Examination Paper of Financial Management IIBM Institute of Business Management Examination Paper Financial Management Subject Code-B-103 Section A: Objective Type & Short Questions (30 marks) This section consists of multiple choice & Short Notes. Answer all the questions. Part One carries 1 mark each & Part two carries 5 marks each. MM.100
Part one: Multiple choices: 1. The approach focused mainly on the financial problems of corporate enterprise. a. Ignored non-corporate enterprise b. Ignored working capital financing c. External approach d. Ignored routine problems 2. These are those shares, which can be redeemed or repaid to the holders after a lapse of the stipulated ...view middle of the document...
Legal requirement b. Purpose of finance c. Period of finance d. Requirement of investors 9. It is that portion of an investments total risk that results from change in the financial integrity of the investment. a. Bull- bear market risk b. Default risk c. International risk d. Liquidity risk 10. _____________ measure the systematic risk of a security that cannot be avoided through diversification. a. Beta b. Gamma c. Probability distribution d. Alpha Part Two: 1. What do you understand by wealth maximization? 2. Discuss the concept of factoring. 3. Define Annuity. 4. What is the Difference between NPV and IRR? END OF SECTION A Section B: Case lets (40 marks)
This section consists of Case lets. Answer all the questions. Each Case let carries 20 marks. Detailed information should form the part of your answer (Word limit 150 to 200 words). 2
IIBM Institute of Business Management
Examination Paper of Financial Management Caselet 1 Case1: Credit Decision - Agarwal Case On August 30, 2006, Agarwal Cast Company Inc., applied for a $200,000 loan from the main office of the National bank of New York. The application was forwarded to the bank's commercial loan department. Gupta, the President and Principal Stockholder of Agarwal cast, applied for the loan in person. He told the loan officer that he had been in business since February 1976, but that he had considerable prior experience in flooring and carpets since he had worked as an individual contractor for the past 20 year. Most of this time, he had worked in Frankfert and Michigan. He finally decided to "work for himself" and he formed the company with Berry Hook, a former co-worker. This information seemed to be consistent with the Dun and Bradstreet report obtained by the bank According to Gupta, the purpose of the loan was to assist him in carrying his receivables until they could be collected. He explained that the flooring business required him to spend considerable cash to purchase materials but his customers would not pay until the job was done. Since he was relatively new in the business, he did not feel that he could compete if he had to require a sizeable deposit or payment in advance. Instead, he could quote for higher profits, if he were willing to wait until completion of the job for payment. To show that his operation was sound, he included a list of customers and projects with his loan application. He also included a list of current receivables. Gupta told the loan officer that he had monitored his firm's financial status closely and that he had financial reports prepared every six months. He said that the would send a copy to the bank. In addition, he was willing to file a personal financial statement with the bank. Question: 1. Prepare your recommendation on Agarwal Cast Company
Caselet 2 This case has been framed in order to test the skills in evaluating a credit request and reaching a correct decision. Perluence International is large manufacturer of...