Corporate Finance End Term: 22 December 2024, Set QDB3 (September 2024 term)

32 more questions in this paper

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1. Q4A call option is in-the-money when the stock price is higher than the strike price.2 marks
2. Q5Liabilities of a commercial bank include loans, deposits with other banks and the central…2 marks
3. Q6The part of the minimum-variance frontier that lies above the global minimum-variance por…2 marks
4. Q7According to CAPM, projects with higher beta require a lower expected rate of return.2 marks
5. Q8When assets have a perfect positive correlation, there are no benefits from diversificati…2 marks
6. Q9The yield curve shows the relation between interest rates and maturity.2 marks
7. Q10An investor can diversify the systematic risk.2 marks
8. Q11You found an ancient painting in your home that was purchased by your father 20 years ago…3 marks
9. Q12The Tata Steel stock is trading at Rs 300 today. Tata Steel is expected to pay a dividend…3 marks
10. Q13There are two assets: a risk-free asset that offers a 6% rate of return and a risky asset…3 marks
11. Q14There are two risky assets that are negatively correlated with ρ = – 0.5. Asset 1 has an …3 marks
12. Q15Sahitya Inc. is considering two different projects, A and B, for investment and can choos…3 marks
13. Q16A British Pound buys 100 Russian Rubles. The GDP deflator in Russia is 110, while the GDP…3 marks
14. Q17The prevailing interest rate in India is 9%, and the prevailing interest rate in the UK i…3 marks
15. Q18The share price for Infosys is Rs 500 today. A trader invests in Infosys by buying 100 Eu…3 marks
16. Q19Which of the following describes a short position in an option?3 marks
17. Q20Consider a put option and a call option with the same strike price and time to maturity. …3 marks
18. Q21The price of a stock is Rs 84. A trader buys a put option on the stock with a strike pric…3 marks
19. Q22When volatility increases with all else remaining the same, which of the following is tru…3 marks
20. Q23When the strike price increases with all else remaining the same, which of the following …3 marks
21. Q24Which of the following describes a protective put?3 marks
22. Q25You purchase two one-year call options with a strike price of Rs 80 and a one-year put op…3 marks
23. Q26The price of a three-month European put option on a non-dividend-paying stock with a stri…3 marks
24. Q27A stock is trading at Rs 100 today. In 3 months, the stock price can either increase to R…3 marks
25. Q28Question 283 marks
26. Q29You invest 60% of your money in a security with a beta of 1.35 and the rest of your money…3 marks
27. Q30Your opinion is that Cipla stock has an expected rate of return of 15%. Cipla has a beta …3 marks
28. Q31The current price of a non-dividend-paying stock is Rs 50. Over the next six months, it i…4 marks
29. Q32A risky asset has a 10% expected rate of return and a 20% standard deviation of the rate …4 marks
30. Q33You purchase a one-year call option with a strike price of Rs 20 and a one-year put optio…4 marks
31. Q34Suppose the risk-free rate is 4% and the expected market return is 9%. If the value of th…4 marks
32. Q35Security A has an expected return of 18% and a standard deviation of 20%. Security B has …4 marks