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Departrnent of Finance
MBA 3'd Batch 2nd Semester Final Examilratio n _201,4
Title: corporate Governance & Restructuring course code: Fin-S211
Time: 3 hours Marlrc. AA

sectiois oI eac-l y.ue1_t!.91 have to be answered in sequential orderl

1' A- Enumeratc iiubris i{ypothesis'aird WfnriiiiCtirie Hypottresis of takeover. ,,Bad bidder, fra
target'- Doyou agree? /ustiffyour opinion.
B. What is Net Acquisirion Value? Explain the process of realizing synergistic gain.
c lt'hat are the four economic motives of Merger & Acquisitioniexplain rhosl in brief. 5

2. a 'Preventative antitakeover defenses will not guarantee

, io*prny', .,independence. So Active
antitakeover defenses become crucial." Do you agree?
Justifi your opinion wiqh pieventative and actiye
B' what is Tender offer? who are the tender offer team members? Describe tender offer eight-factor
test 5
c Differentiate between LBO and MBo. Enumerate the LBO process.
3. A- What is e
B. tVhyvol n bankruptcy.
C Connors e 6as shownlarge

.L^ _-_! c_- _--

operating tax Iosses over the past few years. As
_ 5
belieyes that the
toal pretax profits of the merger will not chanl
ars. The tax loss
car-ry forward of Salinas is $800,000, and connors projects
thar its annual earnings before taxes win be
s280'000 peryear for each of the next 15 years. T'hese earnings are
assumed to fall within the annual
Iimit legally allowed ior application of the iax loss .ar.y ro.*"".a resulring
from the proposed merger.
The firm is in the *0cll tax brackeL
i' If connors does not make the acquisition, whar wiil be the company's tax liability and
after taxes eachyear over the next 15 ye rrs?
ii' If the acquisition is made, what will be the company's tax liabitity and earnings after
each year over the next 15 years?
If Salinas can t'e acquired for $350,000 in cash, should connors make the
acquisition, judging or the
basis of tax co i :iderations? (lgnore present value.)

4.A Ho'* does the green movement create pressure on corporate governance?
Does company
really bother for this pressure?
B. "The main activities of PIRC is to provide information to the
shareholders on governance
C. "Managements accountability is a major concern
for corporate
' governance
o- in a co-
operative society"-Do you agree? Why or rvhy not?
5. A. "It is possible for a company to be the lowest-cost producer in its industry and
iimrrltaneously have an outpui that is the most valued by custonrer.s,'-
Discuss this
B. why it is important to understand the drivers of profitability as measur.ed by the return on
invested capital?
C. which is more important in explaining the success and failure of companics:
strategies or
b. Reai the case aetentivel-v and answer the
folloting questions. 15
Under the leadership of Dennis Kozlowski, r+,ho b
expanded from $3.1 billion to almost $40 billion. M
that took Tyco into a diverse
business press as a great mana
imposing tight financial control
ad';anced at a healii.y clip durin
r'vLU r!rr'drr'cu Lritr dLquisttlutls D-v i'aking urr 5rgrrrirc.irrr. uruL
currrmitmens, rvnicn oy zuul exceeded
S23 billion. As rvco expanded, some questioi.'-1:1',:-1Y1y-:',t1Ty.,1":tint:.:T,::bk::1TT
Lii,i.l'l,il,,fi.'fi:',';'^;#n in, *,' .:liq': 9"'l:",1'::I::i:t^::':f,;:1J::,:T.:::::il,:jlif;:1,3
:"1"Jil'1il1",;':t"".',,i,ii;;" ry:1,":l::li:l:'::fT{"TiiT1;':i";:f;[ detected n"+
and the out ide accountants had
i:T:ll"ilTlJ'i,iil;".;;iliiv',.iJ',.a everv vear,
problems. =;'i=-+- som,etime' Wei6 fiirirlly show n to have soine validiry in 2002
These criticisms, *t'itii#fignored.for with tax evasion by federal
;;J;";ty the board and subsequently charged
when Kozlowski was
zlowst<i ireated Tyco is his peisonal treasury, -
sive Manhattatt apai-tii-rent and a vroCd-class art

'i ,)


t":'offto'::$:?l1;"hip or Dennis.Kozrowski, rvco grew ranilry

ror a decade. whv do vou think
,t.orgrlalq,riii,io"n t* How did it benefit Tyco? How did
Kozlorvski pursued his growth
it beneftt Kozlowski? pad earnings,
gage in accounting manipulations to

term success or
or Edward Breen's taken initiatives to the long
v. fl;Hf::T.:[J:ffi[t]#;."
DePartment of Finance
MBA 2nd Semester (4gh Batch) Final Examination 2014
Time: 3 hours
-// litle: Corporate Governance and Restructuring
Full Marks: 50
Code: FIN 5211
(N B.: Ansvter ony FOt)R questions. Ecch questlcn ccrries eluol morks' Figure5 in the ilght honC ncrgin lndicate full morks
Ports of eoch question should be answered consecutively')

L. a) UnCer what environmental conditions are

price wars most likely to occurfh an industry? How 7

sitould a company try to deal with tne threat of price war?

,., - -: :.-.- ^: -i..:,i ti.'9.r.-r.15: ^,j^l ,"ilh :tf2r2'tlz 1o '-^rhat "att k4ow ahoLIt Orlr air!ine industrv' 8
whatdoes the ntodel lell vou .ab.o-qt 1!r9]ev.etfl Sgf,f.:!itl"l.'1,i!'t
Mention the characteristics of small private company and SMEs'
2 a)
b) 'chairman, Chief executives and Executive directors can work as watch dog for ensuring better 5

corporate governance in any corporation'r- Discuss'

c) Explain the role of Non-executive directors to ensure good corporate Sovernance'
role in enstiring corporate
3. a) Parliament, stock exchange and corporate pressure group have important
governance. Do you agree? Give reasons'
Do you agree? Provide your
b) Corporate governance is attaining increasing importance in Bangladesh.
justification to support your answer'
,,comprehensive strategic management process should have certain implication over the corporate
governance." - Do you agree? Why or why not?

How merger and acquisition is related to corporate governance?

