Corporate Finance Nptel Week 1 Assignment Answers
Are you looking for Corporate Finance Nptel Week 1 Assignment Answers ? All weeks solutions of this Swayam course are available here.
Table of Contents
Corporate Finance Nptel Week 1 Assignment Answers (July-Dec 2025)
Course link: Click here to visit course on Nptel Website
Question 1. Which of the following is the main objective of financial management in a corporate setting?
a) Minimizing taxes
b) Maximizing shareholder wealth
c) Managing employee welfare
d) Ensuring product diversification
Question 2. A financial analyst claims that diversification helps in reducing portfolio risk. This reduction is primarily due to:
a) Equal weighting of securities
b) Investing in high-yield assets
c) Including more volatile assets
d) Negative or low correlation among assets
Question 3. A company wants to invest in a project with a life of 5 years. Which capital budgeting technique would best help in measuring the profitability of this project, considering the time value of money and risk?
a) Payback period
b) Accounting Rate of Return
c) Net Present Value (NPV)
d) Internal Rate of Return (IRR)
Question 4. The Security Market Line (SML) graphically represents the relationship between
a) Asset correlation and expected volatility
b) Systematic risk (beta) and expected return
c) Portfolio variance and market return
d) Risk-free rate and stock price
These are Corporate Finance Nptel Week 1 Assignment Answers
Question 5. If a stock’s expected return is 13%, and the CAPM-based required rate of return is calculated to be 10%, what can be inferred about the stock’s current valuation?
a) It is undervalued and attractive to investors
b) It is fairly priced
c) It is overvalued
d) It has a beta of zero
Question 6. An investor is analyzing a portfolio consisting of 6 different stocks. Assuming each stock has equal weight and the returns are not perfectly correlated, how many unique covariance terms must be calculated to understand the overall portfolio risk?
a) 36
b) 30
c) 15
d) 21
Question 7. What does the term “realized return” refer to?
a) The annual interest rate earned on a fixed deposit
b) Total return that occurs over a particular time period, including both interim income and capital gains
c) The initial investment amount in a financial asset
d) The expected return on an investment over a future period
These are Corporate Finance Nptel Week 1 Assignment Answers
Question 8. How is the return on a portfolio calculated?
a) The weighted average value of returns on individual assets in the portfolio
b) The total sum of returns on all individual assets in the portfolio
c) The highest return among the individual assets in the portfolio
d) The average return of the individual assets in the portfolio, regardless of their weights
Question 9. Suppose the average return of Nifty Index for last 5 years are as follows
a) 8.72 %
b) 11.40 %
c) 6.92 %
d) -8.72 %
Question 10. The return of last 6 years of listed security are as follows. 6 years ago, the price of the security was ₹130 per share. Calculate the return for the holding period.
a) 91.65%
b) 94.76%
c) 88.30%
d) 101.42%
These are Corporate Finance Nptel Week 1 Assignment Answers
Question 11. The beta coefficient of CAPM measures:
a) Total risk of an investment
b) The risk-free return of an investment
c) The total return of an investment
d) The sensitivity of an investment’s return to market movements
Question 12. Which of the following assumptions is NOT part of the Capital Asset Pricing Model (CAPM)?
a) Taxes and transaction costs are included
b) Everybody in the market agrees about expected returns (E(ri)), standard deviations (σi), and correlations (ρij).
c) Investors are rational and risk-averse
d) All investors have homogeneous expectations
Question 13. A portfolio contains three stocks with weights 0.4, 0.35, and 0.25. If the expected returns of these stocks are 12%, 10%, and 8% respectively, what is the expected return of the overall portfolio?
a) 10.3%
b) 9.7%
c) 10.8%
d) 11.5%
Question 14. Calculate the annual return realized by Jiggle who bought a stock of Violence Ltd on May 1, 2024 and sold the stock on April 30, 2025. The company paid the following dividends.
a) 8.14 %
b) 7.64 %
c) 9.41 %
d) 6.75 %
These are Corporate Finance Nptel Week 1 Assignment Answers
Question 15. What is the range of the correlation coefficient, ρij, between two assets?
a) 0 < ρij < 1
b) -2 < ρij < 2
c) -1 < ρij < 1
d) 0 < ρij < 2
Question 16. Which of the following statements about the efficient frontier is true?
a) It represents portfolios with maximum risk and minimum return
b) It is the set of portfolios that provide the highest return for a given level of risk
c) It contains only portfolios with risk-free assets
d) It includes portfolios with no diversification
Question 17. OMG Manufacturing Ltd. stock has a beta of 1.10, while ABC Engineering Ltd. stock has a beta of 0.75. The current risk-free rate is 4.5 %, and the expected return on the market portfolio is 9 %. According to the Capital Asset Pricing Model (CAPM), the required return on the stock of OMG Manufacturing and ACA Engineering should be ______ and ______, respectively.
a) 9.45 %, 7.88 %
b) 8.25 %, 6.65%
c) 10.45 %, 9.60%
d) 9.85 %, 7.80 %
These are Corporate Finance Nptel Week 1 Assignment Answers
Question 18. Which of the following best describes the agency problem in corporate finance?
a) Conflict between lenders and the government
b) Misalignment between shareholder interests and manager decisions
c) Tax avoidance strategies by firms
d) Difference in accounting and economic profit
Question 19. A security with a beta of 1.5 implies that:
a) The security’s returns are 50% higher than the market returns
b) The security’s returns are 50% lower than the market returns
c) The security has a positive covariance of 1.5 with the market
d) The security’s returns are 1.5 times more volatile than the market returns
Question 20. Which two financial instruments are typically classified as fixed-income securities, offering predetermined interest payments and requiring repayment of principal by the issuing firm, irrespective of its earnings?
a) Corporate Bonds and Debentures
b) Equity Shares and Preference Shares
c) Commercial Paper and Mutual Funds
d) Equity Shares and Treasury Bills
These are Corporate Finance Nptel Week 1 Assignment Answers