Question

XYZ Ltd is going into liquidation. The realizable value of its existing assets (net of current liabilities) works out to INR 100 million. It has a long term debt outstanding of INR110 million. Its equity capital consists of 10 million equity shares of nominal (face) value INR 10 each with INR 5 paid up on each share. The amount that would be recoverable by the long term lenders against their claim of INR 110 million on the completion of liquidation and distribution of resources would be (in million INR):
100
60
110
50

Given a company, say XTZ Ltd, the source of finance that would normally require the highest return would be:

Preference shares
Long term loans
Equity shares
The required return would be same for all of the above
1 point
The capital of XYZ Ltd consists of 1 million equity shares of INR 10 each but no preference shares or debt. Its EPS for the year ended March 31, 2021 was INR 7 per share. The company has taken a 10% long term debt of INR 5 million on April 1, 2021. It expects its EBIT (Ernings before interest & taxes)to increase by 25% for the year ended March 31, 2022. Thee tax rate is expected to remain at 30%. The projected EPS for the year ended March 31, 2022 (in INR) is:
8.40
5.00
7.20
10.25

XYZ Ltd is going into liquidation. The realizable value of its assets (net of current liabilities) works out to INR 100 million. It has a long term debt outstanding of INR 110 million and fully paid preference capital of INR 15 million. Its equity capital consists of 10 million equity shares of nominal (face) value INR 10 each fully paid up. The amount that would be recoverable by the long term lenders against their claim of INR 110 million on the completion of liquidation and distribution of resources would be (in million INR):
100
60
110
50

An implicit cost of adding debt capital in a company is:
The tax liability would increase
The P/E ratio will decrease
Cost of equity would increase
All of the above

The payoffs for stock derivatives are linked to:
Stocks that will be issued in the future.
Currently issued stocks
Volatility of stock indexes
Stocks of government owned companies only.

Which of the following is not a feature of futures contracts:
Futures are standardized.
Futures have negligible default risk.
Futures are tradeable at exchanges.
Futures do not entail any margin.

A European call option is the right to buy an asset at the predetermined price (called exercise price) on the exercise date (called the maturity date). You by a European call on the stock of XYZ Ltd with an exercise price of INR 115 exercisable 3 months from now. The price you pay for buying the call is INR 10. If the stock price on maturity of the option turns out to be INR 95, the profit/loss (in INR) you make on this investment strategy is:
(-)20
(-)10
(+)5
(-)30

The futures price at the expiration date of the futures contract:
Equals the price of the underlying asset on that date.
Equals the price of the counterparty on that date.
Equals the value of the hedged asset.
None of these

XYZ Ltd has a capital structure consisting of INR 50 million of 10% participating preference shares and INR 150 million of equity shares. The profit after tax of the company for the year ended March 31, 2021 is INR 45 million. The preferences shareholders are entitled to participate in the surplus after payment of preference dividend at the fixed rate on prorate basis with equity shareholders. Assuming that the company decides to distribute the entire amount of profits after tax, the total amount out of profit after tax that would be allocated to preference shareholders works out to (in million INR):
15
12
5
7

Answer 1

Answer:

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Explanation:

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