Punjab Technical University 2007-2nd Sem M.B.A (-) FINANCIAL MANAGEMENT (-205) - Question Paper

FINANCIAL MANAGEMENT (MBA-205)

Time : 03 Hours Maximum Marks : 75
Instruction to Candidates:
1) part - A is compulsory.
2) Attempt any 9 ques. from part - B.

Section-A
Q1) [15 × two = 30]
a) What is meant by financing decisions?
b) Mention 2 limitations of Accounting rate of return.
c) discuss Financial Risk.
d) Mention the utility of public deposits as a source of fund.
e) discuss operating Lease.
f) explain the relation ranging from debt financing and financial leverage.
g) What is a letter of credit?
h) Differentiate ranging from Bonus problem and stock split.
i) describe the term ‘take over.’
j) What is Capital Asset pricing model?
k) How cost of preference share capital is calculated?
l) What is dividend pay-out Ratio?
m) discuss the concept of Capital Rationing.
n) Mention 2 advantages of Lease financing.
o) describe Economic Value added in relation to shareholder’s value criteria.

Section-B
[9 × five = 45]
Q2) “Shareholder’s wealth maximisation is preferred as an objective of Financial
Management than profit maximisation as objective of Financial
Management.” Justify.

Q3) explain the working of Arbitrage process with the help of suitable examples.
Q4) Under what type of circumstances ‘NPV’ and ‘IRR’ gave contradictory
outcomes and why?
Q5) explain the uses of Lease Financing from Lessee’s point of view.
Q6) Distinguish ranging from Net Income and Net operating Income approach of
optimal capital structure.
Q7) define the main determinants while estimating the working capital
requirements.
Q8) explain the theory of irrelevence of Dividends.
Q9) explain the Reasons and factors affecting mergers and Acquisitions.
Q10) What is weighted avg. cost of capital? How it is capital?
Q11) Initial outlay (Co) Rs. 1, 20, 000.
Life of an Asset eight years.
Estimated Net Annual cash in flow
1st year Rs. 30000
2nd year Rs. 40000
3nd year Rs. 60000
4th year Rs. 40000
compute Internal rate of return.
Q12) A company problems 1000, 7% preference shares of Rs. 100 every at a premium
of 10% redeemable after five years at par. compute the cost of preference
share capital.
Q13) define the factors affecting long term fund requirements.

Earning:   Approval pending.