4. a)
b) -The most basic motive for merger and acquisition is growth" - Do you agree? Discuss with the 9

consideration of the othermotives (lmproved management and the R & D process) of merger &
governance? Does company really
s. a) How does the green movement create pressure on corporate
bcther for this pressure?
-T:.:-a:r a.iiv;iiesof PlRCistopr,i,ideinformationtotheshareholdersongovernanceissue"-
-Ll=-:gen:e.-,3 accountab:,:iY is a major concei'n for corporate governance in a co-operative
soct€ty'- Do you agree? Why or why not?
.Japan and Bangladesh shows different corporate governance structures due to their differences in 15
and external monitoring and the
market structure, institutional and regulatory enviionment, internal
interlocks minimize agency conflicts
state of development. ln Japan, stable shareholdings and share
mitigates incentive and
among different parties. Corporate grouping and main bank system
problems in the financial markets. shareholding and supply of board members by group
banks (Main Bank) facilitate bank's monitoring of member firms,
thereby, reducing incentiv€ problems
firms; other incentive problems
of the participants. As the bank holds both debt and equity of the
Main bank also monitors ex-post
bebileen shareholder and debt holders are likely to be mitigated.
firms when they cannot meet
cerformance and intervenes in the management of firms to help the
ccnrractual oblrgatio;ts. Barks a,:t as rescues of fi;iancial distressec
firnrs lr Bangladesh, bank-firm
Bangladeshi financial
rela:lonship is not as intimate as Japan. Due ro the regulatory arrartBerileii[s,
allowed to participate in stock investment' Banks and financial institutions in
instituiions are not
Bangladesh do not the loan or investment and also do
not provide any support to ihe concertled firms'
wiiich is a common characteristicfeaiures of Japanese corporategovernance.
in the corporate governance-structure of
exoerience likely to play an important role
is more
|L^ f"t f h?t lh'tr^'n '^!rnt'riPq hclnng tn the A<ian f Pgion "
]. .' ' :" ' :: :^
logical? Justify your ans\Jver'
Dc vou ihink the above findings and ou:comes are

Departnnent of Finance
Jagannath University
S: r: est e r' { 51!,t -., t,j } Fi i: : i S.,.; rr-, i n ;iio +- 20 1 _c
i,.'i BA. 2 :

.a Course code: FIN-5211; course Titre: corporate Governance and Restructuring

I FullMarks:60
Ir- _ _Tipe:3 t-tours

l [lnstruction: Answerany 4 (four) questions; figures in the right margin indicate full
sequc,'ice ci <lf ali par.ts
marks; maintain the
of ea:lr qi.rssticn ircu anr-rve,,j . : , . .. \
1- a) "Gobd corporate governanieis good managembnt,- txpii'in wi-ti eiampre.
.b) chairman, Executives and Advisors can work as watch dog for
; ensuring better
corporate governa nce in any corporation_ discuss.
c) corporate governance is attaining increasing importance in Bangladesh.
Do you
agree? Provide your justification to support your answer.

2. a) Explain the five important rotes of the main board of directors in maintaining
corporate govemance in an organization.
b) What is green movement? How it can create pressure in ensuring corporate
governa nce?
c) Corporate sector pressure groups can also create pressure in developing
governance- Explain.

3. a) ? non-performing board can crippre a company just as surery as

a non-performing
business area'. Justify the statement considering different scam
in the financial
market and banking sector in Bangladesh.
b) Describe the roles of employees, customers and trading partners
to ensure corporate
c) The comparative financial condition of Kohirun corporation and pundith
has been given below-
Prticulars KohirunCorporation pundithCompany
Present Eaminp Tk.10 million Tk.2 million
Share Outstanding 1 million 0.4 million
Stock Price Tk.30 Tk.1O
Find out the followings-
l. What is the exchange ratio at existing stock price?
ll' How much shi-res Kohirun Corporation need to offer to complete
the bid for
7oolo at 45% premium over the market price of the stock of pundith
Compa ny.
lll. should the management of Kohirun corporation give the permission of
acquisition? Why or why not?

a) What particuiar.feature about Enroir,s bcard of directors recluced the likelihood

the cornpa;ry's problems would be ?r.Jp?dy aclclressed?
b) What are the main lessons that can be drawn from the failure of Maxell's
c) What are the reasons do you think behind the collapse of Polly Peck? Also identify
the 5
sta keholders who v.rere most disadvantaged from that collapse.

Page 1 of 2
s. a) Whatishostiletakeover?Distinguishbetweenmergerandhostiletakeover.
a firm can take'
different types of preventive anti-takeover measures that
b) Describe

^f +ha <rnelrfnrthe comoanV

Movement Group is evaluating the acquisition of Nameless Grqyp, a

firrn that has
6. a)
tax prafitsof .the qelger will
3.quisiil3i:, ir,?v?inent,B'gup belieYeg fhet lhe total pre-
notchange. Nameless Group has a tax loss carryforward of Tk.1-.8 million'

Group .an prr.hrr" Nameless Group for Tk.2.1hlll'lon.It-can iell the assets for Tk'1.6

mitiion. Movement Group expects earnings before taxes in the

6 years after the
(in Tk)'
merger to be as shown in the following table
Year Earnings
7 6,00,000
2 6,00,000
3 4,50,000
4 4,00,000
5 1,50,000
6 6,00,000
limit that is legally
The expected earnings given are assumed to fall within the annual
resulting from the proposed
alloweci for application of the tax loss carry forward
next 5 Years without the merger'
after taxes for each of the
Caloulate the firm's tax paymer}s and earnings after
next 6 years with the
^erg",Jassociated with the merger?
v- /
I lr. What are the total benefits
lv. Discuss whetheryou would recommend the prqposed merger'
ABC Limited has a beta of 1.45. The risk-free rate's 8%
and the expected return on
and investors expect it to experience a growth in dividends
of !o% per annurn for
Flnd out the followings-
many years to come. The share's currentlY traded atTK 40.
l. What is the capitalizat'ron rate for firm's stock?
What is the value per share assuming this required return?
lll. ln which price you are interested to buy the share?

