Professional Documents
Culture Documents
Where, F is face value
P is purchase price
d is the duration/maturity period
In the given case, yield =
100 365
50
P
P
If yield = 9.5%, P is calculated as,
100 365
50
P
P
= 0.095
P
P 100
=
0.095 50
365
P
P 100
= 0.013
1.013 P = 100 P =
100
1.013
P = Rs.98.72.
64. B Debentures are treated as capital market instruments as their tenure will be more than 1 year.
Hence the answer is (b). All others are money market instruments.
65. E Venture capital funding companies generally provide risk capital to the technology oriented and
highly risky businesses. No other entities, as mentioned in the other options, does the same.
66. A The bank rate is the rate at which the RBI rediscounts the first class commercial bills of exchange
and not at which the RBI issues its 365 days T-Bills. Statement (I) is not true The Cash Reserve
Ratio is the cash that banks deposit with reserve bank as a proportion of their deposits. It is a true
statement. . Statutory Liquidity Ratio is the reserve in addition to the Cash Reserve Ratio where
the banks are required to maintained specified reserves in the form of government securities,
specified bonds and approved securities. Statement (III) is true. Hence option (a) is the
answer.
Page 24 of 25
67. C First find out the effective annual rate (EAR)
EAR =r
e
=(1 +r
n
/m)
m
1
Where,
r
n
nominal rate of interest, i.e., 6.82%
m number of times compounding done =4
r
e
=(1 +0.0682/4)
4
1 =0.06996 or 0.07 =7%
Now, let the sinking fund payment be A.
Rs.50,00,000 =A x FVIFA
(7%,15)
A =50,00,000 / 25.129 =Rs.1,98,973.
Rs.1,98,973 has to be paid into the sinking fund at the end of each year. Hence (c) is the answer
68. D
Present value factor for a perpetual annuity =
1
i
.
Hence it decreases with an increase in the interest rate. Hence (d) is the correct option.
Future Value Interest Factor =
n
(1 i) + .
Hence it increases with increase in the interest rate.
Future Value Interest Factor For Annuity (FVIFA) =
n
(1 i) 1
i
+
. FVIFA also increases with
increase in the interest rate.
69. A In common size analysis the items in the income statement are expressed as percentage of net
sales. Hence (a) is the answer.
70. C
Operating profit Rs.50,00,000
Less : Interest on :
Secured loans @ 14% Rs.7,00,000
Unsecured loans @ 10.5% Rs.2,10,000 Rs.9,10,000
PBT Rs.40,90,000
Less tax @ 50% Rs.20,45,000
PAT Rs.20,45,000
No of shares = 10,00,000
EPS =
.20, 45,000
2.045
. 10,00,000
PAT Rs
no ofshares
= =
P/E =
80
2.045
Market price
EPS
= = 39.12.
71. B
Equity
debt Total
=
4
5
Adding 1 to both sides of the equation we get:
Equity
debt Total
+1 =
4
5
+1 or
Equity
equity debt Total +
=
4
4 5+
or
Equity
asset Total
=
4
9
From above, Equity =
9
4 asset Total
=
9
4 4500
=Rs.2,000
Now, total assets =Total debt +equity =Rs.4,500
or Total debt +2000 =4500
or Total debt =4500 2000
=Rs.2,500
Long term debt =Total debt Short term debt =2500 600
=Rs.1,900.
Page 25 of 25
72. D Overtrading means that the firm has disproportionately low level of working capital with respect
to the level of sales. To define it as a state in which the firm has disproportionately high level of
working capital with respect to sales or a disproportionately high level of receivables with respect
to total assets or a disproportionately high level of cash with respect to total assets or low
turnover of working capital is incorrect.
< TOP OF THE DOCUMENT >