June 2015 - Paper 2

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3. June 2015
4. Paper 2

16:  

State the price of the share for the year t, if the rate of growth of the firm is 10%, EPS and DPS for the year t + 1, are र3 and र 2 respectively and the investors' required rate of return is 20%.

A.	र 30
B.	र 20
C.	र 25
D.	र10
	Answer Report Discuss
	Option: C Explanation : Click on Discuss to view users comments. Write your comments here: Updating your Comments.. Updating your Comments..

17:  

In which of the following appraisal criteria of ca'pital btidgehng, the use of varyi~g

opportunity cost of capital as a discount factor is possible?

 

(a) NPV    (b) IRR        (c) Pay-back Period     (d) ARR

A.	Only (a) is correct.
B.	(a) and (b) both are correct
C.	(b) and (d) both are correct
D.	Only (c) is correct.
	Answer Report Discuss
	Option: A Explanation : Click on Discuss to view users comments. Write your comments here: Updating your Comments.. Updating your Comments..

18:  

According to the CAPM model, the cost of eqiIity is represented by :

Where R_m indicate market rate of return, R_f idicates risk free rate of return and β_j ,indicates

beta of stock J

A.	Rm + (Rm - Rf) βj
B.	Rf + (Rm - Rf) βj
C.	βj + (Rm - Rf) Rm
D.	Rm+Rf +βj
	Answer Report Discuss
	Option: B Explanation : Click on Discuss to view users comments. Write your comments here: Updating your Comments.. Updating your Comments..

19:  

Anticipated annual dividend clivided by the market price of  the stock is referred is

A.	Dividend Pay-out
B.	Dividend yield
C.	Return on Equity
D.	Regular dividend
	Answer Report Discuss
	Option: B Explanation : Click on Discuss to view users comments. Write your comments here: Updating your Comments.. Updating your Comments..

20:  

If the existing shareholder does not exercise his/her rightot does not sell the right

entitlemen

A.	his/her wealth will remain unaffected
B.	his/her wealth will increase
C.	his/her wealth will decrease
D.	his/her wealth may increase or decrease
	Answer Report Discuss
	Option: C Explanation : Click on Discuss to view users comments. Write your comments here: Updating your Comments.. Updating your Comments..

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