An investment generates cash fows of Rs. 10,000 for next 7 years. What would be the et !resent "alue #!"$ if there is an initial investment of Rs. %0,000 and discount rate is 1&'(Rs. &,1&)Rs. *,)%+ Rs. ,,&)7$#+ Rs. *,-1&$Which of the given is treated as .nancial asset(/or0orate bond she1 correct 2r. aveed has bought 100 shares of a cor0oration one year ago at Rs. &, 0er share. 3ver the last year, he received a dividend of Rs. 1.*0 0er share. At the end of the year, the stoc4 sells for Rs. ,1. As 0er given information, what will be his total 0ercentage return (10.),&0.&0',*.1&'Which of the following is a s0ecial case of annuity, where the stream of cash fows!er0etuity she1 correct 5RR and !" rules always lead to identical decisions as long as6/ash fows are conventional she1 correct Which of the following .nancial statement shows both dollars and 0ercentages in the re0ort(/ommon78i1e 8tatement she1 correct 89 5nc. has net income of Rs. ,00,000. :ow much is 4e0t as retained earnings if the .rm has a dividend 0ayout ratio of %0'(Which of the following is the ex0ected rate of return on a bond if bought at its current mar4et 0rice and held to maturity:ow many years will it ta4e to 0ay o; a Rs. 11,000 loan with a Rs. 1,&%1.0< annual 0ayment and a *' interest rate(:ow much must be de0osited at 10' each of the next 1* years to have Rs. 1%&-7.)&(In which type of market, used securities are traded? Select correct option: !rimary mar4etSecondary market9ertiary mar4etone of the given o0tions Which of the following form of business organization is least regulated?Select correct option: Sole-proprietorship=eneral !artnershi0>imited !artnershi0/or0oration Which of the following refers to the diference between the sale price and cost of inentory?Select correct option: et loss!et worth2ar4u02ar4down Which of the following is measured by pro"t margin? Select correct option: #perating e$ciencyAsset use e?ciency@inancial 0olicyAividend 0olicy % business owned by a single person is known as:Select correct option: Sole-proprietorship=eneral 0artnershi0>imited 0artnershi0/or0oration!et Income after ta&ation difers from !et 'ash (low from operations because:Select correct option: Ae0reciation ex0ense is shown in the /ash @low 8tatement and not in the 5ncome 8tatement!on-cash items are included in the Income Statement, but not in the 'ash (low Statement/ash sales are shown in the /ash @low 8tatement but not in the 5ncome 8tatement/ash ex0enses are shown in the /ash @low 8tatement but not in the 5ncome 8tatement )he most common application of term *(inance+ inoles raising money to ac,uire---------. Select correct option: /urrent Asset@ixed Asset5ntangible Asset %ll of the gien options Which of the following is a series of constant cash /ows that occur at the end of each period for some "&ed number of periods?Select correct option: #rdinary annuityAnnuity due!er0etuityone of the given o0tions Which of the following e,uation is known as 'ash (low 0'(1 identity?Select correct option: /@ from Assets B /@ to /reditors + /@ to 8toc4holder/@ from Assets B /@ to 8toc4holders + /@ to /reditors/@ to 8toc4holders B /@ to /reditors C /@ from Assets'( from %ssets 2 '( to 'reditors 3 '( to Stockholder S!) 'orporation has policy of paying a 4s. 5 per share diidend eery year.If this policy is to continue inde"nitely, what will be the alue of a share ofstock at a 678 re,uired rate of return?Select correct option:Rs. ,04s. 9:Rs. *0Rs. )0Question # 1 of 10 ( Start time: 07:10:45 PM )Total Marks: 1The conflict of interest beteen stockhol!ers an! mana"ement is knon as:Select correct o#tion:$"enc% #roblem&nterest conflictMana"ement conflictAgency costQuestion # ' of 10 ( Start time: 07:1':1' PM )Total Marks: 1(hat ill be the real rate if the nominal rate is 14) an! the inflation rate is *)+Select correct o#tion: *,0') 7.55% 10,0) 14,-)Question # - of 10 ( Start time: 07:1':4. PM )Total Marks: 1The !ifference beteen current assets an! current liabilities is knon as:Select correct o#tion:Sur#lus $ssetShort/term 0atioWorking Capital 1urrent 0atioQuestion # 4 of 10 ( Start time: 07:14:1- PM )Total Marks: 12o man% %ears ill it take to #a% off a 0s, 113000 loan ith a 0s, 13'41,04 annual#a%ment an! a 5) interest rate+Select correct o#tion: * %ears 1' %ears '4 %ears 44 %earsQuestion # 5 of 10 ( Start time: 07:15:4- PM )Total Marks: 1S5T 1or#oration has #olic% of #a%in" a 0s, * #er share !i6i!en! e6er% %ear, &f this #olic% is to continue in!efinitel%3 hat ill be the 6alue of a share ofstock at a 15)re7uire! rate of return+Select correct o#tion: 0s, -0 Rs. 40 0s, 50 0s, *0Question # * of 10 ( Start time: 07:1*:10 PM )Total Marks: 1&n case of international business hich of the "i6en factor(s) must be consi!ere!