26. Consider crowdfunding. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Crowdfunders may contribute as loans, equity, donations or pre-purchases of a product.   Yes

2. The project initiator must negotiate directly with each individual contributor.   No

3. Business angels tend to invest at an earlier stage than most venture capitalists.   Yes

4. Crowdfunding is available only to new businesses and never to existing ones.   No

Correct: Y, N, Y, N difficult Crowdfunding

(1) Yes. (2) No: the project is publicised on a platform and the initiator does not have to engage directly with each person. (3) Yes. (4) No: it can also finance a new project for an existing business.

27. A project costs Tk 600 million and returns Tk 200 million in year 1, Tk 250 million in year 2 and Tk 300 million in year 3, with cash flows arising evenly through each year. What is the payback period?

A) 2.0 years
B) 2.8 years
C) 3.0 years
D) 2.5 years

Correct: D complex Payback

After two years Tk 450 million has been recovered, leaving 150 to recover from year 3's 300, which is half a year. Payback = 2.5 years.

28. A project costs Tk 1,000 million and generates Tk 300 million a year for five years. The cost of capital is 8% and the five-year annuity factor is 3.993. What is the NPV?

A) Tk 500.0 million
B) Tk 197.9 million negative
C) Tk 1,197.9 million
D) Tk 197.9 million

Correct: D complex NPV with annuity

PV of inflows = 300 x 3.993 = 1,197.9; NPV = 1,197.9 - 1,000 = Tk 197.9 million. Tk 500 million is undiscounted net cash. Tk 1,197.9 million is the PV of inflows only.

29. A project costs Tk 100 million and returns Tk 60 million at the end of each of years 1, 2 and 3. The cost of capital is 10% and the discount factors are 0.909, 0.826 and 0.751. What is the discounted payback period, assuming cash flows arise evenly within each year?

A) 2.5 years
B) 1.7 years
C) 2.0 years
D) 1.9 years

Correct: D complex Discounted payback

Discounted inflows are 54.5 (year 1) and 49.6 (year 2), so the cumulative PV is 54.5 after one year and 104.1 after two. The remaining 45.5 is recovered within year 2: 1 + 45.5 / 49.6 = 1.9 years. If you chose 1.7 you ignored discounting (1 + 40/60). If you chose 2.0 you rounded to the end of year 2.

30. A project costs Tk 800 million, has no residual value and produces average annual accounting profit of Tk 120 million. What is the ARR based on average investment?

A) 24.0%
B) 60.0%
C) 15.0%
D) 30.0%

Correct: D difficult Accounting rate of return

Average investment = 800 / 2 = 400. ARR = 120 / 400 = 30.0%. On initial investment it would be 15.0%.

31. The money (nominal) rate of interest is 10.2% and inflation is 2%. What is the real rate?

A) 10.0%
B) 12.4%
C) 8.2%
D) 8.0%

Correct: D difficult Real and nominal rates

1 + real = 1.102 / 1.02 = 1.0804, so the real rate is about 8.0%. Subtracting 2 from 10.2 gives 8.2%, which ignores compounding.

32. A company earns EPS of Tk 10, pays out 60% as dividends and retains 40%, reinvested at a return of 15%. The latest dividend D0 is Tk 6 and the ex-dividend share price is Tk 106. Using the dividend growth model, what is the cost of equity? (g = retention x return)

A) 5.7%
B) 17.7%
C) 6.0%
D) 12.0%

Correct: D complex Cost of equity from growth

g = 40% x 15% = 6%. D1 = 6 x 1.06 = 6.36. Ke = 6.36 / 106 + 6% = 6% + 6% = 12.0%. If you chose 5.7% you ignored growth. If you chose 6.0% you took g alone. If you chose 17.7% you added the retention return.

33. A company announces a one-for-four bonus issue. Before the announcement shares trade at Tk 100. What is the theoretical ex-bonus price?

A) Tk 75
B) Tk 100
C) Tk 80
D) Tk 125

Correct: C difficult Bonus issues

Four shares worth 400 become five shares with the same total value: 400 / 5 = Tk 80. A bonus issue raises no cash.

34. A Tk 1,000 convertible bond can be exchanged for 25 ordinary shares. The shares trade at Tk 48 and the bond trades at Tk 1,250. What is the conversion premium?

A) Tk 0
B) Tk 200
C) Tk 250
D) Tk 50

Correct: D difficult Convertible loan stock

Conversion value = 25 x 48 = Tk 1,200. Premium = 1,250 - 1,200 = Tk 50.

35. An irredeemable 8% preference share with nominal value Tk 100 trades at Tk 80. What is its cost?

A) 10.0%
B) 8.0%
C) 6.4%
D) 12.5%

Correct: A difficult Cost of preference shares

Cost = dividend / market price = 8 / 80 = 10.0%. Preference dividends are not tax deductible. If you chose 8.0% you used the dividend rate on nominal value.

36. A company borrows Tk 1,000,000 for five years at 10%, repayable in equal annual instalments in arrears. The five-year annuity factor at 10% is 3.791. What is the approximate annual instalment?

A) Tk 379,100
B) Tk 250,000
C) Tk 200,000
D) Tk 263,800

Correct: D complex Loan repayments

Instalment = 1,000,000 / 3.791 = about Tk 263,800. Dividing by 5 ignores interest. Multiplying by the factor is the wrong direction.

37. A Bangladeshi exporter will receive USD 50,000. The bank quotes Tk 118.20 - 118.60 per USD (bank buys USD at 118.20 and sells at 118.60). How many taka will the exporter receive if it sells the dollars to the bank?

