Loyola College B.A. Economics April 2008 Financial Management Question Paper PDF Download

LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.A. DEGREE EXAMINATION – ECONOMICS

BC 28

 

SIXTH SEMESTER – APRIL 2008

EC 6602 – FINANCIAL MANAGEMENT

 

 

 

Date : 23/04/2008                Dept. No.                                       Max. : 100 Marks

Time : 9:00 – 12:00

 

PART – A

 

Answer any FIVE questions in about 75 words each                             (5 x 4 = 20 marks)

 

  1. Define Sole Proprietorship
  2. What is Financial Management?
  3. What do you understand by “Sweat Equity shares”?
  4. Point out the difference between VAT and CENVAT.
  5. Rs.1,000 is invested at 10% compounded annually for three years.  Calculate the compounded value after three years.
  6. A debenture holder is to receive an annual interest of Rs.100 for perpetuity on his debenture of Rs.1,000.  Calculate the value of debenture if the rate of return is   a) 15%  & b) 10%.
  7. Define New Issue Ratio (NIR).

 

PART – B

 

Answer any FOUR questions in about 250 words each.                                    (4 x 10 = 40 marks)

 

  1. Explain the role of a Finance Manager in the liberalized era.
  2. State the difference between Public and Private Limited Company.
  3. Differentiate between Debentures and Shares.
  4. What are the advantages and limitations of a cooperative society?.
  5. Discuss the Powers and Functions of SEBI.
  6. The current market price of a debenture of X Ltd is Rs.800 having a face value of Rs.1000.  The debentures will be redeemed after 5 years.  The debenture carries an interest rate of 12% p.a.  Calculate yield on maturity.
  7. Mr. A holds an equity share giving him an annual dividend of Rs.20.  He expects to sell the share for Rs.180 at the end of a year.  Calculate the value of the share if the required rate of return is 12%.

 

 

 

 

PART – C

 

Answer any TWO questions in about 900 words each                                (2 x 20 = 40 marks)

 

  1. ‘Financial Management has changed substantially in scope and complexity in recent decades’ – Justify.

 

  1. Comment on common stock valuation. Mohan Ltd Co’s dividend per share next share is expected to be Rs.4 and it is expected to grow at a 6% rate forever. Assume that the appropriate discount rate is 14%. What is the value of one share?

 

  1. From the following capital structure of a company, calculate the overall cost of capital, using (a) Book Value Weights;  b) Market Value Weights.

 

Source

Book value Market Value
Equity Share Capital (Rs.10 share) Rs.45,000 Rs.90,000
Retained Earnings 15,000
Preference Share Capital 10,000 10,000
Debentures 30,000 30,000

 

 

 

 

 

 

 

The after tax cost of different sources of Finance;  Equity 14%;  Retained Earnings 13%; Preference share 10% & Debentures 5% .

 

  1. Explain the detail the rational and significance of the concept of Time value of money. Illustrate with suitable examples.

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