1. An APR of 11% p.a. compounded annually is equal to which EAR (effective annual rate) Select one: a. EAR of 11% p.a. b. EAR of 10.5% p.a. C. EAR of 10.8% p.a. d. EAR of 10% pa 2. A company raising funds from the issuance of corporate bond is an example of Select one: a. Financing decision b. Investment decision c. Dividend decision d. Capital budgeting decision 3. You want to borrow $65000 from your local bank to buy a new sailboat for 5 years. The rate of interest for the loan is 12% p.a. compounded monthly? Which equation is correct below related to this question if C is the monthly payment? Select one: a. 65000 = c/0.12 b. 65000 = (c/0.12)*(1-(1/(1.12060)) c. None of the the options are correct d. 65000 = (0,0.01)*(1-(1/(1+0.01)*60)) 4. The information from income statements are Select one: a. All of the options are correct b. The bottom line - net profit c. The operating profit for the firm d. The top line - sales revenue 5. Mark has been working on advanced technology in laser eye surgery. His technology will be available in the near term. He anticipates his first annual CF from technology to be 175,000$ received two years from today. Subsequent annual CF will grow at 3.5% per year till 20 years. The technology will cease to exist beyond 20 years. What type of cash flow stream is this question mentioning about? Select one: a Growing annuity b. Growing perpetuity c. Perpetuity d. Annuity 6. Given an interest rate of 12% per year compounded monthly, what is the value at date t = O of a growing perpetual stream of $200 monthly payments that begin at date t = 1 (1 month) and grows at 0.05% per month till perpetuity? (nearest integer value) Select one: a. $20000 b. -$5000 c. $21053 d. $2857 7. What are the three important decisions in Financial Management? Select one: a. Investment decision, Financing decision and Capital structure decision b.investment decision, Capital budgeting decision and dividend decision c.Financing decision, Capital structure decision and dividend decision d.Capital budgeting decision, Financing decision and Dividend decision 8. The conflict of interests between shareholders (or owners) and the manager (who is not the owner) in a firm is due to the following relationship Select one: a Agent - Agent relationship b. None of these c. Principal principal relationship d. Principal-agent relationship 9. An APR (Annual percentage rate) of 10% p.a. compounded quarterly is equal to (till 2 decimal place expressed as %) a Effective annual rate of 10.38% p.a. b. Effective annual rate of 11% p.a. c. Effective annual rate of 10% p.a. d. Effective annual rate of 10.20% p.a. 10. Barett Pharma is considering a drug project that costs $2.5 million today and is expected to generate the annual cash flow of $227000 starting end of 2 year, growing at 5% per annum forever. In order to find the discount rate where Barett Pharma will be indifferent between accepting or rejecting the project, which equation will be correct? a. None of the options are correct b.2.5 = 0.227/ C.2.5 = (0.227/(-0.05)) d. 2.5 = (0.227/(r-0.05))*(1/(1+r)) 11. A farmer has taken a loan from Kidar Co. for INR 100. Kidar Co. told the farmer that he can take INR 100 today but will have to pay the company INR 110 after 20 days. If the farmer was not able to pay off the loan for over a year, what is the amount he is supposed to pay to Kidar Co? Interest is compounded every 20 days (Take 1 year has 360 days). (Answer rounded to the nearest integer in INR) a. 1238 b. 769 c. 556 d. 1967 12. A constant perpetual stream of cash flows a. A growing cash flow every period for a finite time period b. A constant cash flow every period till a finite time period c. A constant cash flow every period till infinity (till forever) d. A growing cash flow every period till infinity 13. What is an effective annual rate? a. It is a rate which is per annum rate compounded annually b. It is a rate which is per annum rate continuously compounded C. None of the options is correct d. It is a rate which is per annum rate compounded semi-annually