LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.A. DEGREE EXAMINATION – ECONOMICS

RF 26

SIXTH SEMESTER – APRIL 2006

                                                    EC 6602 – FINANCIAL MANAGEMENT

(Also equivalent to ECO602)

 

 

Date & Time : 24-04-2006/9.00-12.00         Dept. No.                                                        Max. : 100 Marks

PART – A

Answer any FIVE questions in about 75 words each.           (5 ´ 4 = 20 Marks)

1. Define business finance.
2. Bring out the scope of Financial Management.
3. Write a note on financial forecaste.
4. What is the relationship between financial decision making and risk and return.
5. Explain wealth maximization objectives of Financial Management.
6. A finance manager’s concern must be to maintain liquidity rather than profitability.
7. How does valuation concept help in decision making?

PART – B

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

8. Discuss the impact of globalization in the financial decision making of corporate enterprises. Also discuss the impact of liberalization on Indian industry.
9. Explain the role and scope of finance function in business distinguishing it from the accounting function. Also give Spearman organization chart for the finance function in large corporate enterprises
10. Explain the concept of compounding and present value. How do these two concept differ?
11. Explain two approaches which are adopted for valuation of equity shares with appropriate examples.
12. Explain the procedure you would adopt to minimize your risk while selecting a capital investment project.
13. Risk analysis is an essential feature of investment decision making process. What are the major risk factors? And how will you control them.
14. Explain the advantages and disadvantages of the following types of business organization.

(a) Sole proprietorship          (b) Partnership (c) Joint stock companies

PART – C

Answer any TWO questions in about 900 words each.         (2 ´ 20 = 40 Marks)

15. Explain the basic provisions of the following Acts:

(a) SEBI     (b) MRTP         (c) IDRA 1956 (d) Industrial licensing policy 1993

16. Discuss briefly the different techniques of analysis and interpretation of financial statements and explain the salient features of the various methods of financial analysis.
17. What is profitability? How is it measured? Which of the accounting ratios serve as indicators of profitability? And how are they computed?
18. What is meant by cost of capital of a firm? And what relevance does it have in decision-making? How is it calculated with different types of sources of capital funds? Why is the cost of capital most appropriately measured on an after tax basis?

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.A.  DEGREE EXAMINATION –ECONOMICS

RF 33

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
  1. Rs 3000 due to be received six years from now with an opportunity cost of 8%
  2. 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
  1. 12%
  2. 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

 

16. 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

 

17. 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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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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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)

1. Define business finance.
2. Write a note on companies Act.
3. What are financial liabilities?
4. Write a short note on Capital Structure.
5. State the cost of preference capital.

6. 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%.

1. Discuss the cost of retained earnings.

PART – B                 

Answer any FOUR questions in about 300 words each.                                          (4×10=40)

1. Analyse the emerging role financial managers in India.
2. Write a note on industrial policy.
3. Bring out the functions of financial system.
4. Examine the various indicators of financial development.

12. 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.

1. Discuss weighted average cost of capital.
2. Explain the various forms of business organization.

 

 

PART – C

Answer any TWO questions in about 900 words each.                                            (2×20=40)

 

1. Discuss the nature and scope of business finance.
2. What is financial market and explain the equilibrium in the financial markets with four panel diagram.
3. Bring out the SEBI guidelines for primary and secondary markets.
4. Discuss the various misconceptions about the cost of capital concept.

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.A. DEGREE EXAMINATION – ECONOMICS

SIXTH SEMESTER – APRIL 2012

EC 6602 – FINANCIAL MANAGEMENT

 

 

 

Date : 20-04-2012              Dept. No.                                       Max. : 100 Marks

Time : 1:00 – 4:00

 

PART – A

 

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

 

1. State the goals of financial management.
2. Define partnership.
3. What is financial market?
4. If a person invests Rs.5,000 at 12% compounded annually for three years,

calculate the compounded value after three years.

