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Question No: 1 ( Marks: 1 ) - Please choose one

Which of the following type of lease is a long-term lease that is not cancelable and its life often matches the useful life of the asset?

► A financial

► An operating

► Both financial & operating lease

► None of the given options

Question No: 2 ( Marks: 1 ) - Please choose one

Among the pairs given below select a(n) example of a principal and a(n) example of an agent respectively.

► Shareholder; manager

► Manager; owner

► Accouor ntant; bondholder

► Shareholder; bondholder

Question No: 3 ( Marks: 1 ) - Please choose one

What is the present value of Rs.8,000 to be paid at the end of three years if the interest rate is 11%?

► Rs.5,850

► Rs.4,872

► Rs.6,725

► Rs.1,842

Question No: 4 ( Marks: 1 ) - Please choose one

What is the present value of Rs.717 to be paid at the end of 2 years if the interest rate is 9%?

► Rs.604

► Rs.417

► Rs.715

► Rs.556

Question No: 5 ( Marks: 1 ) - Please choose one

As interest rates go up, the present value of a stream of fixed cash flows _____.

► Goes down

► Goes up

► Stays the same

► Can not be found

Question No: 6 ( Marks: 1 ) - Please choose one

An 8-year annuity due has a present value of Rs.1,000. If the interest rate is 5 percent, the amount of each annuity payment is closest to which of the following?

► Rs.154.73

► Rs.147.36

► Rs.109.39

► Rs.104.72

Question No: 7 ( Marks: 1 ) - Please choose one

A capital budgeting technique that is NOT considered as discounted cash flow method is:

► Payback period

► Internal rate of return

► Net present value

► Profitability index

Question No: 8 ( Marks: 1 ) - Please choose one

In which of the following situations you can expect multiple answers of IRR?

► More than one sign change taking place in cash flow diagram

► There are two adjacent arrows one of them is downward pointing & the other one is upward pointing

► During the life of project if you have any net cash outflow

► All of the given options

Question No: 9 ( 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

Question No: 10 ( Marks: 1 ) - Please choose one

Which of the following is a characteristic of a coupon bond?

► Pays interest on a regular basis (typically every six months)

► Does not pay interest on a regular basis but pays a lump sum at maturity

► Can always be converted into a specific number of shares of common stock in the issuing company

► Always sells at par

Question No: 11 ( Marks: 1 ) - Please choose one

A zero-coupon bond has a yield to maturity of 9% and a par value of Rs.1,000. If the bond matures in 8 years, the bond should sell for a price of _______ today.

► Rs. 422.41

► Rs. 501.87

► Rs. 513.16

► Rs. 483.49

Question No: 12 ( Marks: 1 ) - Please choose one

When a bond will sell at a discount?

► The coupon rate is greater than the current yield and the current yield is greater than yield to maturity

► The coupon rate is greater than yield to maturity

► The coupon rate is less than the current yield and the current yield is greater than the yield to maturity

► The coupon rate is less than the current yield and the current yield is less than yield to maturity

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following is the variability of return on stocks or portfolios not explained by general market movements. It is avoidable through diversification?

► Systematic risk

► Standard deviation

► Unsystematic risk

► Financial risk

Question No: 14 ( Marks: 1 ) - Please choose one

According to the Capital Asset Pricing Model (CAPM), which of the following combination is equal to the expected rate of return on any security?

► Rf + ?[E(RM)]

► Rf + ?[E(RM - Rf]

► Rf + ?[E(RM) - Rf]

► E(RM) + Rf

Question No: 15 ( Marks: 1 ) - Please choose one

What is the expected return of a zero-beta security?

► The risk-free rate

► Zero rate of return

► A negative rate of return

► The market rate of return

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