Kurukshetra University 2007 M.Com Accounting and Finance Financial Management & Policy - Question Paper
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Code No. 3Ml FINANCIAL MANAGEMENT ft POUCY
Paper : MC-202 ;
Timi Ihrtv hours I I Maximum Marks: 100
Note: Attempt any HVE questions otii ol llu* uon eight questions. All questions cam cqu.il marks
1. "Pfotit maximisation is .1 phrase which can easily lead to semantic muddles and it ispn'ably hazardous to use it in Ihespecul and restricted sense *n operational objective."! tn the light < this statement uggesl an operationally feasiblcobjech.c vhich the(n>ai. :al manger should purMii and which also leflects the nu*i efficient use of society's economic resoi - is.
2. What do vihi me in bv weighted average cost of capital? Illustrate with an example. Discuss Ihe relevance of cost of capital in capital budgeting and capiUl strut I lire decisions
3. A company has earnings tieloie interest and taxes ol Ks. 3 million and a 40 lax r.ile Its iispiired rate til return on equity in thealseiM * ol bonotv mg is IH..
(a) In the absence of |M'rson.il taxes, vvhal is tin* v.ilueof tht* company as per MM mmlel 0) wilh no leverage (ii) with Rs. 4 million is debt .mil (111) with Ks. 7 million debt.
(b) Personal as well .is toipor.ile laves now exist. The marginal |H'isonal lax rale onominon st<x k uuonie is 2!>":>aiul Ihe marginal j>eison.il tax rate on debt mcmne is 30%.
Determine the value of Ihe company for each ol the debt alternatives in Part A. Why do vour answers ditter
4. Differentiate between o|H*ratmg leverage, hnaik 1.1I leverage and combined leverage. Wh.tl is Iheir Mgiuhcaiue in finance?
5. "Dividend division is residual in nature.Comment on Ihe statement and discuss the view points of modern linance theorists regarding the relevance of dividend decision to the valuation of a firm.
6. The prime goal of receivables management is to maximize Ihe value of an enterprise by sinking a balance belween liquidity, risk and profitability. Evaluate the statement and discuss the methods of managing recievables
7. What arc the objectives of Corporate Restructuring? bxplain the major forms in which it can be carried out.
8. Write notes on any two of the following:
(i)U tility of credit rating to investors as well as tocompanics
(ii) Leasing as a source of finance
(ii) Venture Capital financial in India.
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