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FINANCIAL MGMT
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 period
a. Cumulative preference shares b.
Non-cumulative preference shares c. Redeemable preference shares d. Perpetual
shares
3. This type of risk arise from
changes in environmental regulations, zoning requirements, fees, licenses and
most frequently taxes
a. Political risk b. Domestic risk c. International risk d. Industry risk
4. It is the cost of capital that is
expected to raise funds to finance a capital budget or investment proposal
a. Future cost b. Specific cost c.
Spot cost d. Book cost
5. This concept is helpful in
formulating a sound & economical capital structure for a firm
a. Financial performance appraisal b.
Investment evaluation c. Designing optimal corporate capital structure d. None
6. It is the minimum required rate of
return needed to justify the use of capital
a. From investors b. 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?
Question:
1. Which type of financing is appropriate to each firm?
2. What types of securities must be issued by a firm which
is on the growing stage in order to meet
the financial requirements?
1. How would you judge the potential profit of Bajaj
Electronics on the first year of sales to Booth
Plastics and give your views to increase the profit.
2. Suggestion regarding Credit limit. Should it be approved
or not, what should be the amount of
credit limit that electronics give to Booth Plastics.
1. Honey Well Company is contemplating to liberalize its
collection effort. Its present sales are Rs.
10 lakh, its average collection period is 30 days, its
expected variable cost to sales ratio is 85 per
cent and its bad debt ratio is 5 per cent. The Company’s
cost of capital is 10 per cent and tax are
is 40 per cent. He proposed liberalization in collection
effort increase sales to Rs. 12 lakh
increases average collection period by 15 days, and increases
the bad debt ratio to 7 percent.
Determine the change in net profit.
2. Explain the concept of working capital. What are the
factors which influence the working capital?
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