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Financial Management Essay

2206 words - 9 pages

Examination Paper Semester I: Financial Management 
       IIBM Institute of Business Management 
 
Semester‐1                                                Examination Paper                                             MM.100 
 
                                                           
    Financial Management 
 
                                              
 
Section A: Objective Type (30 marks) 
 
• This section consists of Objective questions & Short Notes. 
• Answer all the questions. 
• Part One question carries 1 mark each & Part two carry 5 marks each. 
 
   Part one: 
 
    Multiple choices: 
 
1. The approach focused mainly on the financial problems of corporate enterprise 
a. ...view middle of the document...

Firms point 
c. Capital expenditure point 
d. Cost of capital 
 
7. It  arises  when  there  is  a  conflict  of  interest  among  owners,  debenture  holders  and  the 
management 
a. Seasonal variation 
b. Degree of competition 
c. Industry life cycle 
d. Agency costs 
 
8. Some guidelines on shares & debentures issued by the government that are very important for 
the constitution of the capital structure are 
a. 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 is Annuity kind of cash flow? 
 
2. What do understand by Portfolio risk?  
 
3. What do you understand by ‘Loan Amortization’? 
 
4. What is the Difference between NPV and IRR?   
 
 
 
END OF SECTION A
IIBM Institute of Business Management 

Examination Paper Semester I: Financial Management 
 
 
 
 
Section B: Caselets (40 marks) 
 
• This section consists of Caselets. 
• Answer all the questions. 
• Each Caselet carries 20 marks. 
• Detailed information should form the part of your answer (Word limit 200 to 250 words). 
 
 
Caselet 1 
 
This  case  provides  the  opportunity  to  match  financing  alternatives  with  the  needs  of  different 
companies. It allows the reader to demonstrate a familiarity with different types of securities. George 
Thomas was finishing some weekend reports on a Friday afternoon in the downtown office of Wishart 
and  Associates,  an  investment‐banking  firm.  Meenda,  a  partner  in  the  firm,  had  not  been  in  the  New 
York  office  since  Monday.  He  was  on  a  trip  through  Pennsylvania,  visiting  five  potential  clients,  who 
were considering the flotation of securities with the assistance of Wishart and Associates. Meenda had 
called the office on Wednesday and told George's secretary that he would cable his recommendations 
on  Friday  afternoon.  George  was  waiting  for  the  cable.  George  knew  that  Meenda  would  be 
recommending different types of securities for each of the five clients to meet their individual needs. He 
also  knew  Meenda  wanted  him  to  call  each  of  the  clients  to  consider  the  recommendations  over  the 
weekend.  George  was  prepared  to  make  these  calls  as  soon  as  the  cable  arrived.  At  4:00  p.m.  a 
secretary handed George the following telegram. George Thomas, Wishart and Associates STOP Taking 
advantage  of  offer  to  go  skiing  in  Poconos  STOP  Recommendations  as  follows:  (1)  common  stock,  (2) 
preferred  stock,  (3)  debt  with  warrants,  (4)  convertible  bonds,  (5)  callable  debentures  STOP.  See  you ...

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