+Select correct o#tion:0ole of forei"n e8chan"e9alance of #a%ments$ttitu!e of :o6ernmentsAll of the given options shez corredtQuestion # 7 of 10 ( Start time: 07:17:40 PM )Total Marks: 1(hich of the folloin" item(s) is(are) not inclu!e! hile calculatin" ;#eratin" 1ash 8#enses relate! to firm?s financin" of its assets$ll of the "i6en o#tionsQuestion # 4 of 10 ( Start time: 07:14:04 PM )Total Marks: 1S5T &nc, has net income of 0s, -003000, 2o much is ke#t as retaine! earnin"s if the firm has a !i6i!en! #a%out ratio of 40)+Select correct o#tion: 0s, -03000 Rs. 10!000 0s, 1403000 0s, '003000Question # . of 10 ( Start time: 07:1.:'5 PM )Total Marks: 1(hich of the folloin" cash flo acti6ities are re#orte! in the 1ash ower the ris4, higher the return'. Digher the risk, higher the return=. one of the aboveE. )his type of risk afects almost all types of assets.%. Systematic 4isk;. Ensystematic Ris4'. 9otal Ris4=. !ortfolio Ris4@'F G :H I 6: are based on the following data:Suppose you bought 6,7:: shares of a corporation at 4s. >7 each.%fter a year, you receied 4s. ?::: 04s. > per share1 in diidends. %tthe end of year the stock sells for 4s. ?: each. If you sell the stock atthe end of the year, your total cash in/ow will be 4s. 9H,::: 067::shares J ?: each 2 4s. 97::: C =iidend 2 ?:::1. H. %ccording to the gien data, the 'apital Kain will be:%. 10,*00;. E,7::'. 10,000=. 7,000L. %ccording to the gien data, the =iidend yield will be:%. iFuidity of the .rmD. >ong term cash fow of the .rm/. !ro.tability and long term health of the .rmA. Return on investment ,. 9he statement of cash fows hel0s users to assess and identify all of the following exce0t6A. 9he im0act of buying and selling .xed assets.D. 9he com0anyGs ability to 0ay debts, interest and dividends./. A com0anyGs need for external .nancing.A. 9he com0anyGs reliance on ca0ital leases.%. 8u00ose Hounas /or0oration has balance of merchandise of *000 units. 5t wants to sell &000 units at -0'of its cost on cash. What would be the a;ect of this transaction on the current ratio(A. @allD. Rise/. Remain unchangedA. one of the given o0tion*. 5f the interest rate is 1::7->::5 ended on Mune ?:, the cash cycle of 'lima& companywas67:days, anditspayableturnoer was7. What wastheoperatingcycleof thecompany during >::7->::5?a$ &,% daysb1 >>? daysc$ &%* daysd$ &,0 days5. Which of the following is the cheapest source of "nancing aailable to a "rm?a$ Dan4 loanb$ /ommercial 0a0ersc1 )rade creditd$ one of the given o0tions.E. Which of the following illustrates the use of a hedging 0or matching1 approach to "nancing?a$ 8hort7term assets .nanced with long7term liabilities.b1 .7 8D. 7&.* '5. % risk that in/uences a large number of assets is known as:S. 8ystematic Ris4(. 2ar4et Ris4K. on7diversi.ableRis4D. %ll of the gien optionsE. Which of the following risk can be eliminated by diersi"cation?S. 8ystematic Ris4(. Ansystematic 4iskK. A U DD. one of the given o0tionsH. Suppose the initial inestment for a proBect is 4s. 65:,::: and the cash/ows are 4s. 9:,::: in the "rst year and 4s. L:,::: in the second and 4s. 7:,::: in the third. )he proBect will hae a payback period of: S. >.5 Tears(. ,.1 HearsK. ,.) HearsD. %.1 HearsL. % model which makes an assumption about the future growth of diidends is known as:S. Aividend !rice 2odelI. =iidend Krowth @odel(. Aividend !olicy 2odelK. All of the given o0tions6:. Which of the following is not a ,uality of I44 ?S. 2ost widely usedM. Ideal to rank the mutually e&clusie inestments(. Qasily communicated and understoodK. /an be estimated even without 4nowing the discount rateMost Appropriate Answer among the given choices has been selected..6. --------- is a special case of annuity, where the stream of cash /ows continues foreer.I. 3rdinary AnnuityM. . If a bank ofers 678 annual rate of return compounded ,uarterly, what would be the Sfectie %nnual 4ate 0S%41?I. 1*.00 'M. 1*.,% 'U. 67.HE 8V. 1).