Section A (1 Mark)
Which of the following statement is correct?

Section C (4 Mark)
J&M had a return on equity of 31.5% in 1993, and paid out 37% of its earnings as dividends. The stock had a beta of 1.25. (The treasury bill rate is 6%.) The extraordinary growth is expected to last for ten years, after which the growth rate is expected to drop to 6% and the return on equity to 15% (the beta will move to 1).
Assuming the return on equity and dividend payout ratio continue at current levels for the high growth period, estimate the P/BV ratio for J&M.

Section A (1 Mark)
Following is not a head of income

Section C (4 Mark)
Mr. Peter sells a Nifty Put option with a strike price of Rs. 4000 at a premium of Rs. 21.45 and buys a further OTM Nifty Put option with a strike price Rs. 3800 at a premium of Rs. 3.00 when the current Nifty is at
4191.10, with both options expiring on 31st July.
What would be the Net Payoff of the Strategy?
* If Nifty closes at 3800
* If Nifty closes at 4500

Section A (1 Mark)
The covariance of the market returns with the stocks returns is 0.007. The standard deviation of the market is
7% and standard deviation of stock's return is 10%. What is the correlation coefficient between stocks and market returns?