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CMA Final Exam: Strategic Financial Management
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Syllabus for the paper: Section A : Investment decisions 25% 1. Investment Decisions, Project Planning and Control 2. Evaluation of Risky Proposals for Investment Decisions 3. Leasing Decisions Section B : Financial Markets and Institutions 20% 4. Institutions in Financial Markets 5. Instruments in Financial Markets 6. Capital Markets 7. Commodity Exchange Section C : security Analysis and portfolio Management 25% 8. Security Analysis & Portfolio Management Section D : Financial risk Management 30% 9. Financial Risks & Management 10. Financial Derivatives – Instruments for Risk... Show more
CMA Final Exam: Strategic Financial Management
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25 Questions

1. The required rate of return on equity is 24% and cost of debt is 12%. The company has a capital structure mix of 80% of equity and 20% debt. What is the overall rate of return, the company should earn? Assume no tax.
2. BLC Ltd., a valued customer engaged in import business is in need to remit EURO 1 million to his European exporter. The spot rate of ?/US$ is ?65.47/65.57 and that of US$/EURO is $ 0.8053/0.8057. What rate will a banker quote to BLC Ltd. if the bank's margin is 0.50%?
3. Mr. Ravi is planning to purchase the shares of X Ltd. which had paid a dividend of ?2 per share last year. Dividends are growing at a rate of 10%. What price would Mr. Ravi be willing to pay for X Ltd.
4. MS Ltd. is planning to invest in USA. The annual rates of inflation are 8% in India and 3% in USA. If spot rate is currently ?75.50/$, what spot rate can the company expect after 3 years?
5. A firm has an asset
6. The following information is extracted from MF, a mutual fund scheme. NAV on 01-11-2019 is ?65.78, annualized return is 15%. Distributions of income and capital gains were ?0.50 and ?0.30 per unit in the month. What is the NAV on 30-11-2019?
7. A certain mutual fund has a return of 17% with standard deviation of 3.5% and the sharpe ratio is 4. The risk free rate is
8. A call option at a strike price of ?200 is selling at a premium of ?24. At what share price on maturity will it break-even for the buyer of the option?
9. Which of the following investment avenues has the least risk associated with it?
10. A ?1,000 per value bond bearing a coupon rate of 14% matures after 5 years. The required rate of return on this bond is 10%. The value of the bond (to the nearest rupee) will be:
11. It is given that ?/
12. A stock is currently sells at ?350. The put option to sell the stock sells at ?380 with a premium of ?20. The time value of option will be
13. An investor has invested in a mutual fund when the NAV was ?15.50 per unit. After 90 days the NAV was ?14.45 per unit. During the period the investor got a cash dividend of ?1.35 per unit and capital gain distribution of Re. 0.20. The annualized return based on 360 days year count will be
14. An investor is bullish about X Ltd. which trades in the spot market at ?1,150. He buys two call option contracts with three months (one contract is 100 shares) with a strike price of ?1,195 at a premium of ?35 per share. Three months later, the share is selling at ?1,240.Net profit/loss of the investor on the position will be
15. Two Firms P Ltd and M Ltd are similar in all respects expect that M Ltd uses ?10,00,000 debt in its capital structure. If the corporate tax rate for these firms is 40%, Calculate the value of M Ltd exceeds that of P Ltd?
16. You are given the following information: required rate of return on risk free security 7%; required rate of return on market portfolio of investment 12%; beta of the firm 1.7.The cost of equity capital as per CAPM approach is
17. A mutual Fund had a Net Asset Value (NAV) of ?72 at the beginning of the year. During the year, a sum of ?6 was distributed as Dividend.Besides, ?4 as Capital Gain distributions. At the end of the year, NAV was ?84. Total return for the year is:
18. While plotting a graph with risk on X-axis and expected return on Y-axis, a line drawn with co-ordinates (0, rf) and (
19. XYZ Ltd. has a uniform income that accrues in a 4 - year business cycle. It has an average EPS of ?20 (per share of ?100) over its business cycle. Find out the cost of equity capital, if market price is ?175.
20. M uses 12% as nominal required rate of return to evaluate its new investment projects.
It has recently been decided to protect shareholders interest against loss of purchasing power due to inflation. If the expected inflation rate is 5%, the real discount rate will be
21. If the RBI intends to reduce the supply of money as part of anti-inflation policy, it might
22. In a constant dividend model, the following estimates the difference between the required rate of return and the growth rate:
23. A project has a 10% discounted pay back of 2 years with annual after tax cash inflows commencing from year end 2 to 4 of ?400 lacs. How much would have been the initial cash outlay which was fully made at the beginning of year 1?
24. Your customer requests you to book a sale forward exchange contract for US $ 2 million delivery 3rd month. The quotes are: Spot US $ 1= ?48.050/0.060; 1month margin = 0.0850/0.0900; 2 month margin = 0.2650/0.2700; 3 month margin = 0.5300/0.5350.You are required to make an exchange profit of 0.125%. Ignore telex charges and brokerage.
25. The dollar is currently trading at ?40. If rupee depreciates by 10%, what will be the spot rate?

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