%& '?. % bond represents a --------------- made by an inestor to the ----------------.I. loanN receiver M. dividendN issuerU. dividend, receiverV. loanW issuer9. When the interest rates fall, the bond is worth --------------.I. @oreM. >ess U. 8ameV. All of the given o0tions. 7. If S!) 'orporation pays out ?:8 of net income to its shareholders as diidends. What would be the 4etention 4atio for S!) 'orporation? htt06KKwww.vustudents.netI. ,0 'M. *0 'U. E: 8V. -0 '5. If sales are to grow at a rate higher than the sustainable growth rate, the "rm must:I. 5ncrease !ro.t 2arginM. 5ncrease 9otal Assets 9urnoverU. 8ell new sharesV. %ll of the gien options.E. ------------ is the current alue of the future cash /ow discounted at anappropriate discount rate.I. >>>>' all interest rates !ill tend to be >>>>>$ Lo!? higher www.virtualins0ire.com @igh? lo!er :ighN higher -one of the given o"tions hen real rate is high' all interest rates !ill tend to be higher and vice versa$ Ruestion o6 1 2ar4s6 1 $ 7 !lease choose one hich of the follo!ing is the extra .ield that investors dem and on a taxable bond as acom"ensation for the unfavorable tax treatment* Interest rate ris5 "remium Inflation ris5 "remium 9efault ris5 "remium 9axability 0remium Investors demand extra .ield on a taxable bond as a com"ensation for the unfavorable tax treatment' 5no!n as taxability 0remium Ruestion o6 1,# 2ar4s6 1 $ 7 !lease choose one In!hicht."eofthemar5et' "reviousl.issuedsecuritiesaretradedamonginvestors * 0rimar. ;ar5et X8econdary 2ar4et0g 100 Tertiar. ;ar5et -one of the given o"tions 8econdary 2ar4et The mar5et in !hich "reviousl. issued securities are traded among www.virtualins0ire.com investors Ruestion o6 1%# 2ar4s6 1 $ 7 !lease choose one 0lace the follo!ing items in the "ro"er order of com"letion regarding the ca"italbudgeting "rocess$ 6I70erforma"ost-audit forcom"leted"roAects? 6II7Benerate "roAect "ro"osals? 6III7 :stimate a""ro"riate cash flo!s? 6I>>>>>>>> if the IRR doesnDt exceed s the re2uired return and>>>>>>>>>>> other!ise$ Acce"ted? reAected Acce"ted? acce"ted ReAected? reAected RePectedN acce0ted0g 10- Ruestion o6 1)# 2ar4s6 1 $ 7 !lease choose one IRR and -0< rules al!a.s lead to identical decisions as long as : www.virtualins0ire.com Cash flo!s are conventional Cash flo!s are inde"endent X/ash fows are both conventional and inde0endent -one of the given o"tions Ruestion o6 17# 2ar4s6 1 $ 7 !lease choose one A "roAect !hose acce"tance does not "revent or re2uire the acce"tance of one or morealternative "roAects is referred to as : XA mutually exclusive 0roPect An inde"endent "roAect A de"endent "roAect A contingent "roAect Ruestion o6 1 > > that of the shorter-term bond' for a given change in mar5etinterest rates$ ;ore than Lessthan :2ual to -one of the given o"tions Ruestion o6 11# 2ar4s6 1 $ 7 !lease choose one hen cor"orations borro!' the. generall. "romise to: I$ ;a5e regular scheduled interest "a.mentsII$ Bive the right of voting to bondholders III$ Re"a.theoriginal amount borro!ed6"rinci"al7 I>>>>>>>>> andreAected if it is >>>>>>>>$ 0ositive? "ositive !ositiveN negative -egative? negative -egative? "ositive Ruestion o6 1)# 2ar4s6 1 $ 7 !lease choose one The E=F Cor"oration is considering an investment that !ill cost Rs$ 1&'&&& and have ausefullifeof( .ears$9uringthefirst%.ears'the net incrementalafter-taxcashflo!s are Rs$ %)'&&& "er .ear and for the last t!o .ears the. are Rs$ %&'&&& "er .ear$hat is the "a.bac5 "eriod for this investment * ,.& Hears 4$) =ears ($& =ears Cannot be determined from the given information Ruestion o6 17# 2ar4s6 1 $ 7 !lease choose one hich of the follo!ing statement is I-C3RR:CT regarding a normal "roAect * If the IRR of a "roAect is greater than the discount rate' 5' then its 0I !ill be www.virtualins0ire.com greater than + If the -0< of a "roAect is greater than &' then its 0I !ill exceed + If the IRR of a "roAect is 1L' its -0>>>>>>>>> Cost refers to the cash flo!s that could be generated from an asset thefirm alread. o!ns "rovided it is not used for the "roAect in 2uestion$ www.virtualins0ire.com 8un4 3""ortunit. Fixed >>>>$ Lo!? higher ote6 8olve these 0a0ers by yourself 9his "E =rou0 is not res0onsible for any solved content www.vuas4ari.com /om0osed U 8olved Armaan 2a4hani "u As4ari 9eam www.vuas4ari.com @igh? lo!er @igh? higher -one of the given o"tions hen real rate is high' all