Financial Management - Study Mode

[#1021] Beginning price is Rs 25 and capital gains yield is 5% then capital gain would be
Correct Answer

(B) Rs 1.25

Explanation

Solution: Capital gain = Beginning price * Capital gains yeild = 25 * 5% = Rs. 1.25

[#1022] If an expected final stock price is Rs 85 and an original investment is Rs 70 then value of expected capital gain would be
Correct Answer

(A) Rs 15.00

Explanation

Solution: Value of expected gain = Expected final stock price - Original investment = Rs. 85 - Rs. 70 = Rs. 15.00

[#1023] Third step in calculating value of stock with non-constant growth rate is to find
Correct Answer

(A) PV of expected dividends

Explanation

Solution: Third step in calculating value of stock with non-constant growth rate is to find PV of expected dividends. The first component of value is the present value of the expected dividends during the high growth period.

[#1024] In expected rate of return for constant growth, expected total rate of return is equal to
Correct Answer

(B) dividend yield

Explanation

Solution: In expected rate of return for constant growth, expected total rate of return is equal to dividend yield. The dividend yield is the ratio of a company's annual dividend compared to its share price.

[#1025] An efficient market hypothesis states in which all public or private information is reflected in current market prices is classified as
Correct Answer

(D) strong form efficiency

Explanation

Solution: An efficient market hypothesis states in which all public or private information is reflected in current market prices is classified as strong form efficiency. Strong-form efficiency is a component of the random walk theory and states that market and securities prices are not random and are influenced by past events. Strong-form efficiency is the opposite of weak form efficiency.