A stock has a beta
value of 1.4. The risk free rate is 4.5% while an expected return on a market
portfolio is calculated at 12.75%. I.
The market risk premium
is 6.3% II.
The expected return on
investment amounts to 11.55% III.
The stock is riskier
than the market.
Which statement/s is/are correct? A. B. C. D.
All the three
I only
I and III
II and III [4 marks]
(xii) Elizabeth wishes
to borrow Rs 1,500,000 which will be repaid over a period of 25 years on a
monthly basis. She has been told that the Annualised percentage Rate is 4.5% at
HSBC. ABSA can offer the same amount with the same conditions but with a rate
of 3.75%. What is the difference in the monthly payments for the two banks? A.
B. C. D.
Between 200 and 250
Between 300 and 350
Between 500 and 550
Between 600 and 650 [5
marks]
(xiii) Charles has been
approached by a pension company where he will have to contribute a monthly sum
so that after 20 years when he will retire, he will have at his disposal a sum
of Rs1,800,000. The Annualised Percentage Rate has been estimated to be 7.2%.
What should be his monthly contribution? A. B. C. D.
3,372
3,572
3,772
3,972 [5 marks]
