Heritage International Colleges

Affiliated With
University of South Asia
Mid Term Paper Spring 2014
Program/s:- MS Semester:- 1
ST
/ 2nd
Paper/s:- Strategic finance Shift:- W
Faculty :- Management sciences Total ar!s:- 30
Campus:- S-02 Time Allo"e#:- 60 mints
NAME: !"## N":
"$%ecti&e Part
$% &etermining the mi' of #e(t an# e)uity to (e use# to finance a firm is "hich type of a
#ecision*
a% capital (u#geting
(% "or!ing capital
c% capital structure
+% ,hich one of the follo"ing provi#es limite# lia(ility for all of its o"ners*
a% sole proprietorship
(% partnership "ith only general partners
c% partnership "ith (oth general an# limite# partners
#% corporation
-% ,hich one of the follo"ing statements concerning corporations is correct*
a% The rules #escri(ing ho" a corporation regulates its o"n e'istence are set forth in
the (yla"s
(% The proce#ures to (e follo"e# for electing corporate #irectors are inclu#e# in the
articles of incorporation%
c% Corporate income is ta'e# only "hen the corporate earnings are #istri(ute# to
sharehol#ers%
#% A corporation is the easiest form of (usiness entity to create%
.% ,hich one of the follo"ing is foun# in the corporate (yla"s*
a% inten#e# life of the corporation
(% the state of resi#ence
c% the num(er of shares that can (e issue#
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Heritage International Colleges
Affiliated With
University of South Asia
Mid Term Paper Spring 2014
Program/s:- MS Semester:- 1
ST
/ 2nd
Paper/s:- Strategic finance Shift:- W
Faculty :- Management sciences Total ar!s:- 30
Campus:- S-02 Time Allo"e#:- 60 mints
NAME: !"## N":
#% the proce#ures for electing the #irectors
/% 0loria "ants to have 1+23222 in her investment account ten years from no"% Currently3
she has nothing save#% Ho" much "oul# she have to #eposit to#ay to reach her goal if
this is the only amount she invests* She e'pects to earn 4%/ percent3 compoun#e#
annually% Ho" much must she #eposit to#ay*
a% 1$$3/+2%5.
(% 16374.%+4
c% 1434./%5$
#% 1$.352/%44
7% Consi#er the follo"ing statement: 8A merger (et"een a pharmaceutical firm "ith a
strong research #epartment an# a pharmaceutical firm "ith a strong sales force is a
typical e'ample of mergers that aim to ta!e a#vantage of economies of scale%9
a% True
(% False
5% ,hich of the follo"ing is a #ivi#en# that is pai# in the form of a##itional shares3 rather
than a cash payout*
a% Stoc! &ivi#en#
(% Cum &ivi#en#
c% :' &ivi#en#
#% :'tra &ivi#en#
4% A merger results in a re#uction of average pro#uction costs% In this case3 "hich of the
follo"ing is C;<<:CT*
a% The merger must have (een conglomerate
(% :conomies of scale e'ist
c% The merger must have (een vertical
Page + of .
Heritage International Colleges
Affiliated With
University of South Asia
Mid Term Paper Spring 2014
Program/s:- MS Semester:- 1
ST
/ 2nd
Paper/s:- Strategic finance Shift:- W
Faculty :- Management sciences Total ar!s:- 30
Campus:- S-02 Time Allo"e#:- 60 mints
NAME: !"## N":
#% All of a(ove
6% The ac)uire# firm ha# net operating losses The merger of the t"o computer
manufacturing firms3 Compa) an# &ell Corporation3 "oul# (e classifie# as "hich of the
follo"ing types of merger*
a% Conglomerate merger
(% =ertical merger
c% Hori>ontal merger
#% onopolistic merger
$2% A firm can lo"er its (rea!even level (y #oing "hich of the follo"ing actions*
a% ?o"ering #irect cost
(% Increasing varia(le cost
c% Increasing varia(le cost
#% ?o"ering sales price
e%
Page - of .
Heritage International Colleges
Affiliated With
University of South Asia
Mid Term Paper Spring 2014
Program/s:- MS Semester:- 1
ST
/ 2nd
Paper/s:- Strategic finance Shift:- W
Faculty :- Management sciences Total ar!s:- 30
Campus:- S-02 Time Allo"e#:- 60 mints
NAME: !"## N":
S'$%ecti&e Part
()2 Attempt *'esti+ns ,2-./
$@ ,hat is finance lease an# operational lease*
+@ ,hat is he#ge*
-@ ,hat is Aoint venture *an# its types*
.@ ,hat are the !ey roles of a financial manager*
/@ ,hat types of e)uity an# #e(t options for a company*
()3 Attempt an0 t1+ *'esti+ns ,.22/
$% ,hat are the motives of mergers an# ta!eovers*
+% ;n $
st
Aan +2$- <oyl cola ta!e a small plant from A#am gee un#er a finance lease% The
cash price of the machine "as 55$o % ,hile the amount to (e pai# "as $23222% The
agreement re)uire# that imme#iate payment of +222 #eposit "ith the (alance (eing
settle# in four e)ual installments commencing on -$ #ec +2$-% The charge of ++62
represent interest of $/B per annum3 calculate# on the remaining (alance of the lia(ility
#uring each accounting perio#%
Cou are re)uire# to sho" the (rea! #o"n of each installment (/" interest an# capital% *
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