LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.A. DEGREE EXAMINATION –ECONOMICS
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SIXTH SEMESTER – APRIL 2007
EC 6602 – FINANCIAL MANAGEMENT
Date & Time: 20/04/2007 / 9:00 – 12:00 Dept. No. Max. : 100 Marks
PART A
ANSWER ANY FIVE QUESTIONS IN ABOUT 75 WORDS EACH
- Define Co-operative organization
- Explain the concept of Annuity
- What is “call money” market?
- What do you understand by accrual principle?
- Find the present value of the following
- Rs 3000 due to be received six years from now with an opportunity cost of 8%
- Rs 1000 to be received 3 years from now with an opportunity cost of 6%
- A Limited is at present paying a dividend of Rs. 4 per equity share this rate of dividend is going to continue in the years to come. The current expected dividend rate is 12% Calculate the value of equity share
- A debenture holder is to receive an annual interest of Rs 100 for perpetuity on his debenture of Rs. 1000. Calculate the value of debenture if the rate of return is
- 12%
- 8%
PART B
ANSWER ANY FOUR QUESTIONS IN ABOUT 250 WORDS EACH
- State the difference between public and private limited company
- Examine the role of financial managers in the post liberalization era
- Discuss the functions of the financial system
- Discuss the role of IDBI in industrial finance
- A Limited has issued bond of the par value of Rs 1000 the present value of the bond is Rs 900. The bond carries an interest rate of 14%. The maturity period is 6 years. You are required to calculate the yield on maturity.
- ABC Ltd is expected to pay a dividend of Rs 30 per share. Dividends are expected to grow perpetually at 10% You are required to calculate the market value of the share if capitalization rate is 15%
- Discuss the powers and functions of SEBI
PART C
ANSWER ANY TWO QUESTIONS IN ABOUT 900WORDS EACH
- Financial management as an integral part of the overall management , is not totally independent area – Justify
- a) A company issues Rs 10,00,000 16% debentures of Rs 100 each. The company is in 35% tax bracket you are required to calculate the cost of debt before and after tax. If debentures are issued at (i) at par (ii) 10% premium (iii) 10 % discount (b) If brokerage paid at 2% what will be the cost of debentures if issued at par
- From the following capital structure of a company calculate the overall cost of capital, using (a) book value weights and (b) market value weights
Sources | Book value | Market value |
Equity share capital Rs 10 per shares | 45000 | 90000 |
Retained earnings | 15000 | – |
Preference share capital | 10000 | 10000 |
Debentures | 30000 | 30000 |
The after- tax cost of different sources of finance is as follows
Equity share capital 14%, Retained earnings 13% Preference share capital 10%
Debentures 5 %.
18. Examine the Equilibrium financial markets through four panel diagram.
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