1. A project has a 10% discounted payback of 2 years, with annual after-tax cash inflows of 400 lacs from year-end 2 to 4. What was the initial cash outlay made at the beginning of year 1?
2. A project is expected to yield an after-tax cash inflow of 150 lacs at the end of year 2, with a cost of capital of 10% and expected inflation of 3% per year. How should this cash flow be accounted for when computing the NPV?
3. If a firm has an asset β of 1.3 and an equity β of 1.5, which of the following is true?
4. A portfolio contains three securities: A, B, and C. Given the correlation coefficients and standard deviations, what is the covariance between securities A and B?correlation coefficients ρAB = +0.4; ρAC = +0.75; ρBC = - 0.4; standard deviation σA = 9; σB = 11; σC = 6; weights ωA = 0.2; ωB = 0.5; ωC = 0.3;
5. A bond with a 1,000 per-value matures in 5 years and carries a 14% coupon rate. The required return is 10%. What is the bond's value (rounded to the nearest rupee)?
6. Given the return, risk, and beta of a mutual fund, what is the Treynor's Ratio of the mutual fund?
7. The 90 day interest rate is 1.85% in USA and 1.35% in the UK and the current spot exchange rate is $ 1.6/£. The 90-day forward rate is
8. The intercept of the Security Market Line (SML) on the y-axis is:
9. A mutual fund wants to hedge its portfolio of shares worth ` 10 crore using the NIFTY Index Futures. The contract size is 100 times the index. The index is currently quoted at 6840. The Beta of the portfolio is 0.8. The beta of the index may be taken as 1. What is the number of contracts to be traded?
10. A call option at a strike price of 200 is selling at a premium of 24. What share price on maturity will break even for the buyer of the option?