DAWN OF INVESTORS 2.

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Q1. If the five year present value annuity factor is 3.60478 and four year present value annuity factor
is 3.03735, what is the present value of Re.1 received at the end of 5 years ?

a. 0.56743

b. 1.56743

c. 0.57643

d. .57963

Q2. Which of these is an appropriate measure of individual share risk (i.e. the risk of a single share
held as part of a portfolio)?

a. Variance

b. Beta

c. Standard deviation

d. Correlation

Q3. Which of the following defines free cash flow?

a. After-tax operating income + depreciation + interest - capital expenditures - change in net

working capital.

b. Gross profit + depreciation + interest - capital expenditures - change in net working capital

c. Net profit + depreciation + interest - capital expenditures - change in net working capital.

d. After-tax operating income + tax shield + depreciation + interest - capital expenditures -

change in net working capital.

Q4. When British Airways merged with Iberia, the Spanish airline, what kind of merger was this?

a. Vertical.

b. Horizontal.

c. Joint venture.

d. Conglomerate.

Q5. Which committee recommended the merger of large Indian banks to make them strong ?

a. Narasimham – 1 committee

b. A.C. Shah Committee

c. A. Ghosh Committee

d. Narasimham – 2 committee
Q6. What is the present value annuity factor at a discount rate of 11% for 8 years ?

a. 5.7122

b. 0.43393

c. 2.30454

d. 5.14612

Q7. _____ associate banks and Bharatiya Mahila Bank (BMB) were merged with SBI with effect from
1 April,2017 ?

a. 6

b. 2

c. 5

d. 4

Q8. The Reserve Bank has imposed a penalty of Rs 35 lakh on which bank for violating norms on
fraud classification and notification?

a. BOB

b. SBI

c. PMC Bank

d. Tamilnad Mercantile Bank

Q9. Which of the following company is aiming to break even across top 10 cities in FY20?

a. BigBasket

b. Grofers

c. Nature’s Basket

d. None of the above

Q10. Suppose there is excess supply in a market and the price decreases. Which of the following
combinations of events will occur?

a. There will be a fall in quantity supplied and a rise in quantity demanded.

b. There will be a fall in quantity supplied and a rise in demand.

c. There will be a fall in supply and a rise in quantity demanded

d. There will be a fall in supply and a rise in demand

Q11. Suppose a demand curve runs from the price axis to the quantity axis in a straight line.
Whereabouts will price elasticity of demand =-1.0?

a. Where the curve meets the price axis

b. Everywhere along the curve.

c. At the mid-point of the curve

d. Nowhere along the curve.

Q12. Which of the following statements about the incidence of a specific tax is false?

a. The incidence which falls on consumers plus the incidence which falls on producers equals
the amount of the tax.

b. The incidence falls more heavily on producers than consumers if the demand curve is flatter
than the supply curve.

c. The incidence falls more heavily on consumers than producers if the supply curve is flatter
than the demand curve

d. The incidence always falls wholly on consumers.

Q13. Suppose that one month, injections in a four-sector economy are greater than withdrawals.
Which of the following statements is false?

a. Planned spending will be greater than output

b. Actual investment will be less than planned investment.

c. Planned investment must exceed planned saving

d. Output is likely to be increased

Q14. _____ is an initiative recently launched by Finance Minister which is an Ease of Doing Business
monitoring dashboard of the Indian Customs which will help the public see the daily Customs.

a. ICEDASH

b. ATITHI

c. PAHAL

d. SWABHIMAN

Q15. Suppose inflation over the next year is expected to be 5%, and assume there are no supply
shocks. What rate of inflation will the short-run Phillips curve show at the natural rate of
unemployment?

a. 0%

b. Between 0% and 5%

c. 5%

d. Over 5%

Q16. The market value of Charter Cruise Company's equity is $15 million, and the market value of its
debt is $5 million. If the required rate of return on the equity is 20% and that on the debt is 8%,
calculate the company's cost of capital. (Assume no taxes.)

a. 20%
b. 17%

c. 14%

d. None of the above

Q17. A country named XX recently changed its policies to solve its economic problems and safeguard
the national interests, raised the import duties for certain items to up to 100%. As a result of this,
country YY whose major exports were made to country XX, increased the economic problems for
country YY. What is this concept called?

a. Comparative Production Advantage

b. Import Substitution Industrialization

c. Beggar Thy Neighbour

d. Voluntary Export Restraints

Q18. Suppose ABC Company can issue new 10-year bonds, with 6 percent coupon, paid semi-
annually. Assume a tax rate of 30 percent. The company’s before-tax cost of debt if these bonds are
issued at 102 is closest to:

a. 1.94%

b. 3.88%

c. 5.54%

d. 6.0%

Q19. Assume a company’s retention rate is 70 percent, its cost of equity capital is 12 percent, its
forecasted earnings per share are $8.00, and its return on equity is 6 percent. Its share price is
closest to:

a. 28.57

b. 30.77

c. 38.77

d. 40.00

Q20. Using annual raw returns regression equation of stock returns on market returns has a slope of
0.4, intercept of 2.50%, & R2 = 35.60. The risk-free rate is 5.5%. The stock has_______ A.

a. Performed better than the market by 3.30%

b. Performed worse than the market by 3.30%

c. Performed worse than the market by 0.80%

d. Performed better than the market by 0.80%