Question 65

How much does Shs 15,000/=, Shs 25,000/= and Shs 35,000/= invested at the beginning of years one, three and five respectively grow to at the beginning of year eight if the rates of interest are 7%, 0%, -4%, 11%, 13%, 14%, -5% and 16% per annum in years 1-8 respectively?

Select one:

A. Shs 96,364.75

B. Shs 114,000.00

C. Shs 111,783.11

D. Shs 83,363.60

Question 66

Which of the following represents the correct formula for valuing a share with a growing dividend?

Select one:

A. Pt = d0 (1 - g)/(r - g)

B. Pt = d0 (1 + g)/(r - g)

C. Pt = d0 (1 + g)/(r + g)

D. Pt = d1 (1 + g)/(r + g)

Question 67

Ceteris paribus, for a two asset portfolio, in which case is the riskiness of the returns lowest?

Select one:

A. Correlation coefficient of the returns is 0.5

B. Correlation coefficient of the returns is -1

C. Correlation coefficient of the returns is 0

D. Correlation coefficient of the returns is +1

Question 68

Which of the following is the correct expression for the percentage return of an investment in a share?

Select one:

A. R_t = (-d_t - P_t + P_t-1)/P_t-1

B. R_t = (d_t + P_t P_t-1)/ d_t

C. R_t = (d_t + P_t P_t-1)/P_t-1

D. R_t = (d_t + P_t P_t-1)

Question 69

A friend of yours, James, is seeking to obtain a Shs 6 million mortgage loan, repayable monthly in arrears. He has approached a lender who has provided him with two alternatives.

Alternative one: Declining balance loan Duration: Rate: Monthly repayment:	5 years 15% p.a Shs 142,739.58
Alternative two: Flat rate loan Duration: Rate:	5 years 9.5% p.a

What is the total interest payable in alternative one and the monthly repayment in alternative two respectively?

Select one:

A. Alternative one: Shs 2,564,374.80 and alternative two: Shs 147,500.00

B. Alternative one: Shs 4,500,000.00 and alternative two: Shs 109,500.00

C. Alternative one: Shs 4,500,000.00 and alternative two: Shs 147,500.00

D. Alternative one: Shs 2,564,374.80 and alternative two: Shs 109,500.00

Question 70

What will be the after tax value of Shs 1,200,000 after three years, if the interest rate during the period is 11.5% per annum and tax rate on earnings is 10%?

Select one:

A. Shs 1,241,400.00

B. Shs 1,617,091.55

C. Shs 1,612,494.56

D. Shs 1,497,091.55