IGNOU M.COM MCO7 FINANCIAL MANAGEMENT IMPORTANT QUESTIONS FOR DECEMBER EXAM
IMPORTANT QUESTIONS
MCO 7
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) 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?
b) Distinguish between explicit cost and implicit cost?
3.a) What is optimum capital structure? Discuss.
b) Critically examine the net income and net operating income approach to capital structure decisions.
4 a) What are the main determinants of a dividend payout?
b) Why do firms follow a policy of stable dividend?
5. a) What is a operating cycle ? How is it important for the management of working capital?
b) Explain the risk return trade off in working capital management?
6. 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.
7 a)What is credit policy? Discuss its objectives and variables. How does credit policy influence ;
- sales
- investments in receivables
- bad debts
b) What are carrying costs and ordering costs and why are they important in inventory management?
8.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?
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) Explain the different types of market securities a firm will choose to invest surplus cash.
b) Discuss the ABC analysis of inventory control.
11a) 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.
12. a) What is the need for holding inventory? What are the costs involved in holding inentory?
b) What is cash forecasting? How does it help in improving cash management?
13. a) Explain the different forms of informal credit arrangements.
b) What are the functions of 'forex market'.
14.What is "Arbitrage" ? Explain Arbitrage pricing Theory and the assumptions of this theory .
15. a)Discuss the factors that influence the capital structure of the firm.
b) State MM proposition I and explain its relevance.
16. What is lease? How is it different from Hire Purchase? What are its advantages and limitations?
17. What are the objectives of inventory management? How are they similar to objectives of cash management?
18. Write short notes on the following:
- Operating leverage
- Financial leverage
- Capital rationing
- Role of stock exchange
- venture capital
- bonds
- factoring
- lease financing
- securitisation
- Economic order quantity (EOQ)
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