Iagannath UniversitY
Department of Finance
2013: MBA 3'd Batch 2d
Final Examination
3'00 Hours
Total Marks: 60' Time:

3! ecch suestion sequentiolly
a) {ou hove'o oiln" 'tt pat',rs
tlie lollowing 4lelions
b) ary n tJour! from

Questlonf,l buying a put option'

^L^ )i*^"o^.ehetween selling a call option and
rd positi o n ?

n il;|.J I :i::lli:,'::,: [:iil:lffi ;;,d- pbsiti on a nd a sh ort f o rwa

over-the-counter market?
uia ,"a q,ot., of a market maker in the
are the do you think is meant
by this?
"ri.i are rero-sum
d) "options and futures "*'" (3+6+6)

for an investment
,"rr, of the following cost of carry moder
the statemen,,n
the cost of carry.
Fo = soetT

with continuous compounding'
is 6% per annum
5250 and the risk-free
of the forward contract?
price and the initial value
(i) What are the fonrard

t"' the value of the fonalard
the forward
'i" income. lt costs 52 per unit
on an investment asset.that provides no
future contract is
year' Assume the spot price $450
_p)/consider a l_year payment O"t^' rntd" at the end of the
./ to store the asse! with the the price of the future contract'
risk-free raleisT%our rnn"l for all maturitio' calculate
per unit and

stock is not
euastion*3 ^---i--^ .r,
- American call nnrio. on a non-dividend-paying
option on
the early exercise of an
a) Explain why


there for an arbitrageur?
what opportunities are
ior alr maturities.
rate is 6% per annum European put option
on a non-dividend-paying
rower bound for the price of a 1-month and the risk-free interest
d) wrrat is the p'i"i 530' the strike price is s34'
when the ,ro.',
stock when the stock
is 6% Per annum?

, Jagannath University
DePartment of
2013: MBA 3'd
Batch 2nd Semester
Final Examination
neerin g and De rivatives)
N-5212 tf in'ntiti
e ngi
Course: Fi
Time: 3'00 Hours
Total Marks: 50'

QuestionF4 bci:9it
credit risk when it
rt enters inio
t*' "i="1T.::11i"ll1lL
trx$<i*i i"'r :'- rnk is-s-ubiect
i[1'<i;:-.;,';'--'-- " ' t+i)-)' 'itk a.0)!9q-l+.e.:i]::T::::*Tl1lll,
U] o'J;tcrr-c,* e'lrrl)Y--: '. .. ,:..-.,:.....i:.".:.,.
a) qu'J"" '"-
?",n0=n, A, a manufacturei
British manufacturer' ;gd rate of interest.
They have been


Comoanv A Lt'vt
a L0.5%

gn a swap *"'r n et
swa p that w, il;'ili
.:"J"1J;ll;'il:;;;r ilJ:'ffiil:'""
i""iTllli1'il *" each orthe
" Tl'J:: the :,
produce a gain of
-a-ba pet
bas points
15 basis "".:;"
L-. . romA
. Under the terms
of tt
or ",
swaP, 6'

,/ o-asloomillioninte,estrateswaphasarema.'i,r..n"averageofthebid.offer
nontn lffi'''''-'i""'"0
:::H v^-"-
month Lro.,n rJ T:1T:I'f
ror ti:":t::::1,[- -
.eL per annum
rr 6-month uBoR
' 'il
'''''t"'"ntry:.1:: illl',l;:
s is
2 monthS ago'
is the
l;" il;;-changed "'i.ll It
:;";.;;;-changed 4.6% rare was
j:|'il';1.,1 fi : i:[:I;:;.,iv n"o:
ng nyed?
the party paving
: S:::: I
:'"""..}.ffi,;",0""*,"' to'T:II'::::lj::U';;.;;"
conti nuo us .o,,n
p o, n o
the partY paying
the swap
cunent value of
a protective
is equivalent to
euestlonfiS ^,,]? wha

l, *l4 liTir Tr ;:[ :i[t:fi:.#:',;#,x'l,;.i': For \'

p'ont from the stratesY'
to loss? a same strike
price and same
lead the
-^-). (.4 Put o"'"",;';:rI,
S14' A out
option with
price or 5e0 costs rJ;;;;. ,... what 'angt of
c) A sa, option *.nlr,r'*.
tn" straddle lead to
a loss?
stock prices *o''O

Questlonfr6 -- and a stop order'

L^),r,-an mark€t-if-touched order
between ae rnark
the difference no. in .n" p,iri. interest to allow speculators
a) Explain
markets is ,,,J;;;;;;;,i.,
b) ,,5peculation ." i,.,,", do,ars in three months
i"JI;"" Euros ror 14 mir'on (dollars per euro)
., *i:l:i:j:j*mr;;ifrli5l"
in a forward-tont"tt'io
ao the same tn'"*'
t-iit"'" "t"
Trader e tntt"
a,,in g,*r:::,:l,X* *:, Hl:Xf ;*.:;U il:ilr::,'"?T,i;
daily settleme:l:.n
1.4300' lgnoring trader has done
into account' wht
settlement is taken
. Jagaanath University

II MBA (4'n Batch) 2d SemesterExamination -2014

Subject: Finance
a ('n,r-a CnAo li Ff N-<, r1
Course Titie # Financial Engrneering and Ddrivatives
J lv{ark: 60 Time # 3 hrs.
Irusrruction-' fAnswer any 4 four) of following questions; figures in the right margin indicatefult marps,
I nc;;.iei,t ihe se,quence of arower of ail parts of each question.l

1.a) \\trat does duration tell you about the sensitivity of a bond portfolio to interest rates? What
the Iimitations of duration measure?
b) "Option and future are zero-sum gaqlp"- What do you think is meant by this statement? 05
Explain carefully the difference between'hedging speculation and arbitrage.
c) The current price of a stock is S 94, and 3-month European call options with a strike price
of $ 06
95 currently sell for S 4.70. An investor who feels thatthe price of the stock will increase is
trying to decide betrveen buying 100 shares and buying2000 call options (20 contracts). Both
strategies involve an investment of $ 9400. What advice would you-give? i{ow does the stock
price have to rise for the option stratery to be more profitable?

2-a) "The early exercise of an American put is a trade-offbetween the time value of money and the
insurarce value of a put." - Explain this statemenl
b) Define interest rate. What are its components? How can you relate it with LIBOR? 2%
c) Suppose you are offered a 10 year, 15%couponbondof Tk. 100 at aprice of Tk. gSthatwill
mature at Tk 105. What rate of interest would you earn on your investment on maturity if
interest is compounded semi-annually?
-4 Company X and Y have been offered the fotlowing rates per annum on a Tk. 20 million S-year

Fixed rate Floating rqte

Coripany X: 12.0% LIBOR +0,1%O
C:-=.:an1 Y: t3.4% LIBOR + 0.6%
i:.::e;. f req:.:is a rloaing-ra:e loarq compa-ly Y requires a fi.xed-rate loan Desiga a swap
u:li ne a ba'rlq acting as intermediary, O.lYo per annum and that will appear equally
e::racrive to both companies.

