Corporate Finance End Term 10 May 2026 — Question 33
Show answer
Correct answer: 106 (accepted within ±1)
Video solution
The video solution to this question is being recorded and will play here. Until then, the answer key is above.
Question 33 of 35 in the IIT Madras BS Corporate Finance (Corporate Finance) End Term paper sat on 10 May 2026, in the January 2026 term (Corporate Finance 06 May 26). It carries 4 marks.
More questions from this paper
- If the real interest rate is 15.5% and the expected inflation rate is 10.2%, the nominal interest rate is 4.81%.
- A downward-sloping yield curve indicates that long-term interest rates are higher than short-term interest rates.
- If the exchange rate changes from 90 Rupees per Dollar to 95 Rupees per Dollar, then the Rupee has depreciated, and it …
- An American call option gives the holder the right to buy the underlying asset at the strike price on or before the exp…
- A bank’s capital ratio is defined as the ratio of its liabilities to its total assets.
- Capital requirements and asset restrictions are governance tools to develop safeguards against banking collapse.
- If an investor writes a put option, her maximum potential loss is the strike price minus the premium received.
- Suppose the current market price of a stock is Rs. 82. If a put option on this stock has a strike price of Rs. 80, then…
- The Efficient Market Hypothesis asserts that a trader should not be able to use any available information to predict fu…
- The risk-free rate is 3%. The expected market rate of return is 9%, and the standard deviation of the market return is …
- In the Black-Scholes pricing formula, the stock prices are considered to be log-normally distributed.
- A long position in an option describes holding an option contract with a maturity of more than 2 years.
- A call option decreases in value when the stock price increases, with all else remaining the same.
- A long straddle strategy requires buying both a call and a put option, each with a different strike price and different…
- The part of the minimum variance set that lies below the global minimum variance portfolio is called the efficient fron…
- Suppose you purchased a call option 22 days ago for Rs. 5.50. The call option has a strike price of Rs. 64, and the sto…
- OPQ Inc. has an expected rate of return of 20% and a standard deviation of the rate of return of 18%. The expected mark…
- Suppose that the interest rate at a point in time in the domestic economy is 5%, and the interest rate in the foreign e…
- A trader buys a call option on a stock with a strike price of Rs 78 when the option price is Rs 4. The trader makes a p…
- Figure question
- A firm has three divisions: sales division, accounting division and logistics division. The sales division has a beta o…
- A stock currently trading at Rs 25 can either rise to Rs 30 or fall to Rs 20 in three months. The three-month risk-free…
- Your expected return on a stock is 18%. The stock has a beta of 1.6. If the risk-free rate is 4% and the expected marke…
- A risky asset has an expected rate of return of 18%, and the Sharpe ratio of this risky asset is 0.75. If the risk-free…
- Figure question
- Lokesh is considering investing in an opportunity that promises to pay Rs 2,000 in one year, Rs 2,500 in two years and …
- The price of a six-month European put option on a non-dividend-paying stock with a strike price of Rs 450 is Rs 30. The…
- The current price of a non-dividend-paying stock is Rs 60. Over the next six months, it is expected to rise to Rs 75 or…
- Figure question
- An employee contributes 100 rupees per year to a retirement account with 7% average annual returns. She starts contribu…
- A stock is trading at Rs 40 today. In six months, the stock price can either increase to Rs 50 or decrease to Rs 35. Th…
- A one-year European call option with a strike price of Rs 80 is selling at a call price of Rs 4. A one-year European pu…
- An investor purchases one call option and two put options with the same strike price of Rs 65 and maturity of three mon…
- A project is expected to have a payoff of Rs 4,000 in one year. The beta for the project is 1.5. If the risk-free rate …