BF BBA-FA19, BAF-SP20 (Sessional 2 SP21)
BF BBA-FA19, BAF-SP20 (Sessional 2 SP21)
BF BBA-FA19, BAF-SP20 (Sessional 2 SP21)
ATTOCK CAMPUS
2nd Sessional Exam – Spring 2021
BS(BA) Fall 2019 & BS(A&F) Spring 2020
MGT232-Business Finance
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.
1
COMSATS University Islamabad, Attock Campus
2nd Sessional Exam – Spring 2021
BS(BA) Fall 2019 & BS(A&F) Spring 2020
MGT232-Business Finance
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***