State whether the following statements are True or False:
Q1: Zero coupon bonds have no coupon rate, hence no yield.
Ans: False
Q2: Deferred Tax Liabilities are the liabilities towards payment of tax at some future point of time and hence, while calculating the Net Worth of a company, it should be deducted.
Ans: False
Q3: Value gap is the difference between the synergy value and purchase price.
Ans: False
Q4: Industrial groups are inherently less conservative than investors in allocating resources.
Ans: False
Q5: In a debt for equity swap, a firm replacing equity with debt decreases its leverage ratio.
Ans: False
Fill in the blanks using words/phrases given in the brackets:
Q1:Price/Earning (PE) Ratio of a company is………..related to Dividend Payout Ratio, (positively/negatively/not).
Ans: Positively
Q2: The stronger a brand of a company is,………… its risk, (lower is/higher is/nothing can be said regarding)
Ans: Lower
Q3: Intangible assets are treated as………..assets, (fixed/fictitious)
Ans: Fixed
Q4: ………risk remains fixed irrespective of number of securities in portfolio (systematic/ unsystematic)
Ans: Systematic
Q5: Seller of a futures contract incurs a loss when the future price………. (increases/decreases)
Ans: Increases
Q6: The…………. (Tangible/ Intangible) Assets monitor is a management tool for organizations that wish to track and value their………assets, (tangible/ intangible)
Ans: Intangible, Intangible
Q7: Dividend yield is the dividend per share as a % of the……value of the share, (book/market)
Ans: Market Value
Q8: The dividend discount model is a specific case of………..valuation.(bond/equity)
Ans: Equity
Q9: Super profit is the excess of future maintainable profit over…..expected profits, (normally/abnormally)
Ans: Normally
Q10: DCF analysis requires the revenue and expenses of………..past/future)
Ans: Future
In each of the questions given below one out of the four options is correct. Indicate the correct answer:
Q1: Which is not a, human – capital related intangible asset?
(A) Trained workforce
(B) Employment agreements
(C) Union contracts
(D) Design patent [Ans]
Q2: A share, Y, currently sells for Rs.50. It is expected that in one year it will either rise to Rs.55 or decline to Rs.45. The value of a European call, if the strike price of the underlying share is Rs.48 and the risk free interest rate is 9% p.a. is
(A) Rs.9.33
(B) Rs.11.33 [Ans]
(C) Rs.18.33
(D) Rs.20.50
Q3: The beta (β) of portfolio is equal to
(A) The beta of the market portfolio
(B) The arithmetic average of the individual security betas
(C) The weighted average of the individual security betas [Ans]
(D) None of these
Q4: A company is having Book Value per share of Rs.15 while the market value per share is Rs.20. If a company has 20 crores number of shares and Book Debt of Rs.100 crores, then its Enterprise Value will be
(A) Rs.300 Crores
(B) Rs.400 Crores
(C) Rs.500 Crores [Ans]
(D) None of the above
Q5: If the company has a P/E Ratio of 12 and a ROE of 13%, then its Market to Book Value Ratio will be
(A) 1.09
(B) 1.56 [Ans]
(C) 9.34
(D) Nothing can be concluded as information available is insufficient
