IGNOU MCO7 FINANCIAL MANAGEMENT IMPORTANT QUESTIONS

IMPORTANT QUESTIONS

MCO7



1.a) What are basic financial decisions? How do they involved risk return trade off?

b) What role should the financial manager play in a modern organisation?

2. a) Why do we use cash flow analysis instead of profit analysis in a capital budgeting decision? What are the general principles of cash flow estimation?


 b) What is the meaning of Cost of Capital? What is its significance in finance decision of a firm ? Explain different types of costs?


3. a) Explain the method of calculating present values of cash flows.

b) Explain the concept of valuation of securities. Why is the valuation concept relevant for financial decision making purposes?

4. What are the different sources of long term finance? Explain them.

5. What is lease? How is it different from Hire Purchase? What are its advantages and limitations?

6. a) Explain the concept of 'risk' and 'return'.
b) What is capital asset pricing model? Explain its assumptions and implications.

7. a) What is payback period method? Despite its weakness, it is a very popular method . What are advantage and disadvantage of the same.

b) Distinguish between explicit cost and implicit cost?

8. Distinguish between systematic and unsystematic risk, with examples.


9. a) What are the factors that affects choice of debt in capital structure? 

b) What is project finance? Discuss any two types of project financing arrangements.


10. a) What are the main determinants of a dividend payout? 

b) Why do firms follow a policy of stable dividend?


11. a) Explain the meaning of financial management ? Differentiate between investment decision and financing decision.

b) Explain the basic financial functions of financial management.
c) In what ways is the wealth maximization criteria superior to profit maximization criteria? Discuss.


12. a) How does credit policy influence ;

  1. sales
  2. investments in receivables
  3. bad debts


b) What are carrying costs and ordering costs and why are they important in inventory management?




13.a) Explain the different types of market securities a firm will choose to invest surplus cash.



b) Discuss the ABC analysis of inventory control.




14. Discuss the concept of financing leverage, operating leverage, and combined leverage . How are they calculated ? Explain these significance in the planning of a firm.




15. a)Discuss the factors that influence the capital structure of the firm.



b) State MM proposition I and explain its relevance.




16. a) Discuss 3 important decisions making areas of financial management.



b) 'Capital budgeting expenditure is usually an expenditure on the project '. Elucidate how do you classify different types of projects.




17. What is "Arbitrage" ? Explain Arbitrage pricing Theory and the assumptions of this theory .




18. a) What is NPV method? How do you assess the desirability of and any project based on this method?



b) What is average weighted cost of capital? Explain with example.




19. What do you understand by DCF technique of capital budgeting? Explain with suitable examples.




20. Write short notes on the following:

  • Role of stock exchange
  • Financial leverage
  • Operating leverage
  • Capital rationing
  • Capital market
  • Cash management
  • Corporate finance




THANK YOU


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