Unique Paper Code FMH20
Revised 0 of 5

Financial Management2020

B.Com (Hons) · 5 questions

Duration: 3.1 HoursMaximum Marks: 93.75

From an older CBCS paper

Reworded by Kunji from the printed paper. The original paper belongs to the University of Delhi. See DU's question bank.

Before you start

  1. Pace. Two minutes a mark: about 38 minutes for each 18.75-mark question, with nothing spare in 3.1 hours. Move on when the time is up.
  2. Keep score. Every part opens a worked answer checked against the books. Turn the key when you have revised it; the boxes at the top fill in, on this device.

1.

18.75 marks
· ~38 min
The three financial decisions; deferred loan instalmentsQ1. "Financial Management is concerned with the solution of three major decisions- the investment, the financing and the dividend decision". Explain this statement, and highlight how these decisions are inter-related.…(18.75)

3.

18.75 marks
· ~38 min
MM approach: critical appraisal and the arbitrage processQ3. Critically appraise the Modigliani and Miller Approach to the theory of capital structure. Two companies, U and L, are in the same risk class. They are alike in every respect, except that firm L has 12% debentures…(18.75)

4.

18.75 marks
· ~38 min
Cost of capital in capital budgeting; WACC at market-value weightsQ4. How is the cost of capital relevant to capital budgeting decisions? Also discuss the factors that affect the cost of capital. A company's capital structure is as follows : The dividend per share is expected to be…(18.75)

5.

18.75 marks
· ~38 min
Postponing dividends for growth: Gordon valuation; dividend policy and shareholders' wealthQ5. Glacier Corporation, a market leader in refrigeration products, has paid dividend consistently over the last several years The average growth rate of dividend has been 12%. Glacier Corporation's capitalisation rate…(18.75)

6.

18.75 marks
· ~38 min
Cash management and working capital; relaxing the credit policyQ6. Comment: "The efficiency of cash management depends on how efficiently a firm manages its inventory and its Receivables". Meridian Ltd is currently operating at the 65% capacity utilization level; its sales are…(18.75)

— End of the paper —