VALLIAMMAI ENGINEERING COLLEGE

SRM Nagar, Kattankulathur – 603 203

DEPARTMENT OF MANAGEMENT STUDIES

QUESTION BANK

III Semester

BA7024 – Corporate Finance

Regulation – 2013

Academic Year 2017 – 18

Prepared by

Dr.Radha Ganesh Kumar - Asst. Professor / MBA

UNIT I INDUSTRIAL FINANCE

Indian Capital Market – Basic problem of Industrial Finance in India. Equity – Debenture financing – Guidelines from

SEBI, advantages and disadvantages and cost of various sources of Finance - Finance from international sources,

financing of exports – role of EXIM bank and commercial banks – Finance for rehabilitation of sick units.

Q.No Unit - I - Part - A - Question Level Competence

1 Define Costof Capital. BTL 1 Remember

2 Compare the differenttypesofcostof capital. BTL 2 Understand

3 Identify the use of debtcapital. BTL 3 Apply

4 Classifythe varioustypesof debentures. BTL 4 Analyze

5 Discussthemethodsof exportfinancing. BTL 5 Evaluate

6 Interpret the functionsofEXIM bank. BTL 6 Create

7 Define Corporate FinanceandIndustrial Finance. BTL 1 Remember

8 Differentiate Capitalmarket and moneymarket. BTL 2 Understand

9 Howwould you have calculatecostof debtwhen issued at par and

redeemedat premium? BTL 3 Apply

10 Whatisbook buildingapproach to publicissues? BTL 4 Analyze

11 Howwould you bringoutthe causesof sickness? BTL 5 Evaluate

12 Interpret thesymptomsof sickness. BTL 6 Create

13 State themeaningof Debenture financing. BTL 1 Remember

14 CanyouexplainaboutEXIM bank? BTL 2 Understand

15 Howwould you focuson thefunctionsofcommercial banks? BTL 3 Apply

16 Classifythe problemsof Industrial Finance. BTL 4 Analyze

17 Define Capital market. BTL 1 Remember

18 Classifythe differentoperatinggroupsof EXIM bank. BTL 2 Understand

19 What are the distinctive featuresof financingfor rehabilitationof Sickunits? BTL 1 Remember

20 Whatisasickunit? BTL 1 Remember

Q.No Unit - I - Part - B - Question Level Competence

1

(i)Define the structure ofIndianCapitalmarket.(4 Marks)

(ii)Whatisthe role ofCapital marketin the economicdevelopmentof aCountry?

(9 Marks) BTL 1

Remember

2 Explainthe role ofSEBI inregulatingIndianCapital Market. BTL 2 Understand

3 Identify the differentformsof share acompanycanissue? BTL 3 Apply

4 Elaborate &Illustrate about the costof variousformsof capital. BTL 4 Analyze

5

(i)Canyouexplain therole of commercial bankforexportfinancing?

(6Marks)

(ii)Can youbringout yourunderstandingonEXIM bankfinancingfor exports

inIndia?(7 Marks)

BTL 5

Evaluate

6

(i)“Equitymethod of financingismore suitedin the presentscenario”- Explain.(7Marks)

(ii)Whatare thefeaturesof Equityshares? Discussitsadvantages&

disadvantages.(6 Marks)

BTL 6

Create

7

(i)Define the emergence ofIndustrial finance.(4 Marks) (ii)Explain theproblemsof Industrial finance inIndia.

(9 Marks) BTL 1

Remember

8 Explainthe varioussourcesof long termfinance. BTL 2 Understand

9

(i)What istherole ofdebenture asasourceof Long-termfinance?

(6Marks)

(ii)What are the guidelinesof SEBI with respectto debenture issue?

(7 Marks)

BTL 3

Apply

10 Examine the varioussourcesof International finance. BTL 4 Analyze

11 ListthecausesofIndustrial sicknessinIndia. BTL 1 Remember

12 Explainthe role of BIFRintherehabilitationof sickunits. BTL 2 Understand

13

(i)Examine the procedurefor rehabilitationof SickUnit.

(7Marks)

(ii)Elaboratethefinancingfor rehabilitationofSickUnit.

