Financial management Archives

11. In arbitrage pricing theory, required returns are functioned of two factors which have

dividend policy

market risk

historical policy

Both A and B

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12. Type of option which cannot be exercised before an expiry date which is classified as

European option

American option

Australian option

money option

Detailed

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Solution

13. Call options situation in which strike price is greater than current price of stock is classified as

out-of-the-portfolio

in-the-portfolio

in-the-money

out-of-the-money

Detailed SolutionCall options

situation in which strike price is greater than current price of stock is classified as

14. Which of the following is / are assumption behind the realized yield approach?

The yield earned by investors has been, on average, in conformity with their expectations

The market price will continue growing at a constant rate forever

Both a and b

Detailed SolutionWhich of the following is / are assumption behind the realized yield approach?

15. Future value of interest if it is calculated two times a year can be a classified as

semi-annual discounting

annual discounting

annual compounding

semi-annual compounding

Detailed SolutionFuture value

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of interest if it is calculated two times a year can be a classified as

16. Capital gains yield is multiplied for beginning price to calculate

capital gain

growth gain

regular yield

variable yield

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17. Stock selling price is Rs 65, expected dividend is Rs 20 and cost of common stock is 42% then expected growth rate will be

0.1123 times

11.23%

11.23 times

Rs 11.23

Detailed SolutionStock selling

price is Rs 65, expected dividend is Rs 20 and cost of common stock is 42% then expected growth rate will be

18. Mutual fund allows investors to sale out their share during any normal trading hours is classified as

exchange traded fund

management expense

money trade fund

capital trade fund

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