Rate of required return to cover risk of investment in absence of inflation is classified as

Consider the following with respect to the term 'Core Inflation': A) Core Inflation is the inflation rate of a particular basket of commodities. B) Core Inflation is the sudden increase in prices of certain items of food grains.C) Core inflation is caused by supply shock in certain essential commodities.

A

Only A

B

Only B

C

Only C

D

Only A and B

Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R). Read the statements and choose the correct answer:
Assertion (A) The nominal interest rate comprises of a real interest rate and an expected rate of inflation and it adjusts when the inflation rate is expected to change. Hence, in the perfect international capital markets, real rate of returns are equal in the two countries.
Reason (R) The international fisher effects states that the nominal interest rate differential must be equal to the expected inflation rate differential In the two countries.

A

Both (A) and (R) are correct and (R) is the right explanation of (A)

B

Both (A) and (R) are correct, but (R) is not the right explanation of (A)

C

(A) is correct, but (R) is not correct

D

Both (A) and (R) are incorrect

Rate of return to cover a risk of investment and decrease in purchasing power, as a result of inflation is known as

A

nominal rate of return

B

accrual accounting rate of return

C

real rate of return

D

required rate of return

An investment of Rs. 10,000, compounded annually, is estimated to return Rs. 20,000 after 6 years from the date of investment. The expected rate of return on this investment in percentage is

A

8.75

B

10.50

C

12.25

D

16.6

The main components of market risk are a) Liquidity risk b) Interest rate risk c) Currency risk

A

Only a

B

both a and b

C

only c

D

all a, b and c

A feasibility study shows that a fixed capital investment of P10,000,000 is required for a proposed construction firm and an estimated working capital of P2,000,000. Annual depreciation is estimated to be10% of the fixed capital investment. Determine the rate of return on the total investment if the annual profit is P3,500,000.

A

28.33 %

B

29.17 %

C

30.12 %

D

30.78 %

Required return is 11% and premium for risk is 8% then risk free return will be

A

3.00%

B

19.00%

C

0.72%

D

1.38%

Required return is 15% and premium for risk is 11% then risk free return would be

A

26.00%

B

4.00%

C

16.50%

D

1.36%

Market risk premium is 8% and risk free return is 7% then market required return would be

A

15.00%

B

1.00%

C

5.60%

D

1.14%

An effect of interest rate risk and investment risk on a bond's yield is classified as

A

reinvestment premium

B

investment risk premium

C

maturity risk premium

D

defaulter's premium

Rate of required return to cover risk of investment in absence of inflation is classified as

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