3.a) Explain why is an American call option on a dividend paying stock always worth as much as 04
iis intrinsic value? Is the same true of a European call option? Explain your answer.
b) Suppose that put options on a stock with strike prices of $ 30 and $ 35 cost $ 4 and $ 7 05
respectively. How can the options be used to create a bull spread and bear spread? Construct a
ta:!e that shows the profit and payofffor both spreads.
c) A 4-month European call option on a dividend paying stock is cui-rently selling for $ 5. The 05
stock price is S 64, strike price is $ 60 and a dividend of $0.80 is expected in I month. The
risk-free interest rate is lZ%o per annum for all maturities. What opportunities are there for an

l.e.| D.:irentia:e tre ft!1,,.'.ii-q rr-rms: 05

i. Long fonvard position and short forward position ii. Continuous compounding and
discounting iii. AmErican option and European option iv. In the money
money y. Over-the+ounter
and out of the (OTC) market and exchange traded

Page 01 of02


An investor enters into a short forward contract to sell MYR 100,000 for USp at qq eI9!q499--q!--
rate of MRy 25.75 per USD. How inuch does t-h-einvistor gain or toii-if tfrJJxChange rate at

c) A90-dayslongforwardcon{ac!.on-ali.1-{iia94P1'y.1ng.s!:.:kj|-9nt9{9qi119.1vtt11.!Ie?bcI.T.
price is Tk. 250 and the risk-free is 6.5% pei rinnum with continutius compbunding.
: :.;r r" i.r}'hatisthEfo:*a,-.3-p?:ceg,:C-tJre-initizrivaiueof'flieforw6rd';rrforiftacflPr
r' : ' ' t'i:::''l
ii. Sixty{ays later, the price of the stock is Tk. 265 and the risk-free interest rate is 6Yo,

what is the forward price and the value of the forward contract?

5.a) Define swap. Enumerate different swaps with example. i'\

" ' 03
b) Differentiate forward markets from futures markets. Explain why is ei'&nt subject to credit 06
risk when it enters into two offsetting swap contracts?
c) The price of aEuropean call that expires in 6 months and has a strike price of $30 is $2. The 06
underlying stock price is $29, and a dividend of $0.50 is expected in 2 months and again in 5
months. The term structure is flat, with all risk-free interest rates being l0%. What is the price
of a European put option that expires in 6 months and has a strike price of $30? Explain
carefully the arbitrage opportunities if the European put price is $3'

6.a) How do the factors affect the value of options? Differentiate options from warrants. 04
b) Explain carefully why Black's approach to evaluating an American call option on a dividend - 04
paylng stock may give an appropriate answer even when only one dividend is anticipated. Does
th. ,*t given by Black's approach undencate or overstate the true option value? Explain
c) bomia.r an Arnerica.l call option on a stock The current stock price is USD 50, time to 07
rarriqy is I year, the risk-free rare of interest is 10.5 per annum, the exercise price is USD 55,
aal d13:stck price volatiliq is 159/0. Cash dividends of USD 1.50 are expected. Shorv that it
c-n nerrr be optimal tc exercise the option on the dividend date. How would you calculate the
price of the opion?

Page 02 of02
Depa rtnaent of F'imamae
II F^,,*^.
Jagannath Universif_v
MBA Semester Final Exami nation 20 15
uuiiisii: D:----:^t r
r-m.iltciai tnslneennq and Derivatives Course Code: FIN - 5212..
Time'3 h,-.urs
I Marks:60
I [Arisuer any 4 (Four) questions; figures in the right margin indicare fi:ll rne:l:s; nlintak th:
r=qirencibf ariiwer of arlparts of each questioni.] -

1'a) "Option and future zero-sum games"- What do you think is meant Marks
by this statement? 04
Explain u'hy a fonvard contract can be ued for either speculation or hedging.
b) rence between forw'ard and futurb contact. Suppose that you
enter 05
t to sell July silver for $10.20 per ounce. The siie ofthe contract
margin is $4,000, and the maintenance margin is $3,000,What
change in ilre furures price rvill lead to a margin call? What happeru
if y-ou do noimeet the
marg:n call?
c) i' Suppose that you *'rite a put contract with a strike price of $40 and an expiration date
in 3 06
months- The current stock price is $41 and the contract is on 100 shares.
What have you
committed yourself to? Horv much could you gain or lose?
price ofa certain stock. The current stock price
of $30 costs $2.90. you haye $5,900 to invest.
, one in the stock and the other in an option on
ses from each?

2.a) Erplain why'the futures price might reasonably be thought to equal the expected futures spot 05
b) Explain hou' margins protect investors against the possibility of default.
)) _expected
to pay a dividend of $1 per share in 2 months and in 5 months. The stock
E:-:e L' S-sC, a::l tre risk-i'':e raie of interest is 8% per annum with continuous compounding

::: :l =a:-::-:es. -i.:- l:i-es:ci har -iust taken a short position in a 6_month forwlrd contract oi
-: - _----._.-.I_
L irLa; a.= the rbru'ard price and the initial value of the forward contract?
ii- Th;ee monrhs later, the price of the stock is $4g and the risk-free rate of
interest is still 8% per annum. what are the forward price and the value of the
forw'ard contact?

3.a) Erplain why an American option is always worth at least as much as a European option on 05
the sarne asset with the same strike price and exercise date.

/ -b)
coinpanies X and Y h:r-e been offered the follorving rates per annum on a g5 miliion
lO-year 04

Fixed raie Floating rate

Company'X: 8.07m
' '':'-'-
Crr"- rrnr' \-'
^' s go.

corrp.r.i5 ,r. requiiss a fixed-rate inr.estrnent; company y requires a floating_rate

invesimenl Design a swap that rvill net a ban-k, acting as intermediary, O.zYo pe. anr,u,i
w-iil a:pear equally aitractive to X antl Y.

Page 0l of02
- is flat in both

,tLl3"T:*::,1",:.T.^rl::^,:: ",llrjoR/swap Japan and the 06
Y"-T""."Y:::It1:::-::-:1"1'g'-T1y.y..*,eus',J";';i.;;ffi #ilil
p'v' ;; ffi; *; ;;#:il:
;"1,*:1 :::"j;''*
principals :I'fl^Ti,1'l
in the two J,T a9,
curiencies are $10 million and1v: : ::.""n;
1.200 miltion
anntho. 3
a4gthgr l years,
',-^-- and +L^
^^J the current ^-.^L----
^,,-^-e exchanse "";-il;:";;:,1,,1ff1"-,^l
iaiii iuJi

C;;-,,* J"r*ai#;;tk;Ti ii:'i:# varut


4'a) .'The early exerci s a trade-off between the time value of

money and 05
b) A l-month Europ >n a non-dividend-paying stock is currently
selling for $2.50.
The stock is $47, the strike price is $50, and ttre rist<-treelnterest 05
rate js iiAp"irri*r, wrr"
opportunities are there for an arbitrageur?
c) An investor sells a European put onihare for $:
and the strike price is $40. Under what cir 0s
what circumstances will ttre option be ex
the investor's profit with the stock price at