5. Define costs of debt.
6. What is ‘preference shares’?
7. Write a note on companies Act.

PART – B

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

 

8. Explain the nature and scope of business finance.
9. Discuss the SEBI guidelines for debentures.
10. Analyse the functions of a financial system.
11. Explain the methods of long term securities valuation.
12. Describe the explicit and implicit costs.
13. Write a note on industrial policy.
14. Analyse the application of present value technique in finance.

PART – C

 

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

 

15. Explain the emerging role of financial managers in India.
16. Discuss the relevance of indirect tax structure on companies in India.
17. Critically analyse the functions of various financial institutions in India.
18. From the capital structure of a company given below, 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                                        Rs.15,000                  –

Preference Share Capital                            Rs.10,000                  Rs.10,000

Debentures                                                    Rs.30,000                  Rs,30,000

The after tax cost of different sources of Finance; Equity 14%; Retained Earnings 13%;

Preference share 10% and Debentures 5%.

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.A., DEGREE EXAMINATION – ECONOMICS

SIXTH SEMESTER – NOVEMBER 2012

EC 6602 – FINANCIAL MANAGEMENT

 

 

 

Date : 5/11/2012               Dept. No.                                        Max. : 100 Marks

Time : 1.00 – 4.00

 

PART-A

 

Answer any FIVE questions in about 75 words each:                                                       (5×4=20)

 

1. Discuss the relationship of financial management to Economics.
2. What are the different ways of classifying financial markets?
3. What are the principal tasks of SEBI?
4. Determine the present value of the following cash stream if the discount rate is 14 %.

Year	1	2	3	4	5
Cash flow	5000	6000	8000	9000	8000

5. A Rs 100 par value bond bearing a coupon rate of 12% will mature after 5 years. What

is the value of the bond, if the discount rate is 15%?

6. Explain Implicit and Explicit cost.
7. If you deposit Rs 1000 annually in a bank for 5 years and your deposits earn a

compound interest rate of 10 percent. What will be the value of this series of deposit at

the end of 5 years?

 

PART-B

 

Answer any FOUR questions in about 300 words each:                                                   (4×10=40)

 

8. Explain the various forms of business organization.
9. “Financial management is in many ways an integral part of the jobs of the managers”-

Comment.

10. Discuss the functions of a financial system.
11. (a) The project X cost Rs 1,00,000 and its expected cash flows are as follows:

Year	1	2	3	4	5
cash flow	20000	30000	40000	50000	30000

The cost of capital is12% calculate the net present value

(b) A company has 15% perpetual debt of Rs 100000. The tax rate is 50%. Determine

the cost of capital (before tax as well as after tax) assuming that the debt is issued at (i)

par, (ii) 10% discount, and (iii) 10% premium.

12. Explain the equilibrium in financial markets.
13. The market price of a Rs1000 par value bond carrying a coupon rate of 14percent and

maturing after 5 years is Rs 1050. What is the YTM on this bond? What is the

approximate YTM? What will be realized YTM if the reinvestment rate is 12 percent

 

14. A company issues 14% irredeemable preference shares of the face value of Rs 100

each. Flotation costs are estimated as 5% of the expected sale price .What is the

cost of preference capital if preference shares are issued at (i) par value (10%)

premium and     (iii) 5% discount?

PART-C

 

Answer any TWO questions in about 900 words each:                                                     (2×20=40)

 

15. Explain the nature and scope of Business finance.
16. Discuss the measurement of Cost of Capital
17. A company has on its books the following information:

Type of capital	Book value	Market value	Specific costs
Debt	300000	270000	8%
Preference capital	200000	230000	14%
Equity capital	500000	600000	17%
Retained Earnings		150000	17%
Total	1000000	1250000

 

Determine the weighted average cost of capital using (a) Book value weights (b) Market value weights.

 

18. a) Discuss the various components of financial system.

 

1. b) Explain the indicators of financial development.

 

 

 

 

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