BCom In Accounting & Finance (BCAF) Sem VI 2016 2017 2017 FINANCIAL MANAGEMENT Question Paper - Mumbai University | munotes

Questions asked in this paper

1. Q1 Re-Write the following statements and fill in the blanks
   • (i) The concept of homemade dividends supports the argument forirrelevance of dividend
   • (ii) studies the percentage relationship that eachitem-of financial statement bears to same item in the base year
   • (iii) When the correlation greater than 0, it is correlation J (iv) If the insiders starts selling heavily, it is considered as indicator A (v) According to Prof, James E Walter in-the long run share prices reflect only the value of expected dividend:
   • (vi) The value as the present value of all the future cash flows on the security
   • (vii) The candle stick chart is the modified version of chart
   • (viii) represents the market value of total assets of the mutual fund less total
   • (ix) is a measure of performance of a in relation to general movement of market
   • (x) ‘is the discounting rate which equates the present value of all future cash flows of a bond
   • (B) Match the 7) :— 7
2. Q1 Yield to Maturity A. Ratio Analysis
3. Q6 Technical Analysis ; F,
4. Q2 (A) From the historical rate of return of two securities and market over the you arerequired to Calculate the Covariance and Correlation Co-Efficient of the two-securities,: Rate of Return %
   • (B) Mr. Jack has a holding of 30% shares in Dance More Ltd. He has assessed and found that Enjoy Life Ltd is of the equivalent risk class. As his financial advisor required to explain him whether he will be better off in switching his holding to Enjoy Life Ltd or not using following information : Total No of Equity Shares 10,00,000 5,00,000 Profit Before interest and tax 93,75,000 Note: All the profit available for distribution as dividend to equity shareholders are distributed ‘in full
5. Q2 (A) R Fund CPSE, a mutual fund which invests exclusively in Maharatna Companies yielded 4.24 per unit forthe year. The opening NAV was = 21.20. R Fund CPSE has a risk factor of 3.50%, Ascertain Sharpe’s ratio and evaluate the funds performance in relation to with the performance of if =
   • (i) Risk Free Return is 5%, Return on Sensex is 15% with a Standard Deviation of 2.75%
   • (ii) Risk Free Return is 4%, Return on Sensex is 17% with a Standard Deviation of 3%,
   • (iii) Risk Free Return is 7%, Return on Sensex is 18% with a Standard Deviation of
   • (B) Tendulkar Ltd’s equity shares currently sell for 32/- per share. The company’s finance 7 Manager anticipates a constant growth of 10.5% and at the end of year dividend of 7 2.50/
   • (i) the expected rate of return ?
   • (ii) If the investor requires 17% return, should he purchase the stock ? (Support your decision with calculation)
6. Q3 From the following data on three mutual funds find out :
   • (i) Reward to Total Risk and (fi) Reward to Systematic Risk. Also Rank them Fact : Risk Free rate is 7%
   • (B) The following are the returns of Share (X) and Market (M) for the last 6 years : 7
   • (i) Whatis'the total risk of Share and Market ?
   • (ii) is systematic risk of Share ?
7. Q3 (A) Mr. Anik is planning for making investment in bonds of one of the companiesi.e.either X Ltd. or Y Ltd maturing at par. The details of these are as follows : The current market price of X bond is 9,455/-. Find out current market price of Y bond if both bonds have same Yield to Maturity (YTM) 8 marks
   • (B) The earnings per share of a company is 10/- and the rate of capitalization applicabletoit 7 is 10%. The company has two option of paying dividend i.e. (i) 50% or (ii) 75%. Calculate the market price per share as per Walter’s Model, can earn return of (a) 15% or (b) 10% or (c) 5% on its retained earnings
8. Q4 From the information provided below prepare financial statements for LSK Ltd for “4 Working Capital 80% of Current Assets Quick ratio 0.5 higher than standard industry Gross Profit 33.1/3 of Cost Fictitious Assets 20% of Current Assets ‘4 Share capital : Reserves and Surplus | profit year of 10% of Reserves and Surplus)
9. Q4 (A) An Investors is considering the-purchase.of the following bond . Maturity (at Par) 4 Years 8 marks
   • (i) If he wants a yield of 12% what is the maximum price he should be ready to pay for ?
   • (ii) If the bond is selling for 940/- what would be his yield ?
   • (B) Aninvestor has-decided to invest = 1,00,000/-in two companies. The estimates of return on F shares in companies under four different scenarios as Ascertain the risk with each class of the secunty ?
10. Q5 (A) What is Industry Analysis ? Explain various factors affecting industry analysis. 8 marks
    • (B) Discuss the determinants of bond valuation. 7
11. Q5 Write short notes on (any three) :— 15 marks
    • (b). Importance of Ratio Analysis Systematic and Unsystematic Risk
    • (e) Risk Diversification

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