5'a) what is meant by a protective put? what position in call options

is equivalent to a protective
put? 05

6-a) 'Employee stock options i

xchange-tradedcall 04
options on th. ;;fi-y'r
e of thecompany'"
Erplain t ir rt t"*!r,r ri,
b) l' A call u'ith a strike price of $60 costs $6. A put with the same strike price
expiiation date costs 54. consuuct and 05
a table that sirows the
range of stock prices would the straddle
piofit from a ,t."aoi.. r..
ii. 9"
Tl-rreeput options on a stock have th
Iead to a lorsi

$60, and $65. The market prices

butterfly spread can be created. C
strategy. For what range ofstockpri
c) A 4-month European call option on a divid
stock-price is $64, the strike price is $60, and i 06
risk-free interest rate is 72Yo per annum for all maturities.
What opporfunities are there for an
/) I
1it I

a-l a.0 "t

_ 0, q?
Fage 02 of02

O, 23
, -1- ,-Y\
- | ,i) lL J tl
7r^^ --6,'l
lf ':,? )'L -L

. Jagannath University
MBA 2N (3tr Bat;h) Semester Examination-:2013
srrtic.i-ri;ai,e';l ':'=r;::: "'
Coursc Codc # Fti\i-5214 Course Tite # portfolio Management
Maft 60 Time # 3 hrs,

l: Possession of mobi!e
TOSSCSSOn OI phooe !:l
llloDllc pncne t!:
i:: rl3 3x3mlnallon
iia.iu.r L-ll iS
rrsrr ;. striC-rii
rr .H'^.t,,
Ju ---L'L:.-
rvuy pior-riDii€d.

2. .Answa any,l (four) of the following questions; figures in the right margin indicate full marks;
i. ir,fainiain oc sequence oianswer oi ali pars of each question you ansv/6r.
- lr) ldentior'.hqcoilponen's of an investor's of i'brdril on investment. 04
) You bought 200 shares ofa stock for $34 per share and a year later you sold it for$37 pu
During the year, you received a cash dividend of $ l -20 per share,
i. Srhat will be the total dollar rcturn? . ,,.\ r 02
ii. What will be the nominal rate of return? ll, \ 02

iii.Assuming that the rate of inflation during the year was 3 percent, compute the real
rates of return on this investment. 03

c) The required rate of return on corlmon stocks is 12 percent, the expected rat-of inflationEf ol
4 percent and the real risk free interest rate of the economy is 2.5 percent. What interest rate
would you expect 9n€94.T-bills? what is the risk premium )r common stocks? I
2-z) A portfolio manager has three portfolios: 06
Portfotio X with I 57o sarnple reu:rn, 0.85 bet4 nonsystemati c risk2%o and 5Yo standard deviation;
Portfolio Y wiEr L27o sample return, 1.00 bet4 nonsystematic risk ZYo utd 5.5% standard deviation and
Portblio Z wili l6Yo Sample return, 1.05 bct4 nonqstematic risk 2%o urd 7 .5Yo standard deviation. The market return is
l4% aod risk-&ec rcrurn is 6.57o.
C:lq:Iatc thc followings and make comment about 0rc performance of portfolios:
L Ja:scn Index ii. TreFor Index iii..Sharpc Index
b Dcfoc effici:nt ma/<et hlpothcsis. Explain dtc thrcc iorrns of efficicnt market hypothesis. 03
lrrrErEnEac caglrat marKet tmc (Ulvll-, qom s€cunty m3rtet ltne (SML). OJ
o ii rv s.qlntv Eka une [5]1L) ts ca.lled thc bass of capital assct pricing model (CAPM)? 03
1rl ot covanarcc lo tlre clrmrnaloo ot the nsk of a diveNitied lio 03
b) Ccidcr tbc foUo*'ine inforrnari on: 06
Stock A B
Std. dcv. (o,) t2% l0o/o
Expected rcturn E(n) 15% l2o/"
Weieht (w,) .40 60
Cahrlate the expected rate of retum and the standard deviations of the portfolios against the following conelation

Ir.oo lffi


Crjqla- thc sta:rdard deviation of the of stock A,B and C

L-olEEransKy poruollo. I ne eno-or-year c?rsh tlow denved from the porttblio will be erther fk. 100,000 orTk. 180,000 06
s-:$ cq'.s.i p:'..--a'-riliries of 0-50. The alt:rr:'.i.,e risk-frec investment in T-biils pavslyo Der year.
i. Il an investor requires a risk premium oi9%, how much shou!C sihe pay for the portfolio?
ir. Suppose that the portfolio can be pr:rchased for the amount the investor found in (req. i), what would the
cxp€tedrate of return on portfolio?
iil If the investor requires a risk premium of llT6,How much should s/he pay for the portfolio?
Comparing req. (i) and (iii), what suggestion can you give about the relationship between the required risk-
premium on a portfolio and thc price at which the portfolio will seil?
Page I of2
b) Ocfinc dre term 'Risk aversion coemcient'.
t' Coosider the follo

u= E(l -tl.005Ad
Ela;ed on he abcv: utiliry formul4 n'hicb investment would you select if'
i. you wcre risk averse wirh A: 4'
- ii. if vou were risk neub'al-
-: ' ::, .
c) t" qf caDital asset pricing model. :--- ,.::-j r 03
Consiier-i portfolio that offers ai-r expected rate of return of t2% and a.standard
deviation of l8%. T-bitls offer a risk-free 7o/o rale of return. What is the maximum level of
risk aversion for which the risky porttolio is still preferred to bills?
Use the following data in answering the questions a & b.

Investment Erpected Return Standard Deviation tii

I L2% 3j%o
2 15 50
J 2l 16
4 24 2l

U:E(r)-.005Ao2 where A:4.5

i. Which investnaent would you select if you were risk averse with A:4.5?
ii. Which investment would you select if you were risk neutral?
iii. What does the variable (A) h the utiliry formula represent?
6r) Considersecun'tY bn OE

r=s of rtugr tE(.Jl aod eriatims (or) of the fol.lowing porfolios assuming that correlation
&bao(rer-0) At$Phtt.a h egr.Ptr.
Portfolio-t: tlaving ltr[: l-5
Porfolio-2: Having Wr : 0.50
Pordolio-3: Having Wa : 0.75
Pordolio-(: Having W1 : - 0.25
Portfolio-5: Having W1 :0.95
Pordoliol: Havins W^ : - 1.25
b) 07

Ass.rmc that market return is l5 % and risk-free rate of rcturn is 7 7o.

i. In terms of the security market line, identi$ thc above mentioned stock as overpriced and underpriced.
ii. Calcu!ate L\e expected rate ofreturn and riskofthe portfolio constituted ofthe stocks listed above.