A) Tk 5,910,000
B) Tk 5,930,000
C) Tk 5,900,000
D) Tk 5,920,000

Correct: A complex Foreign currency receipts

The bank buys dollars at the lower rate: 50,000 x 118.20 = 5,910,000. Using 118.60 would be the rate at which the bank sells.

38. An exporter expects USD 50,000 in three months. It agrees a forward rate of Tk 119.00 per USD. At settlement the spot rate is Tk 117.50. How much better off is the exporter than if it had not hedged?

A) Tk 59,500
B) Tk 75,000 worse off
C) Tk 75,000
D) Tk 1,500

Correct: C complex Forward contracts

Hedged proceeds = 50,000 x 119.00 = 5,950,000; unhedged = 50,000 x 117.50 = 5,875,000. The exporter gains 75,000.

39. A venture capital fund invests Tk 100 million for a 25% stake and requires a 30% annual return over five years. What exit value of its stake is needed?

A) Tk 150.0 million
B) Tk 130.0 million
C) Tk 371.3 million
D) Tk 250.0 million

Correct: C complex Venture capital

Required exit value = 100 x 1.30^5 = Tk 371.3 million. Simple interest would give 250.

40. A company has 100 million shares, profit after tax of Tk 300 million and surplus cash of Tk 600 million earning 2% after tax. It uses Tk 600 million to buy back 10 million shares at Tk 60. What is EPS afterwards?

A) Tk 3.20
B) Tk 3.60
C) Tk 3.00
D) Tk 3.33

Correct: A complex Share buy-backs

Interest lost = 600 x 2% = 12, so profit = 288. Shares = 90 million. EPS = 288 / 90 = Tk 3.20 (before: 3.00).

41. A loan agreement requires debt / (debt + equity) not to exceed 50%. Currently debt is Tk 400 million and equity Tk 600 million. The company borrows another Tk 200 million and pays a Tk 200 million dividend. What is the ratio and is the covenant met?

A) 40%, so the covenant is still met
B) 50%, so the covenant is exactly met
C) 150%, so the covenant is met
D) 60%, so the covenant is breached

Correct: D complex Covenants

Debt becomes 600 and equity falls to 400. Debt / (debt + equity) = 600 / 1,000 = 60%, above the 50% limit.

42. A company funds its permanent core of inventory and receivables with an overdraft that must be renewed annually. Which working capital financing policy is this?

A) Matching
B) Conservative
C) Fixed
D) Aggressive

Correct: D difficult Matching principle

Using short-term finance for permanent assets is an aggressive policy with higher refinancing risk. A conservative policy uses long-term funds for some fluctuating needs.

43. A 91-day Treasury bill with face value Tk 100 is bought at Tk 97.50. What is the approximate annualised simple yield on the cost?

A) 9.9%
B) 11.0%
C) 2.6%
D) 10.3%

Correct: D difficult Treasury bills

Return for the period = 2.5 / 97.5 = 2.56%. Annualised = 2.56% x 365 / 91 = about 10.3%.

44. A growing private company needs Tk 50 million of equity. It does not wish to list, but wants an investor that will provide management expertise and a board seat, and exit within about five years through a sale or flotation. Which source is most suitable?

A) Retained earnings
B) A bank overdraft
C) Debentures listed on the stock exchange
D) A venture capital fund

Correct: D complex Venture capital versus angels

Venture capital provides equity, expertise and monitoring in exchange for an exit within a defined period. An overdraft is short-term debt and debentures do not meet the aims.

45. Which THREE investment appraisal methods ignore the time value of money? (Select THREE.)

Multiple response
A) Accounting rate of return
B) Internal rate of return
C) Net present value
D) Payback
E) Simple payback with undiscounted cash flows

Correct: A, D, E difficult Appraisal methods

Payback, ARR and simple (undiscounted) payback ignore time value. NPV and IRR discount cash flows.

46. Which THREE factors affect a company's dividend policy? (Select THREE.)

Multiple response
A) The number of directors' meetings held
B) Shareholders' expectations
C) Available cash and liquidity
D) The colour of the annual report
E) Legal restrictions on distributions

Correct: B, C, E difficult Dividend decisions

Liquidity, legal limits and investor expectations are relevant. Report colour and meeting numbers are not.

47. Which THREE are sources of short-term finance? (Select THREE.)

Multiple response
A) Bank overdraft
B) Invoice discounting
C) Trade credit
D) Ordinary share issue
E) Twenty-year debentures
F) Retained earnings

Correct: A, B, C difficult Short-term finance

Overdrafts, trade credit and invoice discounting are short-term sources. Shares, long debentures and retained earnings are long-term.

48. Which TWO are disadvantages of listing on a stock exchange? (Select TWO.)

Multiple response
A) Greater regulatory and reporting costs
B) Wider access to capital
C) Higher profile with customers
D) Pressure to deliver short-term results
E) Improved marketability of shares

Correct: A, D difficult Disadvantages of listing

Listed companies face higher compliance costs and short-term pressure. Capital access, marketability and profile are advantages.

49. Which TWO statements about a rights issue are correct? (Select TWO.)

Multiple response
A) Existing shareholders may sell their rights
B) The issue is made at a discount to market price
C) The issue is open to the general public only
D) No cash is raised
E) It automatically reduces the company's equity

Correct: A, B difficult Rights issues

Rights are tradable and the issue price is normally at a discount. A rights issue raises cash and increases equity, and is offered to existing shareholders.

50. Which TWO actions reduce currency exposure on a future export receipt? (Select TWO.)

Multiple response
A) Increasing the credit period
B) Entering a forward contract
C) Waiting to see the spot rate on the day
D) Matching receipts and payments in the same currency
E) Changing the product colour

Correct: B, D difficult Hedging currency exposure

Forward contracts and matching (natural hedging) reduce currency risk. Waiting leaves the exposure and the other options do not hedge.