interest rates !ill tend to be higher and vice versa$ Ruestion o6 1 2ar4s6 1 $ 7 !lease choose one hich of the follo!ing is the extra .ield that investors dem and on a taxable bond as acom"ensation for the unfavorable tax treatment* Interest rate ris5 "remium Inflation ris5 "remium 9efault ris5 "remium Taxability premium Investors demand extra .ield on a taxable bond as a com"ensation for the unfavorable tax treatment' 5no!n as taxability 0remium Ruestion o6 1,# 2ar4s6 1 $ 7 !lease choose one In!hicht."eof themar5et' "reviousl.issuedsecuritiesaretradedamonginvestors * 0rimar. ;ar5et ,econdar. ;ar5et"g +&& Tertiar. ;ar5et -one of the given o"tions 8econdary 2ar4et The mar5et in !hich "reviousl. issued securities are traded among ote6 8olve these 0a0ers by yourself 9his "E =rou0 is not res0onsible for any solved content www.vuas4ari.com /om0osed U 8olved Armaan 2a4hani "u As4ari 9eam www.vuas4ari.com investors Ruestion o6 1%# 2ar4s6 1 $ 7 !lease choose one 0lacethe follo!ing itemsinthe"ro"erorderofcom"letionregarding theca"italbudgeting "rocess$ 6I7 0erform a "ost-audit for com"leted "roAects? 6II7Benerate "roAect "ro"osals? 6III7 :stimate a""ro"riate cash flo!s? 6I>>>>>>>> if the IRR doesnDt exceed s the re2uired return and>>>>>>>>>>> other!ise$ Acce"ted? reAected Acce"ted? acce"ted ReAected? reAected RePectedN acce0ted 0g 10-Ruestion o6 1) # 2ar4s6 1 $ 7 !lease choose oneIRR and -0< rules al!a.s lead to identical decisions as long as : ote6 8olve these 0a0ers by yourself 9his "E =rou0 is not res0onsible for any solved content www.vuas4ari.com /om0osed U 8olved Armaan 2a4hani "u As4ari 9eam www.vuas4ari.com Cash flo!s are conventional Cash flo!s are inde"endent Cash flo!s are both conventional and inde"endent-one of the given o"tions Ruestion o6 17# 2ar4s6 1 $ 7 !lease choose one A "roAect !hose acce"tance does not "revent or re2uire the acce"tance of one or morealternative "roAects is referred to as : A mutually exclusive project An inde"endent "roAect A de"endent "roAect A contingent "roAect Ruestion o6 1>>>>>>>>> Cost is an outla. that has alread. occurred and hence is not affected b. ote6 8olve these 0a0ers by yourself 9his "E =rou0 is not res0onsible for any solved content www.vuas4ari.com /om0osed U 8olved Armaan 2a4hani "u As4ari 9eam www.vuas4ari.com the decision under consideration$ ,un5 3""ortunit. Fixed > > > > > that of the shorter-term bond' for a given change in mar5etinterest rates$ ;ore than Lessthan :2ual to -one of the given o"tions Ruestion o6 11# 2ar4s6 1 $ 7 !lease choose one hen cor"orations borro!' the. generall. "romise to: I$;a5e regular scheduled interest "a.ments II$ Bive the right of voting to bondholders III$ Re"a. the original amount borro!ed 6"rinci"al7 I>>>>>>>>> andreAected if it is >>>>>>>>$ 0ositive? "ositive /ositive0 ne$ative -egative? negative -egative? "ositive Ruestion o6 1)# 2ar4s6 1 $ 7 !lease choose one The E=F Cor"oration is considering an investment that !ill cost Rs$ 1&'&&& and havea useful life of ( .ears$ 9uring the first % .ears' the net incremental after-tax cashflo!s are Rs$ %)'&&& "er .ear and for the last t!o .ears the. are Rs$ %&'&&& "er .ear$hat is the "a.bac5 "eriod for this investment * 1.2 3ears 4$) =ears ($& =ears Cannot be determined from the given information Ruestion o6 17# 2ar4s6 1 $ 7 !lease choose one hich of the follo!ing statement is I-C3RR:CT regarding a normal "roAect * If the IRR of a "roAect is greater than the discount rate' 5' then its 0I !ill be ote6 8olve these 0a0ers by yourself 9his "E =rou0 is not res0onsible for any solved content www.vuas4ari.com /om0osed U 8olved Armaan 2a4hani "u As4ari 9eam www.vuas4ari.com greater than + If the -0< of a "roAect is greater than &' then its 0I !ill exceed + If the IRR of a "roAect is 1L' its -0everage 3"erating Leverage ,tructural Leverage -one of the given o"tions Muestion T + of +) 6 ,tart time: &%:%&:(H 0; 7 Total ;ar5s: + The value of the firmDs cash flo!s 6or the value of the firm7 isMMMMMMMMMM!hen theACC is MMMMMMMMMM$ ,elect correct o"tion: minimi#ed? minimi#ed maximi#ed? maximi#ed maximi1edN minimi1ed 0g 1%- -one of the given o"tions Muestion T ) of +) 6 ,tart time: &%:%%:(4 0; 7 Total ;ar5s: + A firmDs e2uit. is !orth ( million and its debt is !orth % million$ hat is the "ercentageoffirmDs financing that is debt * ote6 8olve these 0a0ers by