Valuation, Principles & Framework – Corporate and Management Accounting MCQ

A Zero Coupon Bond (ZCB) was issued at a face value of ₹ 2,50,000 and has maturity of 5 years. Its YTM is 8%.Whether investor should buy, hold or sell the ZCB if the current market price is -(a) ₹ 1,85,000 (&) ₹ 1,65,000Select the correct answer from the options given below.

A Zero Coupon Bond (ZCB) was issued at a face value of ₹ 2,50,000 and has maturity of 5 years. Its YTM is 8%. What would be fair price of bond today?

What is the value of deep discount bond issued by IDBI for a maturity period of 15 years and having a par value of ₹ 1,00,000 if the required rate of return is 12%?

Zensar Ltd. issued 5 years 12% Bond. The face value of the bond is ₹ 1,000 which is redeemable in 5 equal installments. What would be the current price of the bond if the YTM is 10%?

ZPA Ltd. issued ₹ 1,000 optionally convertible debentures at a coupon rate of 10%. These debentures are convertible to 50 equity shares today. The shares are quoting ₹ 25 in the stock market. The investor expects an 8% return on his investment. Debentures are redeemable after 5 years. Will you suggest conversion?

A bond has a face value of ₹ 1,000 and the coupon rate is 8%. Interest on bonds is payable annually. Find the value of the bond if the required rate of return is 10% and the bond has a maturity of 20 years.

A bond has a face value of ₹ 1,000 and the coupon rate is 8%. Interest on bonds is payable annually. Find the value of the bond if the required rate of return is 6% and the bond is a perpetual bond.

Anurag has invested in a share whose dividend is expected to grow @ 15% for 5 years and thereafter @ 5% till the life of the company. Find out the value of the share, if the current dividend is ? 4 per share and investors required rate of return is 6%.

The required rate of return of investors is 15%. ABC Ltd. declared and paid an annual dividend of ₹ 4 per share. It is expected to grow @ 20% for the next 2 years and 10% thereafter. Compute the price at which the shares should sell.PVFactors: @ 15% for Year 1 = 0.8696 and Year 2=0.7561.

A large chemical company has been expected to grow at 14% per year for the next 4 years and then to grow indefinitely at the same rate as the national economy i.e. 5%. The required rate of return on equity share is 12%. Assume that company paid a dividend of ₹ 2 per share last year (D0 = 2). Determine the market price of the shares today.

Current value of Land & Buildings is ₹ 30,00,000, Furniture, Fixture & Fittings is ₹ 2,50,000. Inventory is valued at ₹ 9,11,000. Debtors are expected to realize 90% of their book value. You are informed that the preference dividend has not been paid for the last 5 years. Calculate the intrinsic value of per equity shares having face value of ₹ 6 each fully paid-up by Net Assets Method.

ZPA Ltd. is foreseeing a growth rate of 12% p.a. in the next two years. The growth rate is likely to fall to 10% for the third year and fourth year. After that growth rate is expected to stabilize at 8% p.a. If the last dividend (D₀) paid was ₹ 1.5 per share and the investor’s required rate of return is 16%, find out the intrinsic value per share of ZPA Ltd. as of date.

The shares of the company are selling at ₹ 20 per share. The firm had paid dividends @ ₹ 2 per share last year. The estimated growth of the company is approximately 8% per year. The required rate of return is 15.5%. The market value of equity shares as per the dividend growth model will be:

The shares of the company are selling at ₹ 45 per share. The firm had paid dividends @ ₹ 4.5 per share last year. The estimated growth of the company is approximately 5% per year. Determine the cost of equity of the company.

The Wind Urja Ltd. (WUL) is a closely held unlisted company with financial details as under:

Ramola Ltd. gives the following cash flows estimate:2015: ₹ 2,000 lakhs
2016 to 2018: Compound growth rate 6.5%
2019 to 2022: Compound growth rate 9.5%
Apply 2096 risk-adjusted discount rate and determine the value of the business.

Following details are available for two companies:X Ltd. has 9 lakh Equity Shares of ₹ 150 each, ₹ 135 paid-up.Y Ltd. has 40 lakh Equity Shares of ₹ 75 paid-up.What is the intrinsic value per share for these companies?

Value of perpetual bond is calculated by:

Which of the following best defines the market capitalization for a company’s shares?

As per Section 247 of the Companies Act, 2013, where a valuation is required to be made in respect of any property, stocks, shares, debentures, securities or goodwill or any other assets or net worth of a company or its liabilities, it shall be valued by a person having such qualifications and experience and registered as a valuer in such manner, on such terms and conditions as may be prescribed and appointed by the –

Which of the following best describes the replacement value of a business?

Analysts commonly consider all of the following to be indicators that the market is overvalued except.

Which of the following is NOT a method of a business valuation?

Provisions relating to ‘valuation by registered valuers’ are contained in –

Which of the following do financial analysts consider least important when assessing the long-run economic and financial outlook of a company?

Which of the following is equal to the present value of all cash proceeds received by a stock investor?

Which of the following is not a general principle involved in a business valuation?

Which of the following is another name for the required return, on a stock?

In which of the following cases valuation is essential?

Which of the following is the correct formula for the Capitalization of Earning Method?

Which of the following is required to be taken into consideration while valuing equity shares of the company?

Present value means –

Which of the following is normally used as discounting factor under the discounted cash flow valuation?

Statement I:Net Asset Method can be fairly used to value shares when the firm is liquidated.
Statement 11:This method does not give any weight to earning capacity of the company.

Net Realizable Value means___

Discounted cash flow valuation is based upon__