Pege2 ofl
MBe(+nBa,"i;:r1ry_XT,'.1-'i',1 j_l_,,",ion.2u7{
COurse Cctle ,r lltrr N!.J!t{<" r , t:t*'' Fiuance
Mark 60 ao,,.r" r,r,. u Portfolio
. Managernent
Tiine # 3 hrs
l.a) Descritre the relationship
between risk aversion and
Discuss capitar A,ocation
*""'!'"l,1Ti[:T';'il;il;rr;#eaut* --
A..*; Rirky ,na nirt-pr.e pc
rtforiosr , .-",1r uu

' i, fr
J:99^0 0
Risk-frce , on"y
-I'v' market fund
Ntr' lunq 'rrql $90'oo
Bonds (long-term $ 1B'4ao '' 1r ' -' : L
Total risk assets $96,600 ''' ;

d) s,"'. poriiJ;'i;;ru,., '- ' ''',', ..i

versus thc capitar Market$ii';;' -1":04 .tt,'.r. ,

2-r) What is ris[: fiec asset? Expound.

b) the process of Alloc;'ti; Capirar
::lff: between Risk,v a,d Risk
Free Assets \ ith 03
Assurrre a risky porrlolio p
defined hv :
l5%o and so= 22yo l ()
The available risk_free asset
rr:797 auci s.,: go;
And_ tlie proporuonr i nvestecj :
t, (i-y)%o in r1
(r)'. Find our Exoected
pected Returrs
Rer for Combinations.
t.1], Jl:: :::_uj y". ", th; p;;,il.b;ib,,:Jporrrorios ' 1..r..--,_,:
9? rinu s:-aphicaliy pot.iure
ll":'cir combiru vvrsutr'u\,o'
Comii'na-tir; i<_-_-
I,vl nr ! .r-- .- , - ..rt oT wittrout Leverage.

(vj) Using Leverage_o 53,lo" ll ""j-#',n s.l,r,
"with Capital Xri*.:,trin".

u.lation and garnbling.
tion iheorem. 0{
end-of-year cash flow derivec'r 0{
frorn trre portfolio wi, be either.
I probabilities of .5. The 07
atrernariul,.i.t_n in;.;#; l;,i
i' IrT#;:f "
" fi'\ n1-,um or E%o, how much rrilr you be rvilling to pay for the
what witt p. the expe*ed rate tll,e an191nt rqund in Req.
Yli:1r,, be orr"trr;-r;;;;::.ili,9"r,r, vou
*t. &r",r, ]Yi
1?l I
Req i)
;;i'r :ie u "rii*;;,.;;i;;"
bc tv ill;qc l;;i,::
to p,,;,^ 'i't pr.,,iuri .f ir',i, \\'irar is rhe price thar you rrili
'" comp,u'5r-liJ;"x1'j':;-lrl".ji.?:^1)
iii),.rrlrar do you conclude abour
lJ,lffi:-l,li:-;s'i"i'i}"o,.*#',,,'ll,,"ii"lJ.ffi :':H:.'.,:
;'J?:f ffthe po,tfolio rvillsell./

Plor'Ill ..irrr
Elucidate The Minirnutlt Variance Portfolio'
S tate Correlati on Effects.

Explain Optimal Portfolios and Nominat Retums'

Riit nooting and the Insurance Principle'
Discuss Risk Sharing.
the.expectcd ret'.trn
wllat is the
market risk premiurrt is 8.5%, what for each secuiity?
Security Beta

ABC 3.69

DEF .64 Li\

GT{I t.64 !:
JKL t.79
return of l3%L What
Consider an asset witl- a beti o f 1.2, a risk-free rate of 5%o and a rrrarket
is the reward-to-risk ratic in equilibrium? i 02
d) Is the CAPM Practical?
Differentiate single index model from multifactor model'
6.a) Discuss random walk and efT'icient hypodieses'.
rates of ieturn on 10
Based on current dividend yielcls andexpected capital gains, the expected
pc;tfolio A and B are l2Yo and l6% respectively. Th-e beta of A is .7, while that o1'B is 1.4.
The T-bill rate is currei tiy 5Yo, the cxpected rate of i-eiuii cj'ihe S 8s P 500 index is
rhel of thc
l3yo.Thestandard deviation of portfolio Ais 12?6 airnti^-!ly, ttrai ';:"ll is 31,-1'r,:lnd
S & P 500 index is 18?6-
i. If you currently hold a rnarket-index portfolio, wouJd you cl-toi;se to add either of
these portfolios to your holdinp? Explain. '"''ri
If insteaC you could invest only in T-bilts and one of these portfolios, wl-rich rvould
you choose?
, Dl? .'

I'rgc 02 of 02
Jagannath UniversitY
R.{n lnrl
!r^u Sem.Jter Fina! Exam.-20i5
iuulttt' Finance -'
Course Title # Porttolto Management
Cotrse Code # FDi-5214 iFull
ur\ Tiure:
4:grt' 3 hrs'
5 I'rvr

Interst from nominal rate of interst'
l.a) s/hat are interest rates? Differentiate real rate of year' The inflation 03
a bond offerec a nominal HPR of 80% per
b) During the period
"il*.*lin"tion, the real 1 x on tt bond over the year? B) compare this real r
rate *,as 70c/o peryear. A) \!hat was " ' ';,'1r.,'i
-"r'" r = R- investing
HPR to the approximation
t"'f:#,?ff :- ^ ^^-.,--+i^-at I offerir
c) 'noi"
^n vear hank CD
:#1.1#,T,tlf.:3.:tT'{1f;# I
rate of ^

ected retum? iii) If you expect the

knent?' Whfl
Market Conditions
O Bear Normal Bull
Prob' '2 -5

StockA -20% lS%

StockB -15% 20Yo
Stock A&B'
D Wtrat are the expected returns for
2.2) Denne Specur""."".Tlrfffli;,ili#l#:i:li*:l;'5:;:u:.:lx#-::;:,Tri"r
Aatc ll rd out utilitv scores
b) Ft9*
Expected retum S-tandarddeviation(SD)
Portfolio fusk premium
\Yo 7y,
t tl-o*'"sk 2%
l0 t0
14 20
S=: =e =*:B-=
=j=i'= '- r-- :
!€='€= r a:rd controlling
^ -r--.:! ii) weight of Bond iii) 04
; ;;-
,:;"=i* :'r*t***.
ue 5300'000
Risk-free money market Fund S90'0000
BonJs (tong+erm)
Tota'l risk assets 5210'000
available risk-free asset has: q 04
b) Assurne a risky p";"il p J"n".a'uy 'qrr1 = iir'" *i or: zzn,The