yourself 9his "E =rou0 is not res0onsible for any solved content www.vuas4ari.com /om0osed U 8olved Armaan 2a4hani "u As4ari 9eam www.vuas4ari.com ,elect correct o"tion: %&L ,,' (&L IGL Ref: (K%=I (CI=&$II &$IIQ+&&=II$IG is e2uit. and +&&-IG=44 is debt Muestion T G of +) 6 ,tart time: &%:%(:)+ 0; 7 Total ;ar5s: + hich of the follo!ing ris5 is associated !iththe uni2uecircumstances ofa "articularcom"an. * ,elect correct o"tion: Financial Ris5 Dusiness Ris4 Functional Ris5 -one of the given o"tions Muestion T +& of +) 6 ,tart time: &%:%G:+) 0; 7 Total ;ar5s: + According to %nd ;O; "ro"osition' cost of e2uit. does -3T de"end u"on !hich of thefollo!ing * ,elect correct o"tion: The re2uired return of firmDs assets The firmDs cost of debt 9he .rmLs stoc4holders0g 1*, The firmDs debt-e2uit. ratio Muestion T +4 of +) 6 ,tart time: &%:%H:(& 0; 7 Total ;ar5s: + hichofthefollo!ingisthedifferencebet!eenthecurrent assetsandthecurrentliabilities * ,elect correct o"tion: -et difference et wor4ing ca0ital Current ratio -et available ca"ital Muestion T+of +)6,tarttime:&%:41:&+ 0;7 Total;ar5s:+3"erating c.cle = >>>>>>>>>>>>>>>> ,elect correct o"tion: Collection "eriod - accounts "a.able "eriod ote6 8olve these 0a0ers by yourself 9his "E =rou0 is not res0onsible for any solved content www.vuas4ari.com /om0osed U 8olved Armaan 2a4hani "u As4ari 9eam www.vuas4ari.com Inventor. "eriod - accounts receivable "eriod 5nventory 0eriod C accounts receivable 0eriod 0g 1)% Inventor. "eriod K account "a.able "eriod Muestion T % of +) 6 ,tart time: &%:4H:%( 0; 7 Total ;ar5s: + AfirmDs ca"ital structure ma. include !hich of the follo!ing * ,electcorrect o"tion: Common stoc5s !referred 8toc4snot sure 8onds All of the given o"tions Muestion T +( of +) 6 ,tart time: &%:(I:44 0; 7 Total ;ar5s: + ;r$ -adeem has bought +&& shares of a cor"oration one .ear ago at Rs$ %% "er share$ 3ver the last .ear' he received a dividend of Rs$ %$)& "er share$ At the end of the .ear' the stoc5sells for Rs$ %1$ As "er given information' !hat !ill be the ca"ital gains .ield * ,elect correct o"tion: +)$1)L %)$+&L &7.&7' ()$&&L Ca"ital gain .ield formula 6%1-%%7C%% =&$%G%G Muestion T +) of +) 6 ,tart time: &%:(1:&) 0; 7 Total ;ar5s: + hich of the follo!ing term refers to the situation !hen investors loan out the mone. * ,electcorrect o"tion: Leverage Levering En7levering0g 1*& Loaning Muestion T + of +) 6 ,tart time: ++:%4:++ A; 7 Total ;ar5s: + hich of the follo!ing activities does not increase cash * ,elect correct o"tion: Increasing current liabilities Increasing e2uit. 5ncreasing current assets other than cash0g 1), 9ecreasing fixed assets Muestion T 4 of +) 6 ,tart time: ++:%):+% A; 7 Total ;ar5s: + ote6 8olve these 0a0ers by yourself 9his "E =rou0 is not res0onsible for any solved content www.vuas4ari.com /om0osed U 8olved Armaan 2a4hani "u As4ari 9eam www.vuas4ari.com The increase in debt financing raises the re2uired return on e2uit. because the ris5 born b.the investors increases !hich is called: ,elect correct o"tion: Financial Ris5"g +)) 8usiness Ris5 Functional Ris5 -one of the given o"tions Muestion T ) of +) 6 ,tart time: ++:%G:&) A; 7 Total ;ar5s: + hat!ill ha""en to cash c.cle if "a.able "eriod is lengthened * ,electcorrect o"tion: Cash c.cle increases /ash cycle decreases1)7 Cash c.cle remain unaffected Cash c.cle has to do nothing !ith "a.able "eriod Muestion T I of +) 6 ,tart time: ++:%1:&4 A; 7 Total ;ar5s: + hich of the follo!ing ;O; "ro"ositions states that it is com"letel. irrelevant ho! a firmchooses to arrange its finances * ,elect correct o"tion: 1st 0ro0osition0g 1*, %nd "ro"osition 4rd "ro"osition -one of the given o"tions Muestion T G of +) 6 ,tart time: ++:%H:+% A; 7 Total ;ar5s: + The total mar5et value of a com"an.Ds stoc5s is calculated as Rs$ %)& million and the total mar5et value of the com"an.Ds debt are calculated as Rs$ +)& million$ hat "ercent of thefirmDs financing is e2uit. * ,elect correct o"tion: 44$44L )&$&&L )&.*0' 1)$&&L B&*0C1*0B%00 &*0K%00B)&.*eFuity and remaining ,7.