CORPORATE
FINANCE
Total Marks: 80
Note :
All Questions are Compulsory
Each Question Carries Equal Marks 10 Marks
1. Explain in detail about Corporate Firm
2. Write a note on Short term solvency & Long-Term Solvency
Measures
3. Explain Definition & Example of a Bond & Explain How to
Value Bonds
4. Write a note on Growth Opportunities & Give one suitable
example
5. You purchase a bond with an invoice price of
$1,140. The bond has a coupon rate of 7.2 percent, and there are five months to
the next semiannual coupon date. What is the clean price of the bond?
6. Explain in Detail about Monte Carlo Simulation
7. Calculating Future Values Compute the future
value of $1,000 compounded annually for
a) 10 years at 5 percent
b) 10 years at 7 percent
c) 20 years at 5 percent
d) Why is the interest earned in part(C) not twice
the amount earned in part(A)
8. Explain in Detail about Different types of
Efficiency
CORPORATE
FINANCE MANAGEMENT
COURSE: CFM Total Marks: 80
N.B.: 1)
Attempt any Twenty Questions 2) All questions carries equal marks.
Q.1)
Give A brief On Optimizing the Corporate Finance Function, The External
Business Environment and Corporate Financial Strategy. The
Strategic Logic of High Growth?
Q.2)
Explain what is Shareholder Value Maximization?
9. Corporate Valuation
10.
Valuation Models: Public Company
11.
Valuation Models: Closely held Company
12.
Corporate Performance Measurement: Economic
Value Added (EVA)
Q.3)
Explain Financial Policy with the help of the following points?
a) Capital Structure
b) Operating Leverage
c) Dividend Policy
d) Pricing Strategy
e) Tax Planning
f) Optimal Capital Budgeting with real Options
g) Mergers and Acquisitions
h) Asset-Liability Management: Optimizing the Balance Sheet
a) Identifying and Estimating Risk Exposure
b) Off-Balance Sheet (OBS) Risks
c) Operational Risk Management
d) Enterprise Wide Risk Management (EWRM)
e) Risk Hedging Strategies
Q.5)
what is Financial Reporting, Planning and Control
a) Financial Reporting: GAAP Convergence
b) Business and Financial Planning
c) Treasury Management
d) Financial Control and Audit
e) Optimize amid Changing Operating Conditions
Q.6)
Corporate Performance Management: The Balancing act?
a) The Execution Problem
b) The Balanced Scorecard
c) Real-time Financial Systems: Corporate Performance Management (CPM)
d) Integrated Financial Management
Q.7) How do we create and measure shareholder
value creation? Q.8) How do we manage financial risk?
Q.9) In
what projects are we going to invest our shareholders money (capex)?
Q.10) Why Profit maximization is not the same as shareholder wealth
maximization? Q.11) What investments should we make?
Q.12) How do you know whether an investment
generates value for shareholders? Q.13) Described Traditional appraisal
techniques?
• What businesses actually use
• Payback
• Accounting rate of return
• Why internal rate of return is still popular
o Strategy
o Social context
o Expense
o Stifling the entrepreneurial spirit
o Intangible benefits
Q.15)
Explain The stages of investment decisions ?
o Generation of ideas
o Development and classification
o Screening
o Appraisal
o Report and authorization
o Implementation
o Post completion audit
Q.16)
Explain Allowing for risk
• What is risk?
• Adjusting for risk through the discount rate
• Sensitivity analysis
• Scenario analysis
• Probability analysis
• Standard deviation
• What risk techniques do managers actually
Q.17)
Explain Value managed companies versus earnings managed companies
• The pervasiveness of the value approach
• Case studies: FT100 companies creating value
and destroying value
• Why shareholder value?
• Earnings-based management’s failings:
o Dicey accounting o Throwing money in
o Ignoring the time value of money
o Ignoring risk
• ROCE has limitations
• Focusing on earnings is not the same as value
• How a business creates value
• The five actions to create value
•
Strategic business unit management
•
Do we have any strong business franchises?
•
Industry attractiveness
•
The strength of our resources
•
The TRRACK system
•
The life cycle of value potential
•
Strategic choice
•
What use is the head office?
Q.19)
Explain Value creation within strategic business units
•
Using cash flow to measure value
•
Shareholder value analysis
•
Economic profit
•
Economic value added (EVA)
Q.20)
What is the companies cost of capital?
•
The required rate of return
•
The cost of equity capital
o
The
capital asset pricing model
o
Gordon
growth model
o
The cost
of retained earnings
•
Debt capital
•
Preference shares
•
The weighted average cost of capital, WACC
•
What the WACC tells you
•
Applying WACC to strategic business units and
projects
•
What do managers actually do?
•
Implementation issues
o
How
large is the equity premium?
o Which risk free rate?
o
How
reliable are the CAPM and beta?
•
Fundamental beta
Q.21)
explain the below Mergers: impulse, regret and success
•
The merger decision
•
You say merger, I say acquisition
•
Types of merger
•
Merger statistics
•
What drives firms to merge?
o Synergy
o Market power
o Economies of scale
o Internalisation of transactions
o Tax
o Risk diversification
o Bargain buying
o Inefficient management
o Managerial benefits
o Hubris
o Survival
o Free cash flow
o Third party motives
Q.22) Do the shareholders of acquiring firms gain
from mergers?
Q.23) What pay-outs should we make to
shareholders?
The
other extreme
Some
muddying factors
•
Clientele
effects
• Taxation
• Information
conveyance
•
Agency
effects
Scrip
dividends
Share buy-backs and special dividends A round up of the
arguments
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