(6Marks)

BTL 4

Analyze

14

(i)What arethe presentfeaturesandfunctionsof IndianCapital Market? (9 Marks)

(ii)Whatistherelationship betweenPrimarymarketand SecondaryMarket? (4 Marks)

BTL 1

Remember

Q.No Unit-I Part-C

1. SEBI'srole asaregulatorof Indiancapital marketswasonce again, whentheBSE index

crashed by176points. Thiswastheresult of thelarge positiontaken byastockbroker-

KetanParikh (KP)in ten stocks, popularly knownasK10. Thecompaniesinwhich KPheld

high equitystakesincluded Amitabh BachchanCorporation Limited,MuktaArts, Tips,

PritishNandyCommunications,HFCL, GlobalTelesystems, ZeeTelefilms, Crest

Communications andPentaMediaGraphics. Analystsfeltthat themajor reasonfor SEBI's

failure to protectinvestorsagainst scamswaslackof skilled humancapital. For instance, they

quoted theexample of theKPscaminwhich KPhad takenhugepositionsin tenstocks. In spiteof

SEBI possessing thisinformation,itcould not gauge KP'svestedinterestsinacquiring these huge

positionsandhisillegitimate plans.Inapoll conducted during the period,over

90% of therespondentsbelievedthatthe regulatoryenvironment wasnot sufficient to

protectthe rightsof retailinvestorsinIndia. Restoring theconfidence of retail investorsin the

market will be animportant taskofSEBI.

(i)What istherole ofSEBIinInvestor’sprotection?(10 Marks)

(ii)Do youthinkabout any reformsto be taken bySEBI for effectiveregulation?(5Marks)

2. Howisdebenture financing differentfromBankloans,Equitysharesand

bonds?

3. TheSickIndustrial CompaniesAct(SICA)had beenindeal with the publicinterestto deal

withtheproblemsof industrial sicknesswith regard to thecrucialsectorswhere public

moneyislockedup. It containsspecial provisionsfortimely detectionof sickand potentially

sickindustrial companies,speedy determinationandenforcementof preventive, remedial

andothermeasureswithrespectto such companies. TheGovernmentof India provided

variousconcessions andincentivesto theSicksectorfor their sustained growth.Assisting

newSickunitsonsoft termsbylendinginstitutions, reservationofcertainIndustriesfor the

SSIsector,incentivesrelated to land/shed financing, machineryand raw-materials, provision of

facilitieswithin the Industrial Estates, and Excisedutyexemptionand pricepreferences.

(i)Elucidate on the sicknessprevailinginour country.(10 Marks)

(ii)Criticallyexamine themeasurestaken bySICAfor SickUnitsrevival.

(5Marks)

4. Identifyand examine therole of EXIM bankofIndiainforeigninvestment.

UNIT II SHORT TERM-WORKING CAPITAL FINANCE

Estimating working capital requirements – Approach adopted by Commercial banks, Commercial paper- Public deposits and inter corporate investments.

Q.No Unit - II - Part - A – Question Level Competence

1 Define workingcapital. BTL 1 Remember

2 Compare Grossand Net workingcapital. BTL 2 Understand

3 Identify the factorsbearingimportance on workingcapital needs. BTL 3 Apply

4 What are the sourcesof workingcapital? BTL 4 Analyze

5 Discussthephasesof workingcapitalcycle. BTL 5 Evaluate

6 Interpret with simple illustration, thecomputationof MPBF? BTL 6 Create

7 WhatisCommercial paper? BTL 1 Remember

8 Differentiate public&intercorporatedeposits. BTL 2 Understand

9 Brief out on Inter corporate Investments. BTL 3 Apply

10 WhatisCertificateof Deposits? BTL 4 Analyze

11 Define line ofcredit. BTL 5 Evaluate

12 Interpret the variousmethodsof calculating workingcapital. BTL 6 Create

13 Howwould you bringoutthe variousapproachesofmaintaining workingcapital? BTL 1 Remember

14 Why tradecredit iscalledspontaneousfinancing? BTL 2 Understand

15 Write a note on publicdeposits. BTL 3 Apply

16 Classifypermanentand temporary workingcapital. BTL 4 Analyze

17 Define Factoring. BTL 1 Remember

18 Compare publicdepositwith fixed deposit. BTL 2 Understand

19 Howiscash creditdifferentfromloanfinancing? BTL 1 Remember

20 Whatarethefeaturesofcashcredit? BTL 1 Remember

Q.No Unit - II - Part - B – Question Level Competence

1

(i)Define the variousconceptsofWorkingCapital.(4Marks)