* is debt Muestion T 1 of +) 6 ,tart time: ++:4&:4) A; 7 Total ;ar5s: + hich of the follo!ing is referred as the ratio of the standard deviation of a distribution to themean of that distribution * ote6 8olve these 0a0ers by yourself 9his "E =rou0 is not res0onsible for any solved content www.vuas4ari.com /om0osed U 8olved Armaan 2a4hani "u As4ari 9eam www.vuas4ari.com ,elect correct o"tion: 0robabilit. distribution 9he ex0ected return The standard deviation Coefficient of variation Muestion T +& of +) 6 ,tart time: ++:4%:%1 A; 7 Total ;ar5s: + Cashc.cle = >>>>>>>>>>>>>>>> ,elect correct o"tion: Inventor."eriod- accountsreceivable"eriodInventor."eriodKaccountsreceivable"eriodInventor. "eriod K account "a.able "eriod 30erating cycle 7 accounts 0ayable 0eriod0g 1)* Muestion T +% of +) 6 ,tart time: ++:44:%% A; 7 Total ;ar5s: + According to !hich of the follo!ing theor.' the firm/s ca"ital structure is determined b. atrade-off of the value of tax shields against the costs of ban5ru"tc.$ ,elect correct o"tion: ;O; 0ro"osition ;odern theor. of ban5ru"tc. costs 8tatic theory of ca0ital structurenot sure 9ividend gro!th theor. Muestion T +4 of +) 6 ,tart time: ++:4(:)) A; 7 Total ;ar5s: + Thecost of common e2uit. for a firm is: ,elect correct o"tion: The re2uired rate of return on the com"an./s stoc5 The.ield to maturit. on the bond 9he ris47free rate The mar5et ris5 "remium Muestion T +( of +) 6 ,tart time: ++:4I:+G A; 7 Total ;ar5s: + ,tandard deviations for Investment A and Investment 8 are %)L and +%L res"ectivel.$ Thisindicates that : ,elect correct o"tion: Investment AislessvolatilethanInvestment 8Investment 8 is e2uall. volatile to Investment A 5nvestment A is more volatile than 5nvestment D Investment 8 is more volatile than Investment A Muestion T + of +) 6 ,tart time: ++:(%:%+ A; 7 Total ;ar5s: + hich of the follo!ing is the time bet!een recei"t of inventor. and "a.ment for it *,elect correct o"tion: 3"erating C.cle ote6 8olve these 0a0ers by yourself 9his "E =rou0 is not res0onsible for any solved content www.vuas4ari.com /om0osed U 8olved Armaan 2a4hani "u As4ari 9eam www.vuas4ari.com Cash C.cle Current C.cle one of the given o0tions0g 1)* Muestion T ( of +) 6 ,tart time: ++:(G:41 A; 7 Total ;ar5s: + hich of the follo!ing is the overall return the firm must earn on its existing assets tomaintain the value of the stoc5* ,elect correct o"tion: IRR 6Internal Rate of Return7 ;IRR 6;odified Internal Rate of Return7 WA// #Weighted Average /ost of /a0ital$ 1%) AAR 6Average Accounting Return7 Muestion T ) of +) 6 ,tart time: ++:(H:&% A; 7 Total ;ar5s: + hat !ill ha""en to cash c.cle if inventor. and receivable "eriods get longer *,elect correct o"tion: /ash cycle increases0g 1)7 Cash c.cle decreases Cash c.cle remain unaffected Cash c.cle has to do nothing !ith inventor. and receivable "eriods 8tandard deviations for 5nvestment A and 5nvestment D are 1*'and ,&' res0ectively. 9his indicates that 6 ,elect correct o"tion: InvestmentA ismorevolatilethanInvestment 8 InvestmentA ise2uall.volatiletoInvestment 8 Investment 8 is less volatile than Investment A 5nvestment D is more volatile than 5nvestment A Muestion T H of +) 6 ,tart time: ++:)%:%+ A; 7 Total ;ar5s: + hich of the follo!ing term refers to the use of "ersonal borro!ing to alter the degree offinancial leverage * ,elect correct o"tion: Pn-levering :omemade leverage0g 1*1 Levering Loaning Muestion T +& of +) 6 ,tart time: ++:)4:+4 A; 7 Total ;ar5s: + hich of the follo!ing is the return that firmDs creditors demand on ne! borro!ings * ,electcorrect o"tion: /ost of debt0g 1%, ote6 8olve these 0a0ers by yourself 9his "E =rou0 is not res0onsible for any solved content www.vuas4ari.com /om0osed U 8olved Armaan 2a4hani "u As4ari 9eam www.vuas4ari.com Cost of "referred stoc5 Cost of common e2uit. Cost of retained earnings Muestion T +4 of +) 6 ,tart time: ++:)):%+ A; 7 Total ;ar5s: + A firmDs e2uit. is !orth ( million and its debt is !orth % million$ hat is the "ercentage offirmDs financing that is e2uit. * ,elect correct o"tion: %&L 44L (&L )7' %C&B) %K)B0.)7 Muestion T +( of +) 6 ,tart time: ++:)I:)& A; 7 Total ;ar5s: + Pnder !hat situation' !e can safel. sa. that one ca"ital structure is better than the other * ,electcorrect o"tion: If it results in a higher !eighted average cost of ca"ital 5f it results in a lower weighted average cost of ca0ital0g 1%- If it results in a lo!er value of the firm Ca"ital structure has to do nothing !ith !eighted average cost of ca"ital @inishedlast Fui1 of acc*01=ood bye all " E studentsDadal 0e chalta hu mai=hirta sambhalta humaiOhuwishein 4rta hu mai Ohony se darta hu mai _aga na soya hu mai 2usa.r 