Question 1

Section A (1 Mark)The proposed Fair Tax would change the U.S. tax system and instead:

Options :

A : Institute a national sales tax

B : Institute a single income tax rate for all taxpayers

C : Would only tax the rich

D : None of the Above

Answer: A

Question 2

Section A (1 Mark)H Ltd, a UK resident company, owns 100% of the share capital of two other UK companies and 80% of the share capital of T SA, a company resident in Italy.H Ltd has three associated companies.

Options :

A : TRUE

B : FALSE

Answer: A

Question 3

Section A (1 Mark)You buy a investment plan by investing Rs. 5000/- per month for first 12years and Rs. 10000/- per month for next 12 years. If the rate of interest is 15% per annum compounded monthly . How much amount would you have after 24 years?

Options :

A : 21392639

B : 15802741

C : 15909254

D : 31284601

Answer: C

Question 4

Section C (4 Mark)Assume the following;With this agreement, every 6 months, the transfer of funds takes place between fixed rate payer and floating rate payer.What would Net Cash flows after 6-months from the initiation date?

Options :

A : $15,00,000 from Fixed-Rate to Floating-Rate Payer

B : $12,50,000 from Fixed-Rate to Floating-Rate Payer

C : $14,50,000 from Floating Rate Payer to Fixed Rate Payer

D : $10,50,000 from Floating Rate Payer to Fixed Rate Payer

Answer: B

Question 5

Section B (2 Mark)A stock with a Beta of 0.7 currently priced at Rs 50 is expected to increase in price to Rs 55 by year end and pay Rs 1 as dividend. The expected market return is 15% and the risk free rate is 8%. The stock is:

Options :

A : Overpriced, so do not buy it

B : Underpriced, so buy it

C : Properly priced so buy it

D : Properly Priced so do not buy it

Answer: A

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