9/15/2019 PLUTUS 2019 || AGON 5.

PLUTUS 2019 || AGON 5.0

Instructions:
1. Quiz should be submitted by Team Leader
2. There is no negative marking
3. Multiple submission will lead to disquali cation

* Required

Email address *

puneetk05@iimamritsar.ac.in

Team Name *

Brainiacs

Team Leader's Name *

Puneet Kakkar

College Name *

IIM, Amritsar

What are the fundamental drivers of Price-to-Book ratio: i)

Expected Growth Rate ii) Beta of the stock iii) Net Pro t Margin
iv) Cost of Equity v) Payout Ratio vi) After Tax Operating Margin

i , ii , iii

i, ii, iii, v

i, ii, iv, v
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i, iii, iv, v

ABC Company is a retail store that sells tools to construction

companies across the country. ABC reported net income of
$200,000 and issued preferred dividends of $20,000 during the
year. ABC also had 30,000, $5 par common shares outstanding
during the year. Compute Return on Equity?

$1.4 per share

$1.6 per share

$1.8 per share

$1.2 per share

EV/EBITDA multiple is to be used to nd undervalued rms.

What can you say about the company which is most likely to be
undervalued?

Stock with low EV/EBITDA, High Tax Rate, High Return on capital

Stock with high EV/EBITDA, High Tax Rate, Low Return on capital

Stock with low EV/EBITDA, Low Tax Rate, High Return on capital

Stock with low EV/EBITDA, High Tax Rate, Low Return on capital

Consider a bond (Face Value=100) with 7% coupon (per annum),

paid Semi-annually and a term to maturity of 3 years. YTM is 6%
per annum. If there’s a decrease of 50 basis points in the annual
YTM, then: What’s the exact price change of the bond?

-1.39

+0.58

+1 39
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+1.39

-0.58

Consider a bond (Face Value=100) with 7% coupon (per annum),

paid Semi-annually and a term to maturity of 3 years. YTM is 6%
per annum. If there’s a decrease of 50 basis points in the annual
YTM, then: What % of the exact price change is captured by
duration?

98.245%

99.176%

97.384%

99.84%

Consider a bond (Face Value=100) with 7% coupon (per annum),

paid Semi-annually and a term to maturity of 3 years. YTM is 6%
per annum. If there’s a decrease of 50 basis points in the annual
YTM, then: What % of the exact percentage price change is due
to convexity?

0.8187%

0.16%

2.616%

1.746%

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Spot Exchange rate between Euro (EUR) and US dollar (USD) is

1.14 USD per EUR. The 2-year forward exchange rate (EUR/USD)
is 1.145. Given that 2-Yr interest rates are 4% in EUR and 3% in
USD. Calculate the no-arbitrage 2-yr forward exchange rate
(EUR/USD)

1.129

1.152

1.117

1.163

Spot Exchange rate between Euro (EUR) and US dollar (USD) is

1.14 USD per EUR. The 2-year forward exchange rate (EUR/USD)
is 1.145. Given that 2-Yr interest rates are 4% in EUR and 3% in
USD. To obtain an arbitrage pro t, an arbitrageur should do:

Borrow EUR for 2 years+ Buy USD + Long forward contract on EUR

Borrow USD for 2 years + Buy EUR + Short forward contract on EUR

Borrow EUR for 2 years + Buy USD + Short forward contract on EUR

Borrow USD for 2 years + Buy EUR + Long forward contract on EUR

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Spot Exchange rate between Euro (EUR) and US dollar (USD) is

1.14 USD per EUR. The 2-year forward exchange rate (EUR/USD)
is 1.145. Given that 2-Yr interest rates are 4% in EUR and 3% in
USD. Which of the following is not true:

Price to Sales ratio is used in case of loss making rms

Forward PE is not for newly formed companies

EBITDA/EV is used for measuring the cash return on investment

Price to Book Value is used for all the companies except Banking and Non-
Banking Financial Companies

Which company recently acquired Intel’s modem business?

Microsoft

Apple

Google

Amazon

Which of the following ventures are related to Elon Musk: 1.

Deep mind technologies 2. Paypal 3. The boring company 4.
SolarCity

1&2

1,2&3

All of the above

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On the basis of following data, which of the following statement

is correct?

. PQR has the most favourable coverage and ABC has the most favourable
leverage

XYZ has the most favourable coverage and PQR has the most favourable
leverage

ABC has the most favourable coverage and XYZ has the most favourable
leverage

XYZ has the most favourable coverage and ABC has the most favourable
leverage

Which of the following is not true for the portfolio of risky assets
and risk free assets?
The variance of the portfolio is equal to the weighted average of the
variance of the returns of risky assets and risk free asset

Standard deviation of the portfolio is equal to the product of standard

deviation of risky asset and its portfolio weight

Expected return of the portfolio is equal to the weighted average of risky

and risk free assets.

None of the above

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Calculate the value of the brand name for the company XYZ

$3.5 Billion

$3.95 Billion

$4 Billion

None of the above

The following regression equation is prone to: P/E = 3.45 +

1.21(Growth) + 3.23(ROE) - 0.6(Beta) +.7(Payout ratio)

Heteroskedasticity

Multicollinearity

Both a and b

None

Which of the following risk is not included in Business Risk? i)

Sales Risk ii) Financial Risk iii) Operating Risk

i, ii

i, ii, iii

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ii

Compute WACC for the following data:

10.0%

10.6%

11.8%

Can’t be determined

An investor gathered the following information about two 7%

annual-pay, option-free bonds: I. Bond R has 4 years to maturity
and is priced to yield 6% II. Bond S has 7 years to maturity and is
priced to yield 6% III. Both bonds have a par value of Rs.1,000.
Given a 50 basis point parallel upward shift in interest rates,
what is the value of the two-bond portfolio?

Rs. 2,030

Rs. 2,044

Rs. 2,086

Rs. 2,062

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In periods of rising prices and stable inventory quantities, which

of the following best describes the effect on gross pro t of
using LIFO as compared to using FIFO?

Decreases comparatively

Higher

The same

Lower

If a publicly-traded company has a beta of 1.7 and the riskless

rate for one-year Treasury bills is 4.5% and the expected return
for the market is 12.5%. What is the company's capitalization
rate? Suppose the company has current earnings of $5.20 per
share that have been growing at a rate of 6.5%. What should be
the company's share price using a capitalization of earnings
approach?

$46.54

$45.07

$44.68

$42.74

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