Chartered Wealth Manager CWM_LEVEL_2 Release Date

Section B (2 Mark)

You purchase one ILM 70 call option for a premium of Rs6. Ignoring transaction costs, the break-even price of the position is

Section C (4 Mark)

Data on following mutual funds given below:

Risk free return is 8%. Calculate Treynor measure.

Section A (1 Mark)

The stage in venture Capital financing where the business plan is completed and presented to a venture capital firm is called________________.

Section C (4 Mark)

KB, a household product manufacturer, reported earnings per share of Rs3.20 in 1993, and paid dividends per share of Rs1.70 in that year. The firm reported depreciation of Rs315 million in 1993, and capital expenditures of Rs475 million. (There were 160 million shares outstanding, trading at Rs51 per share.) This ratio of capital expenditures to depreciation is expected to be maintained in the long term. The working capital needs are negligible. KB had debt outstanding of Rs1.6 billion, and intends to maintain its current financing mix (of debt and equity) to finance future investment needs. The firm is in steady state and earnings are expected to grow 7% a year. The stock had a beta of 1.05. (The Risk Free Rate is 6.25%.)

Estimate the value per share, using the FCFE Model.