4hoya hu mai Och sir .ra sa hu mai Dudhu 1ara sa hu maiVVV ote6 8olve these 0a0ers by yourself 9his "E =rou0 is not res0onsible for any solved content www.vuas4ari.com /om0osed U 8olved Armaan 2a4hani "u As4ari 9eam www.vuas4ari.com Armaan.ma4haniJgmail.com 8tarting lec 1 to ,* Aate 61-7Pan7&011 A// *01 Rui1 /onference lecture 1 to ,* Ruestion [ * of 1* # 8tart time6 106**60-!2 $ 9otal 2ar4s6 1 8u00ose mar4et value exceeds boo4 value by Rs. &00,000. What will be theafter7tax 0roceeds if there is a tax rate of ,* 0ercent ( 8elect correct o0tion6 Rs$ HG')&& Rs$ +&)'I&& Rs. 1,0,000 Rs$ +)&'&&& %&&&&&Q4)L=G&&&& %&&&&&-G&&&&=+4&&&& Muestion T H of +) 6 ,tart time: &%:%4:%( 0; 7 Total ;ar5s: + In !hich t."e of "roAects' the une2ual lives of the "roAects do affect the anal.sis * ,electcorrect o"tion: ;utuall. exclusive 9e"endent Inde"endent Correlated ;r$-aveedhasbought+&&sharesofacor"orationone.earagoatRs$ %4"ershare$3ver the last .ear' he received a dividend of Rs$ +$)& "er share$ At the end of the .ear'thestoc5sellsforRs$ 4+$As"ergiveninformation' !hat !ill behistotal "ercentagereturn * ,elect correct o"tion: +&$I4L %&$%&L 4)$+%L (+$4&L First find dividend .ield then ca"ital gain .ield then "lus both ans!er >et see Aividend yieldB 1.*0K&,B0.0)*&1' /a0ital gain yield B#,17&,$K&,B0.,%7>>>>>>> is the mar5et in !hich alread. issued securities are traded among investors$ a$ 0rimar. mar5et b$ ,econdar. mar5et c$ Financial mar5et d$ Ca"ital mar5et I$ ,u""ose ;ehran Cor"oration is dealing in the Automobile industr.$ 8ased on "roAected costs and sales' it ex"ects that the cash flo!s over the 4-.ear life of the "roAect !ill be Rs$)' &&&'&&& in first .ear' Rs$G' &&&'&&& in the next .ear and Rs$1' &&&'&&& in the last .ear$ This "roAect !ould cost about Rs$ +&'&&&'&&&$The net "resent value of the "roAect !ould be >>>>>>>>' if discount rate is assumed to be %)L$ a$ Rs$%' )GI' &&& b$ Rs$4' )GI' &&& c$ Rs$+' )GI' &&& d$ Rs$(' )GI' &&& G$ The 0roAected cash flo!s from a "ro"osed investment are =ear Cash Flo!s&+ Rs$)&&'&&&&% Rs$1&&'&&&&4 Rs$I&&'&&&The"roAectscostsareRs$+' )&&'&&&$ The"a.bac5"eriodforthisinvestment !ouldbe>>>>>>>>>>>>>>$ a$ +$)& .ears b$ %$&& .ears c$ %$44 .ears d$ 4$&& .ears 1$ ,u""ose F Cor"oration' has the "resent value of its future cash flo!s is Rs$()&' &&& and the "roAect has a cost of Rs$4&&' &&&' then the "rofitabilit. index !ould be >>>>>>>>>>>>>>>>$ a$ &$IIG b$ + c$ +$%) d$ +$)& +& Dusiness @inance #A//*01$ 8olution Fui1 01@all 8emester &00) H$ Fee "aid to the consultant for evaluating the "roAect is an exam"le of >>>>>>>>>>>>>>$ a$ 3""ortunit. cost b$ ,un5 cost c$ 9ecremental cost d$ -one of the given o"tion +&$ If the sales of the A8 cor"oration is Rs$%&' &&&'&&& !here as its cost is Rs$+%' &&&'&&&duringthesame"eriod$Assumetheannual taxrateis4GL$Itsannualde"reciationisRs$)' &&&' &&&$Theo"eratingcashflo!of theorgani#ation!ouldbe>>>>>>>>>>>>>>>$ a$ Rs$ 4'1+&'&&& b$ Rs$ ('1+&'&&& c$ Rs$ )'+H&'&&& d$ Rs$ I'1H&'&&& 9otal mar4s6 10 1.5nvesting activities include6 a.!urchase of 0ro0erty, 0lant and eFui0ment b./ash received from the issuance of stoc4 or eFuity in the business. c.!urchases of stoc4 or other securities #other than cash eFuivalents$ d.Doth a U c &./hanges in cash from .nancing are Scash inS when6 a./a0ital is raised b.Assets increased c.>iabilities decreased d./ash withdrawn ,.=enerally, changes made in cash, accounts receivable, de0reciation,inventoryand accounts 0ayable are refected in6 ++ 1.9he time between sale of inventory and collection of receivable.a account receiableb o0eration cyclec inventory 0eriodd none of above&. allow a ban4 to substitute its creditworthiness for the customer, for a feeis calledMMMMMMMMMMM7a o0en ban4 accountb commercial draftc 0romisory notedbanker accetptance?.8tandard deviations for 5nvestment A and 5nvestment D are &*' and 1&'res0ectively. 9his indicates that 68elect correct o0tion65nvestment A is less volatile than 5nvestment D5nvestment D is eFually volatile to 5nvestment AInestment % is more olatile than Inestment ;5nvestment D is more volatile than 5nvestment A%. .nd the average &',*',)',7 8c )'d . What would be its accounts payable turn oer?e$ ,.,%7 a00roximatelyf$ *.,%7 a00roximatelyg1 >.?9E appro&imatelyh$ ).&*, a00roximately69.