Kerala University 2009-4th Sem M.B.A (Full Time) , (2006 Scheme) STRATEGIC CORPORATE FINANCE - Question Paper

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Fourth Semester M.B.A. (Full Time) Degree Examination, July 2009

(2006 Scheme)

STRATEGIC CORPORATE FINANCE

Time: 3 Hours    Max. Marks: 60

SECTION - A    (5x3=15 Marks)

Answer any five questions. Each question carries three marks.

1.    What are the primary objectives of Corporate Management in India ?

2.    What is equipment lease ? What are its essential elements ?

3.    What are the unique features of hire-purchase accounting ?

4.    What is sensitivity analysis ?

5.    What are the components of net cash outlay in the capital budgeting decision ?

6.    What is hedging ?

7.    What are Interest swaps and Currency swaps ?

8.    What are derivative instruments ?

SECTION - B    (3x10=30 Marks)

Answer any three questions. Each question carries ten marks.

9.    Briefly discuss the financial security markets and its valuation models.

10.    Explain the different types of long term financing and its significance.

11.    Enumerate briefly the major steps in capital budgeting.

12. The Income Statements of M.K. Ltd. are given for the years 2007 and 2008. Convert them into common-size income statement and interpret the change.

Income statements for the year ending.

Gross Sales

Less : Sales returns    ,

Cost of sales    5,95,000

Gross Profit    1,05,000 Operating Expenses :

Administrative expenses    12,700

Operating income    69,300

Other incomes    1,200

Net operating expenses    1,750

13.    X Company Ltd., an Indian Company, is required to make a payment of 3 million US dollars after six months, against import of plant and machinery. What are the different alternatives to hedge against the foreign currency exposure. Give explanations.

SECTION - C Compulsory Question

14.    Calculate the average rate of return for Project A and B from the following :

Project A    Project B

Investments    Rs. 20,000    Rs. 30,000

Expected life (no salvage value) 4 years    5 years

Project Net Income (after interest, depreciation and taxes)

Years Project A Project B (Rs.) (Rs.) 1 2,000 3,000 2 1,500 3,000 3 1,500 2,000 4 1,000 1,000 5 - 1,000 6,000 10,000

If the required rate of return is 12% which project should be undertaken ?

Attachment: kerala-university-2009-m-b-a-40272-1.pdf

Earning:   Approval pending.