(ii)What are the differentmethodsof workingcapitalfinancing?(9 Marks) BTL 1

Remember

2

(i)Explain the mainformsof workingcapital advance by banks?(7Marks) (ii)What

kindof security isbeenrequired by banksfor workingcapital

Finance. (6Marks)

BTL 2

Understand

3 (i)Howwould youexplainthevariousmethodsof forecasting working capital requirements?(9Marks) BTL 3

Apply

(ii)Whatisthe need forassessing workingcapital requirement?(4Marks)

4 Howwould you categorize the variousfactorsinfluencingon thedemand for

workingcapitalina manufacturingconcern? BTL 4 Analyze

5 “WorkingCapital must beadequate but atthesame time not excessive”- Comment. BTL 5

Evaluate

6

(i)Discusshowthecash requirementsfor workingcapital are estimated.

(7Marks)

(ii)Discusstheproformafor computationof workingcapital requirement.

(6Marks)

BTL 6

Create

7

(i)Define the featuresandcategories of intercorporate investment.

(4 Marks)

(ii)Explain provisions under companiesact1956 relating to inter corporate investment.(9 Marks)

BTL 1

Remember

8

(i)What do youunderstand byCurrentasset financing?(6 Marks)

(ii)Whatishedgingapproach of Currentasset financing?(7Marks) BTL 2

Understand

9 Canyouexplainabouttheadvantagesand limitationsof Commercial paper? BTL 3 Apply

10 DiscussthefeaturesofCommercial paper. BTL 4 Analyze

11 Howpublicdepositsareused asa source of finance? BTL 1 Remember

12

WriteShort noteson:

(i)Publicdeposits(6Marks)

(ii)Inter corporateinvestments(7 Marks)

BTL 2

Understand

13 Discussthebasicpremisesof the hedgingapproachto financefund

requirements. BTL 4 Analyze

14 What are the advantagesand disadvantagesof publicdeposits? BTL 1 Remember

Q.No Unit–II Part-C

1 Fromthefollowinginformationpreparea statementshowingworkingcapital requirement

Salesfor the year 12000 units

Cost

Rawmaterials Rs.10 per unit

LabourRs.6 perunit Overhead

Rs.4 perunit Total

Rs.20 perunit

Additional information:

Rawmaterialsareinstockonanaverage for onemonth.

Materialsare in processonanaverage for 2 months

Finished goodsare instockonanaverage for 3 months

Creditallowed to customerfour months

Creditallowed bysupplierstwo months

It may be assumed that productionandoverhead accrue throughoutthe year.

2 Whatisthe importanceofworkingcapital for amanufacturing firm?whatshallbe the repercussions ifa firmasa)paucityofworkingcapital b)excessworkingcapital .

3 Examine regulationsundersec186 ofCompaniesAct2013 for Intercorporateinvestmentsin

India.

4

FromthefollowinginformationofVSGRCompany Ltd., estimate workingcapital needed to finance a level of activityof 1,10,000 unitsof productionafteraddinga10 per centsafetycontingency.

Rawmaterials Rs.78

DirectLabourRs.29

Overheads(excluding depreciation) Rs.58

Totalcost Rs.165

Profit Rs.24

Selling price Rs.189

Additional information:

Average rawmaterialsinstock: one month

Average materials–in ‐process(50% completionstage):1/2month

Average finished goodsinstock:onemonth

Creditallowed bysuppliers: one month

Creditallowed to customers:Twomonths

Time laginpaymentof wages:one and half weeks

Overhead expenses:onemonth

One fourthof thesalesare oncash basis.Cash balance isexpected to be Rs. 2, 15,000. Youmayassume that production iscarriedonevenly throughouttheyear and wagesand overhead expensesaccrue

similarly.

UNIT III ADVANCED FINANCIAL MANAGEMENT

Appraisal of Risky Investments, certainty equivalent of cash flows and risk adjusted discount rate, risk analysis in the

context of DCF methods using Probability information, nature of cash flows, Sensitivity analysis; Simulation and

investment decision, Decision tree approach in investment decisions.

