BF BBA-FA19, BAF-SP20 (Sessional 2 SP21)

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COMSATS UNIVERSITY ISLAMABAD

ATTOCK CAMPUS
2nd Sessional Exam – Spring 2021
BS(BA) Fall 2019 & BS(A&F) Spring 2020
MGT232-Business Finance

Date: 06 May, 2021 Max Marks: 25 Max Time: One Hour


Email of Faculty: [email protected] WhatsApp number of Faculty: 03335359376

Important Guidelines for Students


1. You have to solve the paper on plain paper (preferably A4 printer paper)
2. Write your name, registration number, semester, section, subject name, page number and
date on top of the paper.
3. Sign on the bottom right of the paper.
4. Only those sheets would be accepted which has all the information as mentioned on S. No. 2
and S. No. 3.
5. After completion of the paper scan each page with CAMSCANNER Application (available
on Google PlayStore, Apple AppStore and WindowsStore).
6. Convert the scanned pages to pdf document and email it, written on the paper, to your
subject teacher through your official email address (example [email protected]).
Email from any other address will not be accepted for answer sheet submission.
7. If the paper starts at 0900 hrs you have to send the email latest by 1010 hrs. No late email
would be accepted.
8. In case of issue with email, please contact your teacher through his WhatsApp and seek
permission to send the pdf through WhatsApp. WhatsApp submission can only be done if
permitted by the teacher.

Read all questions carefully to fully comprehend the information given therein before
attempting solutions.
Textbook and/or other study material can be consulted to get clues to the concepts required to
give answers to the questions.

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COMSATS University Islamabad, Attock Campus
2nd Sessional Exam – Spring 2021
BS(BA) Fall 2019 & BS(A&F) Spring 2020
MGT232-Business Finance

Date: 06 May, 2021 Max Marks: 25 Max Time: One Hour


Email of Faculty: [email protected] WhatsApp number of Faculty: 03335359376

Q1: (a) State what is the impact of compounding frequency on the future value and present value
calculations? Please be brief. (5)
Q1: (b) You borrow Rs.15,000 at 12 percent compound annual interest for four years. The loan is
repayable in four equal annual installments payable at the end of each year.

(i) What is the annual payment to the nearest rupee that will completely amortize the loan over four
years?
(ii) Of each equal payment, what is the amount of interest and the amount of loan principal? (10)

Q2 (a): When should a financial security being traded in the market be considered overvalued and
when undervalued? (5)

Q2 (b): (i) What are the factors that determine the intrinsic value of a security?

(ii) What is a perpetual bond? Suppose you could buy a bond that paid Rs. 15,000 a year forever. What
would be the intrinsic value of this bond, assuming that your required rate of return for this type of
bond is 15 percent? (2+3)

***Good Luck***

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