B.Com. (Financial Management) SEM VI 2017 18 Nov 2017-18 II Question Paper - Mumbai University | munotes

Questions asked in this paper

1. Q1 (A) Re-Write the following statements and fill in the blanks (any 8) :— 8 marks
   • (i) If ashare has a beta of ,it rises and falls corresponds exactly with the
   • (ii) The concept of homemade dividends supports the argument for irrelevance of dividend
   • (iii) When the correlation co-efficient is greater than it is correlation
   • (iv) According to Prof. James E the long run share prices reflect only the value of expected dividend
   • (v) The value of a bond is measured as the present value the future cash flows on the security
   • (vi) Capital asset pricing model predicts the relationship between the risk and its
   • (vii) The basic objective of portfolio management is to maximise returns with
   • (viii) When the required rate of return is less than the coupon rate the bond sells at
   • (ix) A portfolio mix which offers maximum returns fora given level of risk is an
   • (x) The ratio is used to rank the risk adjusted performance of various portfolios over the same time
   • (B) Match the Column (any 7) :— 7
2. Q8 H. Irrelevance Approach
3. Q2 (A) The following data are available for a bond : Maturity (at Par) 6 Years Yield to Maturity 17% What is the current market price ? 8 marks
   • (B) Kay Kay Ltd’s equity shares currently sell for 45/- per share. The company’s finance manager. 7 anticipates a constant growth of 11.5% and at the end of year dividend of 3.00/- per
   • (i) What is the expected rate of return ?
   • (ii) If the investor requires 15% return, should he purchase the stock ? (Support your decision with calculation)
4. Q2 Withthe help of the information provided below you are asked to prepare Balance Ltd as at 31st March, 2017 Reserves to Capital 1:4 Gross Profit Ratio 25% on Cost Fixed Assets to Net Worth 0.80 times Cash Sales 25% of Net Sales Stock turnover ratio 12 times (on Sales) Total assets comprise of fixed assets, investments and current assets only 15 marks
5. Q3 (A) Mr. Spiky is contemplating purchase of 1500 equity shares of a company. His expectationis 15% before tax by way of dividend, with an annual growth of 10%. The company’s last dividend was 4 per share. he is contemplating, he finds that due to change in taxation rules, dividends have been exempted from tax in hands of the recipients. But the imposition of dividend Distribution Tax on company is likely to lead a fall in dividend of 30 paise per share. Mr. Spiky’s marginal tax rate is 10% Calculate what should be Mr. Spiky’s estimate of the price per share before and after the change in taxation rules 8 marks
   • (B) The following are the returns of Share (S) and Market (M) for the last 6 years : 7
   • (i) What is the total risk of Share and Market ?
   • (ii) How much is the systematic risk of Share ?
6. Q3 (A) Mr. Sinha has invested in three mutual fund scheme as per details below : NAV as on Date of Purchase NAV as on 31/03/2016 48.20 You are required to calculate yield on per annum basis in respect of each scheme as on 8 marks
   • (B) The following information relates to Maya Ltd. 7 Earnings of the Company 10,00,000 No. of Shares Outstanding 2,00,000 Rate of return on Investment 15%
   • (i) What should be the market value per share as per Walter’s Model ?
   • (ii), What is the optimum dividend payout ratio as per Walter’s Model and the market value of company’s share at that payout ratio ?
7. Q4 (A) following data on three mutual funds find out : 8 marks
   • (i) Reward to Total Risk
   • (ii) Reward to Systematic Risk. Also Rank them Fact : Risk Free rate is 7%
   • (B) Aninvestor estimates return on shares in two different companies under four different 7 scenarios as under : Ascertain the risk associated with each class of the security ?
8. Q4 (A) From the historical rate of return of two securities and market over the past 10 years, Calculate the Covariance and Correlation Co-Efficient of the two securities Year Rate of Return (%) 8 marks
   • (B) Mrs. Zara is planning for making investment in bonds of one of the 7 X Ltd. or Y Ltd. maturing at par. The details of these are as follows : Recommend which bond should be purchased
9. Q5 (A) Explain the impact of financial planning on the overall performance of an organisation ? 8 marks
   • (B) Discuss the Assumptions of Modigliani and Miller Hypothesis and its significance. 7
10. Q5 Write short notes on (any three) :— 15 marks
    • (a) Yield to maturity
    • (b) Types of mutual fund
    • (c) Principles of sound financial plan
    • (d) Objectives of portfolio management
    • (e) Portfolio diversification

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