6c-: Oozi'
=TYoald-elffi , h t7 .^o/ :- -
le LLt L --r
investol t ^, ' -,
And the p t o p"rti o rs LnYGtra'
,r, ProPoruoils
lA 1n I T 1,
retum and StanCard deviation
fo **pr.," portfolio if y .'7 5 , 1.0 and 0.
ii"a 05

ce Portfolio?
and risk with p
: '2'
\Yhat wili be minimum -variance retum n1

Co''rn about Risk Aversion and Allocation

d) \\';it:

Page 01 of02
- t

o_":r.d from the portforio wilr be either
ir"ffi'ofl:+f%f**i::;I: li1::i-I:,T.:*
rab,ooo with equar p,ou.uliu*, or;;;.ffi1,:';#:il::i:#ilH,:lT.-J[ rk
f3.rr?13: _'E--f--:-:?

pl"T,,- of eyo,howmuch should she payfor the portfolio?

i; i,:-:::Tfflti::;:*
what would j:l of ,.t a-,o ro#oii.i r* 'vr
the Lryected rat" :?*l:
lil *j:H: * ^i:?^Yr**
i"; iil
'uv 4tuuu,r Ltrc ,vqstor 5lxiltil,r ;;;; ;;ffi ;#ffi
tri. If the investor reqpi
reqJires a risk
portfoiio?- -oremir_rrn of ll%, Hcw nrrch should s/he nav fil tlra

* |:f:.:lf
.,' k. p
vou give about the rerationship betweerr
1..'3fu oo i omo rio t ffirffi ;,Ti: f#
p?'i ui
b) "na " " "
Consider tlie fol ata. 06
Investrnent I 3 4
Expected return E(ri) in % l5 17 20 22
Std. Dev. in oZ 8 10 l3 t5
B ased on. the ab ove uti li ry fo rm ut *n,.n,
i. you were nsk averse with A= 4, "r1ri'"I?*;
3,','fi , ;
ii. if you were risk neutral.
c) State the :ssumptions of Fama decomposition
of portfolio retum.
5'a) Erplain the significance of covariance and correlation
coefficient in the elimination of the
diversified portfolio. risk of a 03
b) Coosider A and B having the followins i formatioh.
E(r) t2l5
o (r) .08 06
Calculate expected rates of return
[E(rJ] stlaar! deviations (oo)
1t of the following portfolios
thal correlation coefficieni rero (hs: 0). Also olot them i
crcfFcient ics .o-
Portfolio I 2 3 4 5 6
w^ IJ 0.50 0.75 0.2s -.25 1.00
c)\ a-
git-ea tre foUorrins infor maoru
125 1.50 0.9s 0.75 1.11
Estimated retum ("/.) 25 20 l8 12 15
welgDrs (wJ .10 20 .25 .30 l5
Assume that m-k@ of return is 7 %.
i' In terms of the securiry market ling identifo the above mentioned
urder.oriced. What does the strictly pri,;ed stocks as overpriced and
stoci inai""teZ
ii' Calculate the expected ra:e of retum and risk of the portfolio
abor=. constituted ofthe stocks listed

ut the Assumptions of CApM.
b) :1. Stock ABC has expected retum 05
of13% and 05

ck is a better buy?
lot the SML and each stock's risk --retum point
c) Is
th: CAPM practical?
one graph. Show graphically.

o Srate the relationship between Liquidity and the CApivI 02


Fage 02 of02

Jaganmath universEty
Department of Finance
MBA 2nd Semester (3'd aatch) Final Examination 2014
Title: R.esearch Methodology Code: FIN- 52i5 -.,,
Time: 3 hours ,,
F llII
lt.S; UU
(N.8.: Answ'er an.v- IiOUR questions. Each quesiion carries equal marks. Figures in the right
1gn $ggtd bg 4nswered consecutivr
any question about the tjefinition ot 5.0

and others are not. Using some

i i management problems of you're choosing, distinguish between them.
i I t.t what problems of secondary data quality must researchers face? How can they deal
i' irviththem?
2. j (a)WhV not use rnore control variables ratherthan depend on randomization as the means 5.0
I of controlling extraneous variables?
i(U) WfrV do senior executives feel more comfortable relying on quantitative data than 5.0
qualitative data? How might a qualitative research company lessen the senior-level

i executive's skepticism? 5.0

l(c) Compare the advantages of experiments with the advantages of survey and
i observational methods.
3. ' (a) How should the researcher handle "don't know" responses? 3.0
zco digits were chosen at random from a set of tables. The frequencies of the digits 12.0
t:eq:encies: 18 19 23 27 76 25 22 20 27 15
u-58 /-2 test tc caeck that the Cigits were uniformly distributed in the tables from which
i:'i€r w€l'E ChOSen.
4. 1 (a) ln anglysis of an 5.0
i I sq"9{within? lf 10.0
, I IYf roothpick bo as
./f those of type B he
fo!'c'rring inform ation:

!a--, cut a signiicance test to determine whether this result indicates that the average
.----3e; of toothpicks in boxes of type A exceeds the average number in boxes of type B by
nc'e 5- Me;rtion the assumptions and draw the conclusion.
5. "han
a) '.',':zt is sampling? Why is it important in research? 5.0
rom probability sampling. 5.0
rom a hospitaladmitting 20,000 patients during a 5.0
derrt that our estirnate cf proportion of patients
n estimate of the proportion of paiienis having
ring hospital
I to be o.:s.
6 a) Write dor,vn about proposal development. 5.0
b) Expound the coniponents of a research proposal. 5.0
c) ::c,,v you evaluate a research proposal. 5.0
Department of Finance
Serirester Final Examination-20l 4
,/ Subject: Finanee
Course Corle: FIN 5215 Course Title: Research Methodotogy
Full Marks: 60
- Ti,nne: 3I{ours
fnstructions: [Ansrver any 4 (Four) quesiions; figures irr ^u\e right
rir! ii;qil-.^-=..1---::'::- if ^r! -^-'+1 af o.lh n,

