Classical

June 2015 - 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 3 and  2 respectively and the investors' required rate of return is 20%.
A.

र 30

B.

र 20

C.

र 25

D.

10

 
 

Option: C

Explanation :


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.

 
 

Option: A

Explanation :


18:  

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

Where Rm indicate market rate of return, Rf idicates risk free rate of return and βj ,indicates
beta of stock J
A.

Rm + (Rm - Rf) βj

B.

Rf + (Rm - Rf) βj

C.

βj + (Rm - Rf) Rm

D.

Rm+Rfj

 
 

Option: B

Explanation :


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

 
 

Option: B

Explanation :


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

 
 

Option: C

Explanation :




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