BBS 4th Year Corporate finance 2079 Question Paper with Answers

We have BBS 4th Year Corporate finance 2079 Question Paper with Answers. It is useful for the BBS students appearing for BBS 4th years exam for regular and supplementary exam.

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BBS 4th Year Corporate finance 2079 Question Paper with Answers

TRIBHUVAN UNIVERSITY
2079
B.B.S. (4 Yrs. Prog)./ IV Year / MGMT
Fundamentals of Corporate Finance (FIN-250)
Full Marks: 100
Time: 3 hrs.
Candidates are required to give their answers in their own words as far as practicable. The figures in the margin indicate full marks.
Group “A”
Brief Answer Questions (Attempt ALL questions)
[10×2=20]

1. Why might conflicts arise between stockholders and debt holders?
2. Differentiate between primary markets and secondary markets.
3. Who are the key participants in the transactions of financial institutions?
4. Define the term financial leverage.
5. Assume that the interest rate on a 1-year T-bond is currently 7% and the rate on a 2-year bond is 9%. If the maturity risk premium is zero, what is a reasonable forecast of the rate on a 1-year bond next year?
6. A company’s sales, variable costs and fixed cost are Rs. 500,000, Rs. 300,000 and Rs. 100,000 respectively. It has borrowed Rs. 200,000 at 10 percent. Calculate the degree of financial leverage.
7. Under water Technology stock is currently trading at Rs. 300 a share. What is the value of call option if exercise price is Rs. 250.
8. What is the annual percentage cost of trade credit (based a 360-day basis) under the credit terms of 2/10, net 40?
9. Assume that today one Canadian dollar is worth 0.6667 U.S. dollar. How many Canadian dollars would you receive for one U.S. dollar?
10. Suppose you want to buy a computer and local bank will lend you Rs. 100,000. Then loan will be fully amortized over 5 years, and the nominal interest rate will be 12% per annum. What will be the annual installment?

Group “B”

Descriptive Answer Questions
Attempt any FIVE questions.
[5×10-50]

11. Define forward and future contracts. Differentiate between forward and future contracts?
    [4+6]
12. Why is preferred stock called hybrid security? Explain the key features of preferred stock.
    [4+6]
13. An analyst evaluating securities has obtained the following information. The real rate of interest is 2% and is expected to remain constant for the next 3 years. Inflation is expected to be 3% next year, 3.5% the following year, and 4% the third year. The maturity risk premium is estimated to be 0.1 x (t-1)%, where
    t = number of years to maturity. The liquidity premium on relevant 3-year securities is 0.25% and the default risk premium on relevant 3-year securities is 0.6%.
    a. What is the yield on a 1-year T-bill?
    b. What is the yield on a 3-year T-bond?
    c. What is the yield on a 3-year corporate bond?

Other Questions answer are in Video

Answers with Questions Paper of Corporate Finance 2079.

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