LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.A. DEGREE EXAMINATION – ECONOMICS
SIXTH SEMESTER – APRIL 2011
EC 6602 – FINANCIAL MANAGEMENT
Date : 09-04-2011 Dept. No. Max. : 100 Marks
Time : 9:00 – 12:00
PART – A
Answer any FIVE questions in about 75 words each. (5×4=20)
- Define business finance.
- Write a note on companies Act.
- What are financial liabilities?
- Write a short note on Capital Structure.
- State the cost of preference capital.
- A company issued Rs. 1,00,000 of 10% redeemable debentures at a discount of 50%. The cost of floatation amount to Rs. 3,000. The debentures are redeemable after 5 years. Compute before – tax and after – tax cost of debt. The tax rate is 50%.
- Discuss the cost of retained earnings.
PART – B
Answer any FOUR questions in about 300 words each. (4×10=40)
- Analyse the emerging role financial managers in India.
- Write a note on industrial policy.
- Bring out the functions of financial system.
- Examine the various indicators of financial development.
- Consider a project, which has the following cash flow stream:
| Investment | Rs. (1,000,000) |
| Saving in Year | Cash flow |
| 1 | 200,000 |
| 2 | 200,000 |
| 3 | 300,000 |
| 4 | 300,000 |
| 5 | 350,000 |
The cost of capital, k, for the firm is 10 per cent. Calculate the net present value of the proposal.
- Discuss weighted average cost of capital.
- Explain the various forms of business organization.
PART – C
Answer any TWO questions in about 900 words each. (2×20=40)
- Discuss the nature and scope of business finance.
- What is financial market and explain the equilibrium in the financial markets with four panel diagram.
- Bring out the SEBI guidelines for primary and secondary markets.
- Discuss the various misconceptions about the cost of capital concept.
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