(Pages 1147
P.T.O.
MAR IVANIOS COLLEGE (AUTONOMOUS)
THIRUVANANTHAPURAM
Reg. No. :.………………… Name :.…………………
Third Semester B.Com. Degree Examination, November 2017
First Degree Programme under CBCSS
Elective Course: Commerce I (Stream
AUCO391.c: Financial Management
Time: 3 Hours Max. Marks: 80
SECTION A
Answer ALL questions in one or two sentences.
1. Write a short note on Time Value of Money.
2. Distinguish between Compounding and Discounting.
3. Name the areas of Finance Function.
4. What is Financial Management Process
5. Write a note on „Watered Stock‟.
6. What is ploughing back of profits
7. Explain in brief significance of cost of capital.
8. What do you mean by Capital Structure
9. Define Operating Leverage.
10. What are the short term sources of working capital finance
(10 1 10 Marks)
SECTION B
Answer any EIGHT questions, each in a short paragraph not exceeding 50 words.
11. Explain the concept Future Value of Money.
12. What do you mean by Cost of Capital
13. What are retained earnings
1147
2
14. What is an Annuity
15. Explain the need of a Financial Plan.
16. What are Creditorship Securities
17. What do you mean by marginal cost of capital
18. What is optimal capital structure
19. Give the meaning of Composite Leverage.
20. What do you mean by structure of working capital
21. What is Inventory Management
22. What is Bonus Dividend
2 16 Marks)
SECTION C
Answer any SIX questions, each in a paragraph not exceeding 120 words.
23. Explain practical applications of Compounding and Present Value Techniques.
24. Calculate the present value of the following cash inflows assuming a discount rate of 12%.
Year 1 2 3 4
Cash Inflows 80,000 00,000 50,000 10,000
25. Discuss Preference shares as a source of finance. Why Preference share is called a hybrid security
26. A company issues 5,00,000 13% Preference Shares of Rs.100 each redeemable after 10 years at a premium of 5%.The cost of issue is 2.5% on the face value of shares. Calculate the cost of Preference Capital.
27. Write a note on cost of capital and its role in Financial Management.
28. What do you mean by M M Theory of Capital Structure
29. Briefly explain the factors which influence the planning of capital structure in a business enterprise.
30. What is the difference between favourable leverage and unfavourable leverage
31. Explain briefly the Temporary Working capital for a manufacturing concern.
4 24 Marks)
1147
3
SECTION D
Answer any TWO questions, not exceeding four pages.
32. "Without adequate finance no business can survive and without efficient financial management no business can prosper and grow". Comment on this statement outlining the role and scope of financial management.
33. "Wealth Maximization is a superior criterion than profit maximization". Explain.
34. Briefly explain the different methods of estimating working capital requirement of a business organization
35. What is the difference between the weighted average cost of capital and marginal cost of capital Which one should be used in capital budgeting
15 30 Marks)