Question
No: 21 ( Marks: 1 ) - Please choose one
The value of a bond is directly
derived from which of the following?
► Cash
flows
► Coupon
receipts
► Par
recovery at maturity
► All
of the given options (P # 67)
Question
No: 22 ( Marks: 1 ) - Please choose one
When the bond approaches its maturity,
the market value of the bond approaches to which of the following?
► Intrinsic
value
► Book
value
► Par
value (P # 68)
► Historic
cost
Question
No: 23 ( Marks: 1 ) - Please choose one
What is yield to maturity on a bond?
► It
is below the coupon rate when the bond sells at a discount, and equal to the
coupon rate when the bond sells at a premium
► The
discount rate that will set the present value of the payments equal to the bond
price
► It
is based on the assumption that any payments received are reinvested at the
coupon rate
► None
of the given options
Question
No: 24 ( Marks: 1 ) - Please choose one
Consider a 5-year bond with a 10%
coupon that has a present yield to maturity of 8%. If interest rates
remain constant, one year from now, what will be the price of this bond?
► Higher
► Lower
► The
same
► Rs.
1,000
Question
No: 25 ( Marks: 1 ) - Please choose one
If all things equal, when
diversification is most effective?
► Securities' returns are positively correlated
► Securities'
returns are uncorrelated
► Securities'
returns are high
► Securities'
returns are negatively correlated
Question
No: 26 ( Marks: 1 ) - Please choose one
Which of the following value of the
shares changes with investor’s perception about the company’s future and supply
and demand situation?
► Par
value
► Market value (P # 74)
► Intrinsic
value
► Face
value
Question
No: 27 ( Marks: 1 ) - Please choose one
Which of the following has NO effect
when the financial health (cash flows and income) of the company changes with
time?
► Market
value
► Price
of the share
► Par value
(Market
Value of the Bond changes (even though it’s Par Value is fixed)
–P # 64
► None
of the given options
Question
No: 28 ( Marks: 1 ) - Please choose one
The value of dividend is derived from
which of the following?
► Cash
flow streams
► Capital
gain /loss
► Difference
between buying & selling price
► All of the given options
(The Dividend Value derived from
Dividend Cash Stream and Capital Gain /Loss from Difference between Buying
& Selling Price. – P # 76)
Question
No: 29 ( Marks: 1 ) - Please choose one
You wish to earn a return of 13% on
each of two stocks, X and Y. Stock X is expected to pay a dividend of Rs.
3 in the upcoming year while Stock Y is expected to pay a dividend of Rs. 4 in
the upcoming year. The expected growth rate of dividends for both stocks
is 7%. The intrinsic value of stock X:
► Will
be greater than the intrinsic value of stock Y
► Will
be the same as the intrinsic value of stock Y
► Will be less than the intrinsic value of stock
Y (PV=DIV 1/r PE, 3/.13 & 4/.13 –- P # 76)
► Cannot
be calculated without knowing the market rate of return
Question
No: 30 ( Marks: 1 ) - Please choose one
Total portfolio risk is
__________.
► Equal to systematic risk plus
non-diversifiable risk
► Equal to avoidable risk plus diversifiable
risk
► Equal
to systematic risk plus unavoidable risk
► Equal
to systematic risk plus diversifiable risk (P # 91)
Question
No: 31 ( Marks: 1 ) - Please choose one
The wider the range of possible
outcomes i.e.________.
► The greater the variability in potential Returns that
can occur, the greater the Risk (P # 86)
► The
greater the variability in potential Returns that can occur, the lesser the
Risk
►The
greater the variability in potential Returns that can occur, the level of risk
remain constant
► None
of the given options
Question
No: 32 ( Marks: 1 ) - Please choose one
Which of the following is simply the
weighted average of the possible returns, with the weights being the
probabilities of occurrence?
► A
probability distribution
► The expected return (P # 92)
► The
standard deviation
► Coefficient
of variation
Question
No: 33 ( Marks: 1 ) - Please choose one
Which of the following statements
regarding covariance is CORRECT?
► Covariance always lies in the range -1 to +1
► Covariance,
because it involves a squared value, must always be a positive number (or zero)
► Low
covariances among returns for different securities leads to high portfolio risk
► Covariances
can take on positive, negative, or zero values
Question
No: 34 ( Marks: 1 ) - Please choose one
Which of the following is NOT a
major cause of systematic risk.
► A worldwide recession
► A
world war
► World
energy supply
► Company
management change
Question
No: 35 ( Marks: 1 ) - Please choose one
Finance consists of three interrelated
areas:
► Money
and capital market
► Investment
► Financial
management
► All of
the given options (P # 1)
Question
No: 36 ( Marks: 1 ) - Please choose one
Mutually exclusive means that you can
invest in _________ project(s) and having chosen ______ you cannot choose
another.
► One;
one (P # 47)
► Two;
two
► Two;
one
► Three;
one
Question
No: 37 ( Marks: 1 ) - Please choose one
At the termination of the project we
need to take into account:
► Salvage
value (P # 51)
► Book
value
► Intrinsic
value
► Fair
value
Question
No: 38 ( Marks: 1 ) - Please choose one
In which of the following approach you
need to bring all the projects to the same length in time?
► MIRR
approach
► Going
concern approach
► Common
life approach (P # 56)
► Equivalent
annual approach
Question
No: 39 ( Marks: 1 ) - Please choose one
Assume a company had Rs.1 billion
in free cash flow last year, and it is expected to grow that cash flow at 3%
into perpetuity. Assuming a 9% cost of equity, what is the present value of the
company?
► Rs.12.08
billion
► Rs.18.15 billion
► Rs.14.16 billion
► Rs.16.67 billion
Question
No: 40 ( Marks: 1 ) - Please choose one
What is the most important criteria in
capital budgeting?
► Profitability
index
► Net
present value (P # 45)
► Pay
back period
► Return
on investmen
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