Section C (4 Mark)
A Portfolio manager is holding the following portfolio:

The risk free rate of return is 6% and the portfolio's required rate of return is 12.5%. The manager would like to sell all of his holdings in stock A and use the proceeds to purchase more shares of stock D.
What would be the portfolio's required rate of return following this change?

Section B (2 Mark)
The term "permanent establishment" includes especially:

Section B (2 Mark)
A bond has the following terms:

If you expect the bond to be called at the end of the year, what would be the maximum price you should pay for the bond if comparable yields are 7 percent?

Section A (1 Mark)
Which of the following is a market anomaly?

Section C (4 Mark)
Omax Inc. one of the largest developer of residential projects, reported earnings per share of Rs 8.0 in 2003, and paid dividends per share of Rs 4.8 in that year. The firm is expected to report earnings growth of 25% in
2004, after which the growth rate is expected to decline linearly over the following six years to 7% in 2009.
The stock is expected to have a beta of 0.85 and current risk free rate is 6.25%.
Estimate the value of the firm using the H Model.