Total No. of Questions 10] [Total No. of Pages 02
B.B.M./B.B.A. DEGREE EXAMINATION, MAY 2018
Second Year
Basic Business Finance
Time 3 Hours Maximum Marks :70
Answer any five questions.
All questions carry equal marks.
Q1) Explain the Significance and types of finance.
Q2) Define the terms equity and debentures and explain merits and demerits of
each.
Q3) Explain briefly about capital market and money markets in India.
Q4) The following figures are taken from the current balance sheet of Delaware
Co.
Capital

8,00,000
Share premium

2,00,000
Reserves

6,00,000
Shareholder's funds

16,00,000
12% irredeemable debentures

4,00,000
An annual ordinary dividend of Rs. 2 per share has just been paid. In the part,
ordinary dividends have grown at a rate of 10 percent per annum and this rate
of growth is expected to continue. Annual interest has recently been paid on
the debentures. The ordinary shares are currently quoted at Rs.27.5 and the
debentures at 80 percent ignore taxation.
You are required to estimate the weighted average cost of capital (based on
market values) for Delaware Co.
Q5) Explain the concept of leverage and different types of leverage.
Q6) Explain the concepts of over capitalization and under capitalization and
results of over and under capitalization.
Q7) Discuss the relationship between working capital management and business
solvency and explain the factors that influence the optimum cash level for a
business.
Q8) Define dividend and explain different forms of dividend.
Q9) Explain the types of Amalgamation and discuss the advantages and
disadvantages of Amalgamation.
Q10)Write short notes on
Non-operating income
Preference share capital
Cost of capital