Financial ManagementValuation Concepts and Valuation of Securities (CBSENET (Based on NTAUGC) Management (PaperII)): Questions 1  5 of 8
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Question number: 1
» Financial Management » Valuation Concepts and Valuation of Securities
Question
The value of a bond with a given maturity period is
(June 2014 Paper II)
Choices
Choice (4)  Response  

a.  Present value of annual interest plus present value of maturity value 

b.  Present value of maturity value of the bond 

c.  Maturity value received 

d.  Total amount of interest plus the maturity value received 

Question number: 2
» Financial Management » Valuation Concepts and Valuation of Securities
Appeared in Year: 2015
Question
Under the modified accelerated cost recovery system (MACRS) an asset in the’5 years property class would typically be depreciated over how many years? (December)
Choices
Choice (4)  Response  

a.  7 years 

b.  5 years 

c.  4 years 

d.  6 years 

Question number: 3
» Financial Management » Valuation Concepts and Valuation of Securities
Question
In the context of the Capital Asset Pricing Model (CAPM) the relevant measure of risk is
Choices
Choice (4)  Response  

a.  unique risk 

b.  variance returns 

c.  beta 

d.  standard deviation of returns 

Question number: 4
» Financial Management » Valuation Concepts and Valuation of Securities
Question
The risk free rate and the expected market rate of return are 0.06 and 0.12 respective. According to the capital asset pricing model (CAPM) the expected rate of return on security X with a beta of 1.2 is equal to
Choices
Choice (4)  Response  

a.  0.144 

b.  0.12 

c.  0.132 

d.  0.06 

Question number: 5
» Financial Management » Valuation Concepts and Valuation of Securities
Question
According to capital asset pricing model assumptions, investors will borrow unlimited amount of capital at any given
Choices
Choice (4)  Response  

a.  fixed rate of interest 

b.  risk free expected return 

c.  risk free rate of interest 

d.  identical and fixed returns 
