wants 5% in a stock with ₹2 Cr delivery ADV. Compute the position as a multiple of ADV and days to exit at 20% participation, in normal and halved-liquidity conditions.

E11.15 Ten positions of 35% vol with pairwise correlation 0.5: compute portfolio vol; then with 25 positions; then with 10 positions at correlation 0.8. What does the third case represent?

E11.16 Design the quarterly review for Kaveri after Q2 FY27 with these results: revenue +9%, EBITDA margin 13.2%, H1 receivable days 101, pledge unchanged, ECL raised to ₹9 Cr. Fill each section and decide the action for a 4% position bought at ₹260.

E11.17 Compute tax on: LTCG ₹6 lakh and STCG ₹1.5 lakh in one year; then with a ₹2 lakh short-term loss harvested.

E11.18 A holding is up 90% in 10 months; the bull case is 8% above the price; it is 11% of the portfolio. Apply the re-underwriting test and the tax consideration; decide.

E11.19 Your journal shows 12 decisions at 75% confidence, of which 6 came true. Compute the calibration gap and prescribe two changes.

E11.20 For a stock with an ATM straddle at 7% of spot into results, an expected in-line print, and historical ±3% reactions, design (a) the trade if long, (b) if flat, and state the Indian F&O constraint that could stop you.

E11.21 You are long a 1.4-beta small cap at 5% and short Nifty futures against it. Compute the hedge notional and list what the hedge does not remove.

E11.22 Compare a cash-secured put at ₹260 with a limit order at ₹260 for Kaveri (if it were F&O-eligible): what does the put pay you, and what does it commit you to that the limit order does not?

Stretch

E11.23 Build a portfolio pre-mortem for a ten-name Indian small-cap book ("2028: −40% vs Nifty −15% — how?") and name the shared thesis variables you would cap.

E11.24 Write the decision-journal entry for a hypothetical purchase of Kaveri at ₹255 in March 2027 after receivable days print at 82.

E11.25 Argue whether a fundamental investor should ever use full Kelly; give the strongest case for each side.

Real-world task

E11.26 Run a screen and an event scan this week; queue ten ideas with sources; kill-test five; triage one; record everything in the casebook queue and kill log.

E11.27 Write a one-page memo on a real company you have researched through Modules 03–09, size it with the rules, and file the decision-journal entry (even if the decision is "watch").

E11.28 Compute your own year's capital-gains tax position from your broker's statement and identify any harvesting opportunities before 31 March.