UGC NET/JRF EXAM, (MANAGEMENT) June 2019

Total Questions: 80

41. International Fisher Effect suggests that a home currency wil

Correct Answer: (b) Depreciate if the current home interest rate exceeds current foreign interest rate
Solution:International Fisher Effect suggest that a home currency will depreciate if the current home interests rate exceeds current foreign interest rate.

42. What is the payoff at maturity of a long call below the strike price?

Correct Answer: (b) Zero
Solution:If the call option is below the strike price at the maturity the investor will not gain anything, So its payoff will be zero.

43. Which one of the following is NOT an integral part of credit policy of a business firm?

Correct Answer: (d) Credit rating
Solution:Credit rating is not an integral part of credit policy of a firm. Credit rating is assigned by a credit rating agency on the credit worthiness of a company.

44. What is the one-month forward price of crude oil trading at $ 70 a barrel when annual interest rate is 6 percent and monthly storage cost amounts to $ 0.60?

Correct Answer: (c) $ 70.95
Solution:

45. The credit of taking portfolio theory from abstraction to reality goes to

Correct Answer: (b) William Sharpe
Solution:The credit of taking portfolio theory from abstraction to reality goes to William Sharpe in 1960's. William Sharpe developed the (CAPM) capital assets pricing model taking off from Harry Markowitz's portfolio theory.

46. Firm A acquirers firm B. Market price of shares of B is20 per share and EPS is5. For an exchange ratio of 1.5: 1, what was the P/E ratio used in acquiring firm В?

Correct Answer: (c) 6
Solution:

47. A large firm operating over a wide geographical area can speed up its collection by

Correct Answer: (a) Concentration banking
Solution:Concentration banking is the practice of shifting the funds in a set of bank accounts into an investment accounts, from which the funds can be more efficiently invested. Concentration banks usually requires that an organization keep all of its bank account with a single bank.

48. What is the market price per share (face value = 100) as per Walter model if the profitability rate of the company is 16 percent, payout ratio is 80 percent and the cost of capital is 10 percent?

Correct Answer: (c) ₹ 179.20
Solution:

49. If risk-free return is 8 percent and the expected return on a market portfolio is 12 percent, the required return on a stock is 15 percent. What is stock beta?

Correct Answer: (b) 1.75
Solution:

50. A company's share is currently selling for 50 and is expecting a dividend of3 per share after one year which is expected to grow at 8% indefinitely. What is the equity capitalisation rate?

Correct Answer: (c) 14 percent
Solution: