1) If a 12% annual bond maturing in years is selling in the market for 750 rupees when the market interest rate is 16%. What is the current yield and YTM of a bond?

2) A company has an equity rate of return of 12% and a debt rate of return of 6%. Its gearing ratio is 40%. The tax rate is 30%. Interest payments on debt are chargeable for tax. The weighted average cost of capital of the compant is

Ans:1. 0.0888

       2. 0.1

       3. 0.0825

       4. 0.12

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