Question Bank FM (MB-205)

1. What is Financial Management? How does it differ from Financial Accounting? 2. Discuss the various objectives of Financial Management with special reference to maximizing the value of the firm. 3. What is the need for the valuation of shares? Discuss various methods for the valuation of shares. 4. Why a company needs long term funds? Discuss various sources of long term funds. 5. What is Capital Budgeting? What is its need? Discuss the various methods of Capital Budgeting. 6. Discuss the various time-adjusted methods/techniques of capital budgeting, clearly bringing out the points of similarity and dissimilarity between NPV and IRR. 7. Discuss the various components of capital. How will you calculate the cost of each component? 8. Explain the concept of optimal capital structure. Discuss the various determinants of capital structure. 9. Enumerate the different theories of capital structure, with special reference to MM approach. 10. What are types of dividend policies? Discuss the various considerations in the context of a dividend policy? 11. Discuss the various theories of dividend policy, both in the context of irrelevance and relevance.

12. What do you mean by lease financing? Discuss various types of leases. Also bring out the merits and demerits of lease financing. 13. What is working capital? Discuss the various factors which affect the working capital requirements of an organization. 14. Enumerate the various types of working capital. How will you determine the working capital requirements of an organization? 15. Discuss the various disadvantages of redundant working capital. Discuss in detail the sources of working capital, with special reference to short term working capital. 16. What is the necessity of cash management? What facets are involved in it? Also briefly describe Baumols and Miller Orrs model in the context of cash management. 17. Discuss the role of factoring (and forfaiting) in the context of receivables management. Enumerate the various types of factoring. 2-Marks Questions 1 Profit maximization 2 Wealth maximization 3 Risk-Return trade off 4 Compounding 5 Discounting 6 Evolution of FM 7 Agency problem 8 Flat rate and effective rate 9 YTM 10 Yield to call 11 Zero-coupon bonds 12 Deep- discount bonds 13 Liquidity premium theory 14 Default risk 15 Public deposits 16 Venture capital 17 Term loans 18 Time value of money 19 Project selection 20 Non-conventional cash flows 21 Terminal cash flow 22 Opportunity cost 23 Product cannibalization 24 ARR 25 Profitability index (benefit-cost ratio) 26 Capital rationing 27 Trading on equity 28 WACC 29 Operating leverage 30 Financial leverage 31 Retained earnings 32 Management

of earnings 33 Scrip dividend 34 Interim dividend 35 Capitalization of reserves 36 Leasing and hire-purchase 37 Lease agreement 38 Seasonal working capital 39 Core current assets 40 Operating cycle 41 Commercial paper 42 Delinquency costs 43 Credit policy 44 Collection period 45 Aging schedule 46 EOQ 47 Carrying costs 48 Minimum level 49 Maximum level 50 Re-order level 51 Lead time 52 JIT 53 ABC analysis 54 Quantity discount 55 Cash budget 56 EVA 57 MVA 58 CAPM 59 Beta 60 Systematic and unsystematic risk 61 Buy back of shares 62 Sweat equity 63 Buy back of shares 64 ASBA 65 Red-herring prospectus 66 Point of indifference (Capital Structure) 67 Over-capitalization 68 Requisition slip 69 IPO and FPO

Numerical problems may mainly be attempted in Capital Budgeting and Estimation of Working Capital requirements.