l. A- uResearch -
.: - -'.--"';*--.\.- Ularks
is a diligent search, stiuili'iiqfiiif iiiesiiflittiot ii'i*perimiggion
aimed al the dbcovery of newfacls andfin(ings"- Discuss.-
b. State the criteria ofa good research.
c- "Researcherc in BaryIadesh lace greot dilJiculties and challenges in doing their 5
researcher-operationl! - do you agee? Discuss your arguments.
2. z- Explain with an example the quality and cost based system of evaluation of research
proposals. (Iechnical: 90; Financial: l0)
b- Write in briefa research proposalon the tontribution ofthe RMG sector in the economy
of Bangladesh."
3. a. State the steps involved in developing the survey instruments.
b. Data on sales (in lakh Tk) and nrofir /in rhnrrcand
rofit (in Tk) nf
thousand T1r\ of ao comDanv are siven het
^^. 10
Sales l0 12 t4 t6 20
Profit l5 20 20 25 30

i. Find the equation of regression of profit on sales
ii. Estimate tire relationsliip between-sales and profrt in relative term
iii- Assess the explanatory power of the independent variable
iv. Determinate the standard error of estimate
v- Estimate the profit w.'ren the volume of sales is Tk. g0 lakh
Interprer the results-

for fre application of chi-square test. 3

say at I percent level of significance that 6
ency of the workers?

Training Efliciencv Total

Efficient Inefficient
Trained 350 50 400
Untrained 200 400 600
Total 550 450 I 000
You ard working as purchase manager for a company. The following information has
been ied to fwo manut-acturers of electric lamos:
Company A Cornpany B
l,{ea.r iife (in hcurs) t300 1248.-
Standard Deviation (in hours) 82 93
Samole size 100 100
Which brand of lamps are you going to purchase if you
you desire to takElEt of 5 percerf?--

5. e. r1'.,1
Define correla
'; ''-5 : "
is multiva
n any '"
ecompan} en;A,B,C,ar
f ;{ summer, wi . The figure (i
Season Salesmen Total
A i.tsCD
Summer 36 . ,26 21 35 t2g
Winter 28 29 31 32 120
Monsoon 26 28 29 29 trz
Total 90 93 81 96 360

Carry out the Analysis of Variance test.

6. Suppose, an art collector is studying the relationship between selling price of a painting 15
ard nso independent variables. Two independent variabtes are the number of bidders at
the particular auction and the age of the painting. A sample of 25 paintings have been
used to conduct multiples regression analysis and the regression estimates given below.

Regrp<sion Anallsls
R2 0.648
Adjusted R': 0.616 tt 25
R 0.805 k2
Std. Enor 222.068 Dep. Var. Auction Price


Regression 1,995,489.1234 2 997,144.56t7 20.23 1.038-05

Total 3,080.400.0000 24

ion outout
variables coeficients std. eruor t (df:2? o-value
I;tert-ept _.1,0E0.0530 34i.3819 8.951 09
Bidders -54.18E5 12.2815 -4.412 .0002
Age t6.2891 3:1839 4.305 .0003

Requirement: Analyze and explain the above regression estimates.

Jaggonath Un iversitY, Dha ka'

Myf Batch Semester Final Examination-2015

'/ subject: Finance
---Qourse, Title: Researe h Methodology
Course Code: FIN 5215
Time:3 Hours
Fuli Mar'<s: 6O
t rna ginindicate full marks; rnaiqtain the

s::;:nc. cf answer of aii par ts of each questions]


l. 3- \t'hat are the basic objectives of Business Research? "A good research is 4

empirical"- ExPlatn. 4
b. eriifly discuss the criteria of a good research report'analysis on stock rnarket in 7
s \\rrite u ..r.*.t proposal on investors' behavior

test? Discuss the purposes of chi-square test'

'' a- Xhatis Chi-square
2. level of significance
;A"*d-.r,n1 r"u.wing information, canive say at 1 percent
..'' il training can ensure improved efficiency of the workers?
"Lrrry'ee Total
Training Efficiency
Efficient lnefficient
Trai,ned 3s0 50 400
Untrained 200 400 600
Total 550 450 t000

in hours 82
1'ou desire to take a risk of 5


\\rhat is rnultiple regression? State the properties of a

good linear regresston
3- a-
be done to remove
b. what is specification error in the regression model? what can
specification elror from the regression modei?
How ii can be removed
c. Define serial correlation in thi linear regression model.
kom the regressior rnodel?
testing in assessing the significance
4- ?. Discuss in brief the importance of hypothesis
a.f ;: sc :.::h r: tr:lts.
olrraiilo ci'rations given foi'
Th: i, l, ,''.'-,. i' o'bsar','ari'.'l: shorr'dre numbcr
Carohna Highway Patroi for
speeding b1' Oft-rcer X and Oft-rcer Y of the South
the las-. fi','e ir:.cnths
lrlay iJune lJulY lAugust September

*-r=ffiean numbcr of citaiions

At rir: .cr: s,,,c.un."
- oificers'i
gr\-en b''' t$'o
.*.-, -..= h,rirr <t-ilta,l arrd rrnskilled workers in the production process'
How is ANOVA helpful in solving business problems? What are basic i *1, ')

umptions in ANOVA?
The accompan)'ing table gives the weight losses in kg. after a 4-week period on a
random saqple of persons on three different diet_s::Tg-s.-1.3t 5% level to see if there
is a siguificant difference in the mean weight losses associated with the various
1 liet al--uiefiDier--f
7 g
8 l0

6. ^. What is a dummy variable? Under what circumstances it is .neqessary

., '\
to use a
dummy variable?
b. Explain the concept of multicollinearity and indicate how to identify the problems
of multicollinearity.
c. Results of the multiple regression equation of job performance rating on CGPA
in MBA and gender are given below:

i. Find the equation of regression ofjob performance rating on CGPA and

ii. Assess the explanatory power of the independent variables-
iii. lndicate which of these variables exerts more influence on job
performance rating.
iv. Assess the significance ofthe results.
lnterpret tie results.

Variab les Entered/ Removed(b)
Model \rariables Entered Variables Removed Method

I CGPA Enter
GR: Gender (0: Girls; 1: Bcys)
Dependent Va-'iabie: JP- Job performaace rating

Model Summary

Adjusted R Square Std. Error of the Estimate

0.5625 0.5324

ANOVA F sig.
365.34s 0.001
Coefficients (a)
t i f T-o+o-rla-Jizp.l I
cl tonrTo.rf i.rc11 --T---_l
I Model I coerncients I
i e I std. iirror I Beta

; (Constant) | 3.56 L