Q.No Unit - III - Part - A – Question Level Competence

1 Define the termInvestmentrelativelywith securitiesinvestment. BTL 1 Remember

2 Compare RAD &CE. BTL 2 Understand

3

Identify the differentmathematicalmodelsusedin riskanalysisof

Capital budgeting. BTL 3

Apply

4 WhatisSensitivityanalysisinInvestment decision? BTL 4 Analyze

5 Discussthecertaintyequivalentmethod of Investment decision. BTL 5 Evaluate

6 Canyouinterpret theassumptionsunderlyingsensitivityanalysis? BTL 6 Create

7 Define riskfromcapital budgeting point. BTL 1 Remember

8 Mentionany two methodsof investmentanalysis. BTL 2 Understand

9 Listthestepsinvolvedinsensitivityanalysis. BTL 3 Apply

10 Whatisdecisiontree approach? BTL 4 Analyze

11 Discussthedifferentstepsindecisiontree approach. BTL 5 Evaluate

12 Interpret the varioustypesof risk. BTL 6 Create

13 Define Probability distributionapproach. BTL 1 Remember

14 Compare the differentformsof discountedcash flowtechniques. BTL 2 Understand

15 Howwould you show yourunderstandingon thefactorsfavorable for makinginvestment decisionin theeconomy? BTL 3

Apply

16 Drawa decisiontree &Illustrate. BTL 4 Analyze

17 Define Simulationanalysis. BTL 1 Remember

18 What are the advantages&disadvantagesof decisiontree approach? BTL 2 Understand

19 Define RAD with example BTL 1 Remember

20 Define CE with example. BTL 1 Remember

Q.N

o Unit - III - Part - B – Question Level

Competence

1

(i)Define the conceptofRiskinInvestmentDecisions.(8 Marks)

(ii)Explain thenature of businessrisk,interestrateriskandmarketrisk.

(5 Marks)

BTL 1

Remember

2

(i)What isprobabilityapproachfor riskyinvestments? Illustrate. (7Marks)

(ii)Howisitutilized inanalyzing riskof investmentprojects? (6Marks) BTL 2

Understand

3 What are the variousmethodsof appraisinginvestment proposalsunderrisks and

uncertainties? BTL 3 Apply

4

(i)“Cash flowof a firmiscategorized into threeasper AS-3”.Name the threeand give fourexamplesundereach category.(7Marks)

(ii)Explain thenature anddeterminantsof cash flows.(6Marks) BTL 4

Analyze

5

(i)Elaborate the decisiontree approach with example.(7Marks)

(ii)Describe thestandarddeviation methodinanalyzingInvestment proposals.(6 Marks)

BTL 5

Evaluate

6

InterpretSimulation method ofinvestmentanalysiswith anexample.

BTL 6

Create

7

Fromthefollowinginformationstate which projectispreferred? Twoalternative projectsare available(projectXand project Y)eachcosting Rs.10,00,000

Year ProjectX ProjectY

1 4,00,000 5,00,000

2 3,50,000 4,00,000

3 2,50,000 3,00,000

4 2,00,000 3,00,000

Thecompanyhasatargetreturn oncapital (riskless discountrate) of 10%. The managementconsidersriskpremiumrateat 2percentand 8 percent respectively, projectXand projectY.

BTL 1

Remember

8

Fromthefollowinginformation, ascertain which project should be selectedonthe basisofstandarddeviation.

ProjectX ProjectY

Cash Inflow Probability Cash Inflow Probability

Rs. Rs.

3200 0.2 2400 0.1

5500 0.3 7400 0.4

7400 0.3 8800 0.4

8900 0.2 5500 0.1

BTL 2

Understand

9

(i)Howwould youunderstand the advantages& disadvantagesof variousDCF

techniques?(5 Marks)

(ii)ACompanyisconsidering projectsXand Y with thefollowinginformation:

Project X Y

ExpectedNPV 60000 227000

Standard

deviation 40000 135000

Which projectwill yourecommend? Will youranswerchangeif youusecoefficient of variationasa measureof riskinstead ofstandarddeviation? Which ismore appropriate? Explain.(8 Marks)

BTL 3

Apply

10

(i)DiscussRAD &CE approach.(4 Marks)

(ii)TheGlobe ManufacturingCompany Ltd. isconsideringaninvestmentinone of

the two mutuallyexclusive proposals-projectsXand Y,which require a cash

BTL 4

Analyze

outlaysof Rs.340000 andRs.330000 respectively. TheCE approach isused in

incorporating riskincapital budgeting decisions. The currentyield on government

bondis8% and thiswill be used asthe risklessrate. Theexpected netcash flows and

theirCE’sare asfollows:

ProjectX ProjectY

Year End Cash flow(Rs) CE Cash flow(Rs) CE

1 180000 0.8 180000 0.9

2 200000 0.7 180000 0.8

3 200000 0.5 200000 0.7

Which project should beaccepted? (9Marks)

11 Define the variousrisks associated with the investmentof funds. BTL 1 Remember

12

(i)What isthesensitivityapproach for dealing withprojectrisk?(7Marks)

(ii)Whatisthe mostcommon methodused to evaluate projectsusingsensitivity

analysis?(6Marks)

BTL 2

Understand

13

M/SZenithEnterprisesisconsideringaprojectwiththefollowingcash flows:

Year Costof

Plant(Rs.)

