LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.A. DEGREE EXAMINATION – ECONOMICS
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SIXTH SEMESTER – APRIL 2006
EC 6602 – FINANCIAL MANAGEMENT
(Also equivalent to ECO602)
Date & Time : 24-04-2006/9.00-12.00 Dept. No. Max. : 100 Marks
PART – A
Answer any FIVE questions in about 75 words each. (5 ´ 4 = 20 Marks)
- Define business finance.
- Bring out the scope of Financial Management.
- Write a note on financial forecaste.
- What is the relationship between financial decision making and risk and return.
- Explain wealth maximization objectives of Financial Management.
- A finance manager’s concern must be to maintain liquidity rather than profitability.
- How does valuation concept help in decision making?
PART – B
Answer any FOUR questions in about 250 words each. (4 ´ 10 = 40 Marks)
- Discuss the impact of globalization in the financial decision making of corporate enterprises. Also discuss the impact of liberalization on Indian industry.
- Explain the role and scope of finance function in business distinguishing it from the accounting function. Also give Spearman organization chart for the finance function in large corporate enterprises
- Explain the concept of compounding and present value. How do these two concept differ?
- Explain two approaches which are adopted for valuation of equity shares with appropriate examples.
- Explain the procedure you would adopt to minimize your risk while selecting a capital investment project.
- Risk analysis is an essential feature of investment decision making process. What are the major risk factors? And how will you control them.
- Explain the advantages and disadvantages of the following types of business organization.
(a) Sole proprietorship (b) Partnership (c) Joint stock companies
PART – C
Answer any TWO questions in about 900 words each. (2 ´ 20 = 40 Marks)
- Explain the basic provisions of the following Acts:
(a) SEBI (b) MRTP (c) IDRA 1956 (d) Industrial licensing policy 1993
- Discuss briefly the different techniques of analysis and interpretation of financial statements and explain the salient features of the various methods of financial analysis.
- What is profitability? How is it measured? Which of the accounting ratios serve as indicators of profitability? And how are they computed?
- What is meant by cost of capital of a firm? And what relevance does it have in decision-making? How is it calculated with different types of sources of capital funds? Why is the cost of capital most appropriately measured on an after tax basis?
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