Corporate Finance Quiz 1: 26 October 2025 (September 2025 term)

A zero-coupon bond with face value of Rs 5,000 matures in one year. Its price is Rs 4,500. What is the yield of the bond?

If you want to double your money at 5% annual rate of interest, how many years will it take?

You purchased an asset today for Rs 1,000. Suppose the asset earns an annual interest rate of 7% which is continuously compounded. What will be the value of the asset after 5 years (Rounded off to nearest integer)?

Which rule helps an entrepreneur with limited capital get back invested money fastest in high interest environments?

If nominal GDP doubles, but real GDP remains unchanged, this means

The PVC stock is trading at Rs 300 today. PVC is expected to pay a dividend of Rs 20 per share next year. If the growth rate of the PVC dividend is 3% every year and the appropriate rate of return is 10% per year, then according to the Gordon growth model

A bond pays 200 units in 1 year and 200 units in 5 years. What is the (simple) duration of the bond?

If expected inflation equals nominal interest rate, then real interest rate is

An upward sloping yield curve shows:

Suppose there is a new project that demands an investment of Rs 10 lakh today and promises to pay off after two years. If the estimated internal rate of return of the project is 12%, then what amount is paid off on the payment date (after two years)?

During the cleaning of house, you find an old sword that belonged to your grandfather. Your grandfather purchased the sword 60 years ago for Rs 60. You go to the market and find out that the current value of the sword is Rs 9,000. What is the annualized rate of return that the sword has earned?

ABC Corporation is looking to invest in one new project, and they have three options: Project-A is expected to generate Rs 30 lakh after two years and Rs 40 lakh after 5 years; Project-B is expected to generate Rs 10 lakh each year for 6 years (beginning next year); Project-C is expected to generate Rs 100 lakh after 10 years. Each one of the project costs Rs 40 lakh today. The required rate of return on these projects is 10%. What is the profitability index of Project-B?

ABC Corporation is looking to invest in one new project, and they have three options: Project-A is expected to generate Rs 30 lakh after two years and Rs 40 lakh after 5 years; Project-B is expected to generate Rs 10 lakh each year for 6 years (beginning next year); Project-C is expected to generate Rs 100 lakh after 10 years. Each one of the project costs Rs 40 lakh today. The required rate of return on these projects is 10%. Which one of the projects should ABC Corporation choose according to NPV criterion?

Assume there are two periods and prices of consumption good are the same (and equal to 1) in both periods. You earn Rs 10,000 in period 1 and Rs 12,000 in period 2. In each of the two periods, your spending is equal to earnings in that period. The slope of intertemporal budget constraint is −1.12, then what is the prevailing interest rate?

What is the present value of an annuity that pays Rs 1,000 for next 25 years (beginning next year) and faces a cost of capital of 5%? (Nearest integer value)

A typical consumer basket in the economy of Pangia Island consists of 1 unit of clothes, 3 units of food and 2 units of fuel. In 2022, the price of clothes was Rs 200 per unit, the price of food was Rs 50 per unit and the price of fuel was Rs 75 per unit. In 2023, the price of clothes was Rs 180 per unit, the price of food was Rs 70 per unit and the price of fuel was Rs 80 per unit. In 2024, the price of clothes was Rs 220 per unit, the price of food was Rs 80 per unit and the price of fuel was Rs 100 per unit. Considering 2022 as base year, what was the CPI in 2024? (Note: CPI in base year =100)

A typical consumer basket in the economy of Pangia Island consists of 1 unit of clothes, 3 units of food and 2 units of fuel. In 2022, the price of clothes was Rs 200 per unit, the price of food was Rs 50 per unit and the price of fuel was Rs 75 per unit. In 2023, the price of clothes was Rs 180 per unit, the price of food was Rs 70 per unit and the price of fuel was Rs 80 per unit. In 2024, the price of clothes was Rs 220 per unit, the price of food was Rs 80 per unit and the price of fuel was Rs 100 per unit. Considering 2022 as base year, what was the annual inflation rate in 2024 with respect to 2023?

Manish runs a private school in his town. He wants to start a bus service for the students. He goes to the bank and asks for a loan of Rs 8,00,000. The bank official tells him that the loan will have a monthly interest rate of 3% for 10 years. What would be the equated monthly instalment (EMI) that he will be paying each month for the next 10 years, beginning next month (Round off to nearest integer)?

Consider a 20-year zero-coupon bond that promises to pay 1000 units after 20 years. The annualized interest rate is 2.5%. Suppose due to geopolitical tensions, the prevailing interest rate increases by 10 basis points to 2.6%. What would be the change in the value of the bond?

On investigating the Indian yield curve, you find that annualized rate on 1-year bond (expiring in September 2026) is 4% and the annualized rate on 2-year bond (expiring in September 2027) is 4.5%. What would be the 1-year interest rate from September 2026 to September 2027?

In the economy of Moldova, the nominal GDP is accounted as 15,000 units and the real GDP is accounted as 12,000 units in 2024, then what is the value of GDP deflator in 2024 for Moldova?

Which of the following is not a characteristic of a bond?

For a simple perpetuity, its present value increases if

Which of the following is a reason for preferring short-term bonds over long-term bonds?