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Thursday, December 2, 2010

Fin622 Mid Term Current Paper (Dec 2010)

Total quiz =32

Mcq =28
2 question =3 numbers
2 question = 5 number

Q suppose we have two stocks i.e. stock A and stock B.stock A has beta of 1.5 and stock B has a beta of 0.75.The expected rate of return on average stock is 13% and the risk free rate of return is 7%.By how much does the required rate on the riskier stock exceeds the required return on the less risky stock. (5)

Q Why weighted average cost of capital of a levered firm is lesser than that of an Un-levered firm? Explain briefly? (3)


Another Paper:-

1. Differentiate stable dividend policy and the constant dividend policy? 5 marks

2. What are gear and un gear beta describe the difference? 3

3. Break-even analysis and sensitivity analysis explain it. Marks 3

4. Why capital rationing makes hurdle for business to invest in optimum investment? 5

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