Question 1

Marks: 1
If Treasury bill rate is 4%, Treasury bond rate is 6%, equity risk premium is 5%, what is the
expected return for a long-term investor in a stock with beta of 0.8?
Choose one answer.
a. 6%
b. None is correct
c. 10%
d. 9%
Question 2
Marks: 1
If the company stable growth rate is 6%, year-0 dividend is 2 USD per share, payout ratio is 50%,
and expected return rate is 10%, what is its current PE?
Choose one answer.
a. 5.6
b. None is correct
c. 10.23
d. 13.25
Question 3
Marks: 1
A bond with a $1,000 face value and a 7 percent annual coupon. The bond will mature in 9 years.
The nominal yield to maturity (Kd) is 9 percent. What is the price of the bond today?
Choose one answer.
a. $ 781.99
b. $ 858.63
c. $ 784.27
d. $ 880.10
Question 4
Marks: 1
If nominal term is 7% and an inflation-indexed treasury offers a 3% real return, what is the
inflation rate? Nominal= real + inflation
Choose one answer.
a. None is correct
b. 10%
c. 2%
d. 4%
Question 5
Marks: 1
What is the duration of a 6%, $1000 par bond maturing in three years if YTM = 10% and interest
is paid annually?
Choose one answer.
a. 2.92
b. 2.72
c. None is correct
d. 2.82
Question 6

Marks: 1
For a retailer like Wal-Mart, which multiple is the most appropriate to be used in relative
valuation?
Choose one answer.
a. Price/Book value
b. PEG (Price/Earnings adjusted for growth)
c. Price/Sales
d. Price/Earnings
Question 7
Marks: 1
For a large bank in Vietnam, which multiple is the most appropriate to be used in relative
valuation?
Choose one answer.
a. PEG (Price/Earnings adjusted for growth)
b. Price/Sales
c. Price/Earnings
d. dePrice/Book value
Question 8
Marks: 1
If a bond was sold at 108, the stated rate of interest was:
Choose one answer.
a. Higher than the market rate on date of issuance.
b. Not related to the market rate on date of issuance.
c. Lower than the market rate on date of issuance.
d. Equal to the market rate on date of issuance.
Question 9
Marks: 1
What is the duration of a discounted Treasury bill with YTM = 6% and time to maturity = 9
months?
Choose one answer.
a. 0.75 year
b. 0.65 year
c. 0.45 year
d. 0.55 year
Question 10
Marks: 1
Which multiple can be used as an adjustment of PE for growth rate?
Choose one answer.
a. Price to sales
b. PEGY (price earnings to expected growth in earnings per share
and dividend yield)
c. None is correct
d. PBV (Price to book value)
Question 11
Marks: 1
You can immune a future obligation by matching ______ with a bond portfolio

Choose one answer.

a. Future cash flow
b. Modified Duration
c. Convexity
d. Macaulay Duration
Question 12
Marks: 1
If a bond was sold at 98, the coupon rate was:
Choose one answer.
a. Equal to the market rate on date of issuance.
b. Higher than the market rate on date of issuance.
c. Not related to the market rate on date of issuance.
d. Lower than the market rate on date of issuance.
Question 13
Marks: 1
Which factor is not needed when evaluate the value of a firm using DCF?
Choose one answer.
a. Expected Cash flow to firm
b. None is correct
c. Weighted average cost of capital
d. Cost of equity
http://www.investopedia.com/university/dcf/
Question 14
Marks: 1
The duration of a bond normally decreases with a decrease in:
Choose one answer.
a. Inflation
b. Coupon rate
c. Time to maturity
d. Yield to maturity
Question 15
Marks: 1
Other thing held equal, higher growth firms will have
Choose one answer.
a. Lower PE ratio
b. Higher PE ratio
c. Average PE ratio as the industry
d. None is correct
Question 16
Marks: 1
Which is NOT the Advantage of Adjusted present value approach?
Choose one answer.
a. None is correct
b. Suitable when evaluating a dollar amount of debt
c. Separate the effects of debt into different components
d. Allow the use of the same discount rates for all capital

