20029276
Description
Quiz by Dinesh Jain, updated more than 1 year ago
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Created by Dinesh Jain
over 4 years ago
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Question 1
Question
Face value of bond = Rs.100; Rate of interest on bond = 8%; Return on similar bonds = 9.5%. Term = 4 years. Bond is convertible into 5 shares. CMP of equity share = 15. What is bond's conversion value?
Answer
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100
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95.24
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75
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15
Question 2
Question
Face value of bond = Rs.100; CMP of bond = Rs.100 Rate of interest on bond = 8%; Return on similar bonds = 9.5%. Term = 4 years. Bond is convertible into 5 shares. CMP of equity share = 15. What is bond's conversion premium per share?
Answer
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20
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15
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5
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25
Question 3
Question
Face value of bond = Rs.100; CMP of bond = Rs.100; Rate of interest on bond = 8%; Return on similar bonds = 9.5%. Term = 4 years. Bond is convertible into 5 shares. CMP of equity share = 15. What is conversion parity price?
Answer
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20
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15
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100
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10
Question 4
Question
Face value of bond = Rs.100; Rate of interest on bond = 8%; Return on similar bonds = 9.5%. Term = 4 years. Bond is convertible into 5 shares. CMP of equity share = 15. What is bond's straight value?
Answer
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100
-
75
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95.26
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89.67
Question 5
Question
Face value of bond = Rs.100; CMP of bond = Rs.100; Rate of interest on bond = 8%; Return on similar bonds = 9.5%. Term = 4 years. Bond is convertible into 5 shares. CMP of equity share = 15. What is downside risk (in Rs.)?
Answer
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0
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10.33
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4.76
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25
Question 6
Question
Face value of bond = Rs.100; Interest rate on bond = 10%. Bond is convertible into 10 shares. Likely dividend per share is Rs.0.2. What is favorable income differential per share?
Answer
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9.80
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0.20
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0.80
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8
Question 7
Question
Existing EPS = Rs.2; Existing no of shares = 1,00,000. Company plans to issue 7% preference capital of Rs.10,00,000. What should be the increase in earnings post preference issue to maintain EPS?
Answer
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No change required
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Increase by 7%
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Increase by 35%
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Increase by 70%
Question 8
Question
Conversion premium per bond = Rs.100. One bond is convertible into 10 shares. Favorable income differential per share = Rs.4. How much is the premium payback period?
Answer
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25 years
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2.5 years
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10 years
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None of the above
Question 9
Question
Face value = Rs.1,000; Rate of interest = 10%. The bond is convertible into 10 equity shares whose current market price is Rs.80. Growth rate in equity share is 10%. What will be the terminal cash flow at end of year 5?
Answer
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800
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1,000
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1,288.41
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None of the above
Question 10
Question
CMP of bond = Rs.1,200. One bond is convertible into 10 shares. CMP of share is Rs.125. Should the investor opt for conversion?
Answer
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Yes
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No
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Investor would be indifferent on conversion
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