Snap Test

Calculate cost of equity; Interest on Government Bonds = 5%, Return on market index = 15%, Beta = 1.5

Calculate WACC

Ke = 12%, Tax = 30%, coupon rate on corporate bonds = 6%, Debt - Equity Ratio = 2:3

Beta measures the sensitivity of returns on stock with respect to that of ____.

Calculate the Present Value of Rs. 100 earned one year from now at 8% Discounting rate?

Write down the formula for calculating Free Cash Flows of a firm.

Expected Dividend = 5, Ke = 9%, Dividends are expected to grow at 4% perpetually. Calculate price of the stock.

The industry P/E ratio is 15. The EPS of the firm is 12. What should be the value of the stock as per industry P/E.

Value of the stock is 150. Market price of the stock is 175. What should a fundamental analyst do?

• Take a long position in that stock

• Take a short position in that stock

Calculate the growth rate in earnings

Dividend Payout Ratio = 40%

Market rate of return = 10%

Stock A has a Beta of 1.2, Stock B has a Beta of 0.7. The market crashes, which stock is less impacted?

• Stock A

• Stock B

• Equally impacted