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 A company purchases a machine for £500,000 with an expected economic life of five years. If the scrap value at the end of five years is expected to be £50,000, what is the annual depreciation charge using the straight line method?
(a) £50,000
(b) £90,000
© £100,000
(d) £120,000
 Which of the following assumptions are NOT compatible with the standard version of the capital asset pricing model (CAPM)?
(a) Financial markets are perfectly competitive.
(b) Investors can borrow and lend at the riskfree rate of interest.
© Investors are riskneutral.
(d) Investors have the same beliefs about the expected return and standard deviation of returns on all assets.
 A sum of £1,000 is invested for 19 months at a compound interest of 0.3% per month. What is the accumulated interest at the end of the period (in £ to two decimal places)?
Important! You should enter only the answer in numbers (without spaces, letters
or symbols) strictly using the following format: 00.00
 Which of the following statements about national income accounting are correct?
i GDP at factor cost deducts subsidies from the value of output and adds back in indirect taxes.
ii ‘Final’ goods are those purchased by an ultimate user but exclude capital goods and intermediate goods.
iii National income is GNP at factor cost plus capital depreciation.
(a) i, ii and iii.
(b) None of i, ii and iii.
© iii only.
(d) i and iii only.
 A 95% daily value at risk (VaR) shows?
(a) The maximum daily loss that is likely to occur 95 days out of every 100.
(b) The minimum daily loss that is likely to occur 95 days out of every 100.
© The maximum daily loss five days out of every 100.
(d) The probability of losing 55 of the initial value of the portfolio in one day.
 If a 5% increase in price leads to a 20% fall in quantity demanded, we say that the price elasticity of demand for that good is?
(a) 4
(b) 0.25
© –0.25
(d) 4
 A convertible bond will usually have a price which is?
(a) At least as great as the price of an equivalent nonconvertible issue.
(b) Less than the price of an equivalent nonconvertible issue.
© Equal to the price of an equivalent nonconvertible issue.
(d) Equal to the price of an equivalent equity issue.
 Which one of the following statements is true?
(a) Primary data and secondary data are both collected with a specific task in mind.
(b) Discrete data can only take a finite number of different values.
© Continuous data cannot take any value in an interval of the ‘real’ line.
(d) A histogram represents the frequency of occurrence of data in terms of degrees.
 Which of the following is NOT a recognised hedge fund strategy?
(a) Marketneutral.
(b) Eventdriven.
© Closet benchmarking.
(d) Long/short.
 If the required yield on a 2.50% consol with a face value of £100 is 5.00%, what is the price of the consol (in £)?
Important! You should enter only the answer in numbers (without spaces, letters or symbols) strictly using the following format: 00

b

c

58.57

b

a

d

a

b

c

50