Reference no: EM132860336

Questions -

Q1. An investor is planning to purchase a stock of Prime Corp. The dividends per share of Prime Corp is expected to be: Year 1 - Php10; Year 2 - Php12; Year 3 - Php13. The investor also planned to sell it out after 3 years at Php110 per share. Suppose that the required return is 12%, the value of the stock today is?

a. 106

b. 110

c. 145

d. 147

Q2. Collaboration Inc. has directly placed an issue of commercial paper that has a maturity of 60 days at Php1.2 million. The interest was based on the risk free rate of 7% and a debt margin of 6%. The withholding tax rate is 20%. The underlying asset is Php3 million. The value of the commercial paper at maturity is

a. 980 000

b. 999 992

c. 1 200 000

d. 1 226 000

Q3. The risk free rate is 5% applicable for a Philippine USD denominated bond with an expected yield of 5%. While it is the given value, it is expected that the market will provide a return of 15%. A similar Australian Bond is expected to yield 2.50%, where the standard deviation for debt and equity are 0.50 and 0.50, respectively. The applicable beta is 1.2. The required return, if the country risk premium is part of the market premium is

a. 17%

b. 19.50%

c. 20%

d. 20.13%