Running

Cost(Rs.)

Savings(Rs.)

0 (7000)

1 2000 6000

2 2500 7000

TheCostof Capital of firmis8%. Measure the sensitivityof the projecttochanges in thelevelsof plant value, costsandsavings(consideringeach factor at atime)

such that thenet presentvalue of the project becomeszero. What factor isthemost sensitive to affecttheacceptabilityof theproject?

BTL 4

Analyze

14

Mr. Selvaisconsidering two mutuallyexclusive project ‘X’and ‘Y’. Youarerequiredto advise himabout the acceptabilityof the projectsfromthefollowing information.

ProjectX

BTL 1

Remember

Costof the Investment 1,00,000 1,00,000

Forecast cash inflowsper annumfor5 years

Optimistic 60000 55000

Mostlikely 35000 30000

Pessimistic 20000 20000

Thecut-off rate may be assumed to be 15%.

Q.No Unit-III Part-C 1 Xltdisconsidering thepurchase of a newplantrequiringacash outlayof Rs.20,000. The

plantisexpected tohavea useful life of 2 yearswithout anysalvage value.Thecash

flows andtheirassociatedprobabilitiesfor the twoyearsareasfollows:

1styear

Cash flow Probability

I 8000 0.3

II 11000 0.4

III 15000 0.3

2ndyear if cash flowsin1styearsare: Rs.8000

Cash flows Probability

4000 0.2

10,000 0.6

15,000 0.2

Rs.11,000

Cash flows Probability

13,000 0.3

15,000 0.4

16,000 0.3

Rs.15,000

Cash flows Probability

16,000 0.1

20,000 0.8

24,000 0.1

Presuming that10% is the costof capital you plot theabovedata in theformof a decisiontree and suggestwhether the project should be takenup or not.

2 A firmhasan investmentproposal, requiringanoutlayof Rs.40,000. Theinvestment proposal isexpected to have 2 years economical life with no salvage value. In year I, there isa0.4 probability that cash inflowafter tax will be Rs.25000 and 0.6probabilities that cash inflowafter tax will be Rs.30,000. The probabilityassigned to cash inflowafter taxfor the year IIare asfollows:

Cash Inflow YearI Rs.25000 Rs.30000

Cash Inflow YearII with Rs.12000 0.2 Rs.20000 0.4 probabilities Rs.16000 0.3 Rs.25000 0.5

Rs.22000 0.5 Rs.30000 0.1

The firm usesa10% discountrate for this type of investment. Constructa decisiontree for the proposed investmentproject.

3 Capital expendituredecisions are byfarthe most importantdecisions inthe fieldof man agement. Illustrate.

4 Is there any difference between riskanduncertainty? Elucidate about capital budgeting decisions inanorganization.

UNIT IV FINANCING DECISION

Simulation and financing decision - cash inadequacy and cash insolvency- determining the probability of cash

insolvency- Financing decision in the Context of option pricing model and agency costs- Inter-dependence of

investment- financing and Dividend decisions.