=uring the "nancial year >::7->::5 ended on Mune ?:, the cash cycle of 'lima& companywas67:days, anditspayableturnoer was7. What wastheoperatingcycleof thecompany during >::7->::5?e$ &,% daysf1 >>? daysg$ &%* daysh$ &,0 days67.Which of the following is the cheapest source of "nancing aailable to a "rm?e$ Dan4 loanf$ /ommercial 0a0ersg1 )rade credith$ one of the given o0tions.65.Which of the following illustrates the use of a hedging 0or matching1 approach to "nancing?e$ 8hort7term assets .nanced with long7term liabilities.f1 .7 8). 7&.* '5. % risk that in/uences a large number of assets is known as:F. 8ystematic Ris44. 2ar4et Ris4S. on7diversi.ableRis4). %ll of the gien optionsE. Which of the following risk can be eliminated by diersi"cation?F. 8ystematic Ris44. Ansystematic 4iskS. A U D). one of the given o0tionsH. Suppose the initial inestment for a proBect is 4s. 65:,::: and the cash/ows are 4s. 9:,::: in the "rst year and 4s. L:,::: in the second and 4s. 7:,::: in the third. )he proBect will hae a payback period of: S. >.5 Tears). ,.1 HearsA. ,.) HearsX. %.1 HearsL. % model which makes an assumption about the future growth of diidends is known as:8 p. a. What would be the present alue of each bond? T. Rs. ,1-.%*N. Rs. ,-0.7*%%. 4s. 96L.97;;. Rs. %),.7*L. )he sensitiity of Interest 4ate 4isk of a bond directly depends upon:S. 9ime to maturity). /ou0on rateA. % and ;X. one of the given o0tions6:. %n insurance company ofers to pay you 4s. 6::: per year if you pay 4s. 5,E6: up front. What would be the rate applicable in this 6:-year annuity?S. H 8). 10 'A. 1& 'X. 1% 'Choose the Most Appropriate Answer among the given choices.6. In the formula ke [2 0=6O. 8ond 0rice U 0ar ' how long does it ta:e to grow to Rs. 1A'AAA. +( LRE5I [ 0, #83>E953$8!R5= 8Q2Q89QR &007A//*01 7 DE85Q88 @5A/Q5nstructions6` 9ue 9ate and Time to submit the Mui# is $ $ $Wednesday, _une 1,, &007 7 7 7 Defore 1&L3 /loc42idnight ` Mui# includes >ecture [ &, to >ecture [ ,* of .our course$9otal2ar4s10 ` =ou can choose the right o"tion b. @ighlighting' 2a4ing Dold or Changing Color$ ` Cheating !ill harm .ou onl. O not to an.one else as co"ied 2ui# gets no credit$ +1 Dusiness @inance #A//*01$ 8olution Fui1 01@all 8emester &00) `Mui# !ill not be acce"table in an. !a. after the mentioned 9ate and Time$/hoose the 2ost A00ro0riate Answer among the given choices. 1. MMMMMMMMMMMMMMM refers to the most valuable alternative that is given u0 if a0articular investment is underta4en. 2. ,un5 cost .300ortunity cost 3. Financing cost !.All of the given o"tions &. 89 com0any 0aid a dividend of Rs. * 0er share last year. 9he stoc4Ls current0rice is Rs. *0 0er share. Assuming that the dividends are estimated to growsteadily at . :2ual to Rs$ +&&. @ess t!an Rs. 100D. -one of the given o"tions1. 3ou #ant to buy an ordinary annuity t!at #ill pay you Rs. 1,000 a year (or t!enext 20 years. 3ou expect annual interest rates #ill be % percent over t!at timeperiod. T!e maximum price you #ould be #illin$ to pay (or t!e annuity #ill beclosest to?A. Rs. 2-,+5+>. Rs$ 4('4%). Rs$ 4H'%G%D. Rs$ (H'&%4+. 3ou !ave Rs. 1,000 t!at you #ant to save. . 8ond 0rice U 0ar ower the ris4, higher the return'. Digher the risk, higher the return=. one of the aboveE. )his type of risk afects almost all types of assets.%. Systematic 4isk;. Ensystematic Ris4Dusiness @inance #A//*01$ 8olution Fui1 01@all 8emester &00)7'. 9otal Ris4=. !ortfolio Ris4@'F G :H I 6: are based on the following data:Suppose you bought 6,7:: shares of a corporation at 4s. >7 each. %fter a year, youreceied 4s. ?::: 04s. > per share1 in diidends. %t the end of year the stocksells for4s. ?: each. If you sell the stock at the end of the year, your total cash in/ow will be4s. 9H,::: 067:: shares J ?: each 2 4s. 97::: C =iidend 2 ?:::1.H. %ccording to the gien data, the 'apital Kain will be:%. 10,*00;. E,7::'. 10,000=. 7,000L. %ccording to the gien data, the =iidend yield will be:%. essU. 8ameV. All of the given o0tions.7. If S!) 'orporation pays out ?:8 of net income to its shareholders as diidends. Whatwould be the 4etention 4atio for S!) 'orporation?I. ,0 'M. *0 'U. E: 8V. -0 '5. If sales are to grow at a rate higher than the sustainable growth rate, the "rm must:I. 5ncrease !ro.t 2arginM. 5ncrease 9otal Assets 9urnoverU. 8ell new sharesV. %ll of the gien options.E. ------------ is the current alue of the future cash /ow discounted at an appropriate discount rate.I.