Valuation, Principles & Framework – Corporate and Management Accounting MCQ

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Valuation, Principles & Framework – Corporate and Management Accounting MCQ

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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.

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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?

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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%?

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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%?

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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?

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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.

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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.

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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%.

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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.

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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.

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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.

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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.Valuation, Principles & Framework – Corporate and Management Accounting MCQ 4

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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:

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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.

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

  Market Value on 31.3.2019 (₹ in lakh)
Land and building 6,500
Plant and machinery 2,000
Furniture and fixtures 20
Trade receivables 1,000
Cash & cash equivalents 30
Spares 10
Trade payables 20
Long-term loans 2,000
Outstanding expenses 5Worldwide Wind Energy Ltd. is ready to take over WUL by paying a 35% premium over the market value of assets and liabilities as goodwill. Calculate the price which WWEL is ready to pay to shareholders of WUL.

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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.

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Following details are available for two companies:Valuation, Principles & Framework – Corporate and Management Accounting MCQ 2X 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?

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Value of perpetual bond is calculated by:

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

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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 –

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

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

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

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

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

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

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

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

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In which of the following cases valuation is essential?

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

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

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Present value means –

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

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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.

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Net Realizable Value means___

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Discounted cash flow valuation is based upon__

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