components
http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Adjusted%20Present%20Value%2
0%28APV%29.aspx?mode=none
Question 17
Marks: 1
Which of the following best describes Bond duration?
Choose one answer.
a. Duration is a measure of the sensitivity of bond price to changes in
the risk free interest rate
b. None of these
c. Duration is a measure of the sensitivity of bond price to changes in
the average interest rate in the market
d. Duration is a measure of the sensitivity of bond price to changes in
the maturity of the bond
http://www.investopedia.com/terms/d/duration.asp
Question 18
Marks: 1
What could be used as an equation of Plug in a financial model?
Choose one answer.
a. All are correct
b. Cash = Total Assets Current Assets Net Fixed Assets
c. Cash = Total Equity Current Assets Net Fixed Assets
v
d. Debt = Total assets Current liabilities Equity
Question 19
Marks: 1
The weights of two bonds in a portfolio are 45% and 55%, the first bond has duration = 5, the
bond portfolio duration = 7, what is the duration of the second bond?
Choose one answer.
a. 8.74
b. 8.54
c. 8.64
d. 8.44
Question 20
Marks: 1
Which is NOT an approach to estimate Risk premium?
Choose one answer.
a. None is correct
b. Comparable risk premium
c. Historical risk premium
d. Implied risk premium
Question 21
Marks: 1
The concept of __________ measure the riskiness of company comparing with the market when
leaving out the effect o f leverage
Choose one answer.
a. Levered risk

b. Unlevered risk
c. Unlevered beta
d. Levered beta
Question 22
Marks: 1
Duration measures the weighted average maturity of a noncallable bond's cash flows on a present
value basis.
Choose one answer.
a. False
b. True
c. Can't be determined
Question 23
Marks: 1
Which is the fundamental variable that mostly explains the Value to Book value multiple?
Choose one answer.
a. Growth rate
b. ROC
c. Payout ratio
v
d. Risk
Question 24
Marks: 1
Which is NOT a model for Cost of capital approach?
Choose one answer.
a. High growth model
b. Stable growth model
c. Multi-stage model
d. Two-stage model
Question 25
Marks: 1
What is the Duration of a Portfolio of 3 bonds with durations of 7, 8, 9 and weights of 0.5, 0.3,
0.2 respectively?
Choose one answer.
a. 8.2
b. 7.3
c. 7.7
d. 7.1
Question 26
Marks: 1
What is the duration of a 6%, $1000 par bond maturing in two years if YTM = 10% and interest
is paid annually?
Choose one answer.
a. None is correct
b. 1.89
(1.94)
c. 1.91
d. 1.83
Question 27

Marks: 1
Of the alternatives available, the bond that has the shortest duration is the bond with a:
Choose one answer.
a. 15-year maturity, 6% coupon
b. 25-year maturity, 4% coupon
c. 30-year maturity, 0% coupon
d. 15-year maturity, 5% coupon
Question 28
Marks: 1
The Thailand government had 5-year Baht bonds outstanding, with a yield to maturity of about
10.0 % on January 1, 2007.
In January 2007, the Thailand government had a local currency sovereign rating of XXX. The
typical default spread (over a default free rate) for XXX rated country bonds in early 2007 was
3%. The risk free rate in Thailand Baht is
Choose one answer.
a. None of the others
b. The yield to maturity on the 5-year bond (=10.0%)
c. The yield to maturity on the 5-year bond Default spread
(=7.0%)
d. The yield to maturity on the 5-year bond + Default spread
(=13.0%)
Question 29
Marks: 1
What is the stock price (USD) of a firm which has value of operating assets of 200 million dollar,
market value of debt of 50 million dollar, cash of 20 million dollar, and 2 million outstanding
shares?
Choose one answer.
a. None is correct
b. 85
c. 75
d. 20
Question 30
Marks: 1
Find the price of a 10 percent coupon bond $1000 par value with three years to maturity if the
yield to maturity is now 12 percent. Use semiannual discounting.
Choose one answer.
a. $952.20
b. $999.80
c. $950.83
d. $1196.7