MBA202-Financial Management

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Master of Business Administration - MBA Semester 2

MBA202-Financial Management

Set - 1

Q1. Explain the factors affecting Financial Plans

Answer.

Q2. a) Explain Zero Coupon Bond.                         5

b) Explain the concept of Yield to Maturity           5

Answer. Zero coupon bonds

In India, zero coupon bonds are alternatively known as Deep Discount Bonds (DDBs). These bonds became very popular in India for over a decade because of issuance of such bonds at regular intervals by IDBI and ICICI. Zero coupon bonds have no coupon rate, that is, there is no interest to be paid out. Instead, these bonds are issued at a discount to their face value, and the face value is the amount

Q3. a) Explain the concept of Operating Cycle.          5

b) Explain any five determinants of Working Capital.      5

Answer. Operating Cycle

The time gap between acquisition of resources and collection of cash from customers is known as the operating cycle. It is also referred to as the working capital cycle.

Operating cycle of a firm involves the following elements:

•          Acquisition of resources from suppliers

•          Payment

Set - 2

Q1. Briefly explain types and sources of Risk in Capital budgeting

Types of Risks.                 5

Sources of Risks.             5

Answer. Capital budgeting involves four types of risks in a project: stand-alone risk, portfolio risk, market risk and corporate risk.

Stand-alone risk

Stand alone risk of a project is considered when the project is in isolation. Stand-alone risk is measured by

Q2. ABC Ltd current dividend is Rs 6. It expect to have a supernormal growth period running to 4 Years during which the growth rate would be 25%. The company expects normal growth rate of 8% after the period of supernormal growth period. The Investor’s required rate of return is 15%. Calculate what the value of one share of this company is worth.

Calculate the value of one share

Answer.  

Q3. Briefly explain the costs associated with maintaining Receivables.

Answer. There are four different varieties of costs associated with maintaining receivables: capital cost, administration cost, delinquency cost and bad debts or default cost. Below depicts the costs associated with maintaining of receivables.

Capital cost

When firm sells goods on credit, the good achieves higher sales. Selling goods on credit has

FALL-2018

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