Q.No Unit - IV - Part - A – Question Level Competence

1 Define Dividend decision. BTL 1 Remember

2 Compare Cash Inadequacyand Cash Insolvency. BTL 2 Understand

3 Identify the objectivesof ratio analysis. BTL 3 Apply

4 Canyoulistthemajorsolvencyratios? BTL 4 Analyze

5 Whatisthe need for dividend decisionsinthe organization? BTL 5 Evaluate

6 Explain thedifferenttypesof dividend policy. BTL 6 Create

7 Define agency cost. BTL 1 Remember

8 What are the componentsof financing decision? BTL 2 Understand

9 Give anexample of agencycost. BTL 3 Apply

10 Canyoulistthe various methodsof pricinganoption? BTL 4 Analyze

11 What do you understandbycall option? BTL 5 Evaluate

12 Do youagreeinvestmentdecision isinterdependentonfinancing decision? BTL 6 Create

13 Whatisanoption? BTL 1 Remember

14 CanyouexplainaboutBinomial modelof optionpricing? BTL 2 Understand

15 What would be the assumptions of BlackScholesoptionpricingmodel? BTL 3 Apply

16 Why do youthinkinvestment decisionisinterdependenton dividend decision? BTL 4 Analyze

17 Define Investment decision. BTL 1 Remember

18 Canyouexplain theinterdependence of financing decisionondividend

decision? BTL 2 Understand

19 WhatisFinancing decision? BTL 1 Remember

20 Whatisdividend policy? BTL 1 Remember

Q.No Unit - IV - Part - B – Question Level Competence

1 Howwould you showtherelationship between thefinancing decisionand

investment decisioninafirm? BTL1 Remember

2

(i)Explainabout Simulationdecisions.(5Marks)

(ii)What do youunderstand byMonte Carlo Simulation?(8Marks) BTL2

Understand

3 What would resultif optionpricesare affected? Identifythe factors.

BTL3 Apply

4 Examine the factorsinfluencing dividend decisionofafirm. BTL4 Analyze

5 (i)Can youformulate onpreventive measuresforCash Inadequacy?(9 Marks) (ii)What are thesymptomsof Cash Inadequacy?(4Marks) BTL5

Evaluate

6

(i)Asafinancialmanagerhowwould youtake financial decisionincontextof optionpricingmodel?(8 Marks)

(ii)Can youexplainaboutBinomial OptionpricingModel?(5 Marks) BTL6

Create

7 What are the underlyingassumptionsof BlackScholesOptionpricingmodel? BTL 1 Remember

8

Explain thelegal and procedural aspectsof dividendsaccording to Companies

Act1956. BTL 2

Understand

9 (i)What would be thetypesand determinantsof Cash Insolvency?(7 Marks)

(ii)Howdo we determinethe probabilityofcash insolvency?(6 Marks) BTL 3 Apply

10

ABC Ltdhascurrently15lakhssharesof Rs.100each.At theend of the year, the

company wantsto declare dividend paymentatthe rate of Rs.5 per share.

Thecapitalizationrate forriskclassto which the firmbelongsis10per cent. It

expectsto have a net income of Rs.2,50,00,000 and hasaproposal formaking

newinvestmentof Rs.5 Crores, Showthat under theMMassumption,the

paymentof dividend does not affectthevalueof thefirm.

BTL 4

Analyze

11

(i)Define the essentialsofWaltersand Gordon’sDividend model.(4Marks)

(ii)Explainitsshortcomings.(4Marks)

(iii)What isModiglianiMiller approach of Dividendmodel?(5Marks)

BTL 1

Remember

12

(i)What do youunderstand by AgencyCosts?

(7 Marks)

(ii)Howdo we resolve agency problems?(6 Marks)

BTL 2

Understand

13

(i)Discussthe varioustypesof real options.(5 Marks)

(ii)Findoutthe valueofcall option&put optionof a share whosecurrent

marketprice isRs.47. Exercise priceisRs.45. Time to expiration183 days. The

expected price quantityis25% andexpected rateis10%.(8Marks)

BTL 4

Analyze

14

A companyhasatotal investmentof Rs.5,00,000 inassetsand 50,000

outstandingordinarysharesatRs.10pershare(par value). Itearnsarate of 15

percentonitsinvestmentand hasapolicyof retaining50percentof the earnings. If

the appropriate discountrate of the firmis10percent, determine the price of

theshareusing Gordon’smodel.Whatshallhappento thepriceof the share if

thecompanyhasapayoutof 80 per centor 20percent?

BTL 1

Remember

Q.No Unit-IVPart-C

1. Theearningspershare ofcompanyisRs.10. It hasaninternal rate of returnof 15per centand

thecapitalization rate of itsriskclass12.5per cent. IfWalter’smodel isused(i) Whatshould

be theoptimumpayout ratio of the fim? (ii)Whatwould be the priceof the share

atthispayout? (iii)Howshall the price of theshare be affectedif a different payoutwereemployed?

2. Calculate thevalueof a call optionusing theB-Smodel giventhe followinginformation: Currentmarketpriceof theshare (S):Rs.75

Volatility (standarddeviation): 0.45

Exercise price (E): Rs.80

Riskfree rate of returnRf:0.12

Time toexpiration:6months-0.5yrs

Ifaninvestor wantsto buyaput with sameexercise price &expirationdateascall option, what will be the value of put?

