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Exam Code: FIN
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NO.1 Johar Co has earnings per share of $0*80 and a constant annual dividend payout ratio of 25%.
Its equity shares have a beta of 1.2. The risk-free rate of return is 5% and the market rate of return is
8%.
What is the expected cost and predicted value of an equity share in Johar Co?
A. Expected cost = 20.6%, Predicted value = $3.88
B. Expected cost = 3.6%, Predicted value = $5.56
C. Expected cost = 8.6%, Predicted value = $2.33
D. Expected cost = 8.6%, Predicted value = $9.30
Answer: C

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NO.2 A put option based on Sigma Co's share has a premium of 86c and its strike (exercise) price is
460c.
Sigma's underlying share is currently quoted at 422c.
What does the premium consist of?
A. Neither intrinsic nor time value
B. Only intrinsic value
C. Both intrinsic value and time value
D. Only time value
Answer: C

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Posted 2016/12/30 11:33:20  |  Category: CPA  |  Tag: FIN ExpertFR spotCPA