3. Whatisthe argumentabout the tax neutralityof dividend? Illustrate youranswer.

4. Examine aboutOptiontradinginIndia.

Q.No Unit - V - Part - A – Question Level Competence

1 Define Corporate governance. BTL 1 Remember

2 Will you state the need for businessethics? BTL 2 Understand

3 What domean byCorporate disasters? BTL 3 Apply

4 Howwould you categorize the three viewsofstakeholders? BTL 4 Analyze

5 Canyouelaborate on the principlesof Corporate governance? BTL 5 Evaluate

6 Whyshould the corporateassume social responsibility? BTL 6 Create

7 Define Corporatesocial responsibility. BTL 1 Remember

8 Compare Disclosure andTransparency. BTL 2 Understand

9 Identify the areasofCorporate social responsibility. BTL 3 Apply

10 Howwould you categorize the factorsthataffect businessethics? BTL 4 Analyze

11 Canyouexplain theneedfor businessethics? BTL 5 Evaluate

12 Canyoucite the importance ofCSRtowardssociety? BTL 6 Create

13 Whatisbusinessethics? BTL 1 Remember

14 Will you state aboutmanagersand professionalism? BTL 2 Understand

15 Illustrate anexample forCSRinanyorganization. BTL 3 Apply

16 Howwould you explain the principlesof businessethics? BTL 4 Analyze

17 Define Professionalism. BTL 1 Remember

18 Compare the practicesofmanagers and ethics. BTL 2 Understand

19 WhatisCEO/CFOcertification? BTL 1 Remember

20 What are the reasonsforcorporate disasters? BTL 1 Remember

UNIT V CORPORATE GOVERNANCE

Corporate Governance - SEBI Guidelines- Corporate Disasters and Ethics- Corporate Social Responsibility-

Stakeholders and Ethics- Ethics, Managers and Professionalism

Q.No Unit - V - Part - B – Question Level Competence

1

(i)What arethe principlesof corporate governance?(5Marks)

(ii)Give listofcontentsofclause 49of the listingagreement?(8Marks) BTL 1

Remember

2 Explain therole ofSEBI inCorporate Governance. BTL 2 Understand

3 Howthe companycanexecutecorporate social responsibilityinthe changing businessenvironment? BTL 3

Apply

4 Examine the toolsemployedto promotesociallyresponsible practicesin BTL 4 Analyze

business.

5

(i)Canyouexplain theneed and requirementsofCorporate governance?

(6Marks)

(ii)Whatisthe importance of Corporate Governance?(7Marks)

BTL 5

Evaluate

6

(i)Canyoucite thevariousareas/activitiesofCorporate social responsibility? (6Marks)

(ii)Cancite the argumentsagainstCorporate social responsibility?(7 Marks) BTL 6

Create

7 What are the keySEBI guidelinesonEmployeestockoption scheme? BTL 1 Remember

8 ExplainthesalientfeaturesofCorporate governance in the IndianPublic sector. BTL 2

Understand

9

(i)Identifyandexplain the need and principlesofBusinessethics.

(8Marks)

(ii)What are the factorsaffecting businessethics.(5Marks)

BTL 3

Apply

10 Examine the causesandsymptomsof BusinessDisaster BTL 4 Analyze

11

(i)Describe stakeholder theory.(6 Marks)

(ii)Describe Agencytheoryof Corporate Governance.(7 Marks) BTL 1

Remember

12

(i)Isethicsnecessaryinbusiness?Comment.(8 Marks)

(ii)What are the typesof ethicsfollowed inorganizations?(5 Marks) BTL 2

Understand

13

Writeshort noteson thefollowing:

i)Corporate disasters(3Marks)

ii)Corporate ethics (3Marks)

iii)Managersand professionalism(3Marks)

iv)Role played bySEBI inavoiding, corporate disasters, ethics, andalso describeCSRinitiativesofcorporate world.(4 Marks)

BTL 4

Analyze

14 Describe the importanceof CSRof present day business.

BTL 1 Remember

Q.No Unit-VPart-C 1 “Indianfinancialmarketsare characterized byalackof adequate disclosure

and weak corporate governance”-Comment

2 Criticallyexamine onany recentfinancial scamsinIndia. 3 Are Indian companiesready to handle disasters? Elucidate ondisaster risk

managementand the roleof corporatesector.

4 Elucidate on theperspectivesof Indian businesspractices. Illustrateyour answer with examples.