BBS 4th Year Corporate Finance Model Question with Answers

We have BBS 4th Year Corporate Finance Model Question with Answers. Corporate Finance is one of the five subjects of BBS 4th years for Finance groups.

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BBS 4th Year Corporate Finance Model Question with Answers

Following are the BBS 4th Year Corporate Finance Model Question.

FUNDAMENTALS OF CORPORATE FINANCE
(FIN 250)
27
Code No: FIN 250
Time: 3 hrs
Sample Model Question
Full Marks: 100
Pass Marks: 35
Candidates are required to give their answers in their own words as far as practicable
Attempt ALL questions.
Group A: Brief Answer Questions (10×2=20]

Deline corporate social responsibility with example.
What is the role of trustee?
What will be annual installment for the loan for Rs 500,000 if interest rate is 10% and that the
loan period is 3 years?
What is warrant?
What is a hostile takeover?
Differentiate between primary and secondary markets.
What is purchasing power parity?
Why is preferred stock called hybrid security?
Ans: Rs 201,063.52.
A call option on Birat Company’s stock has a market price of Rs 7. The stock sells for Rs 30 a share, and the option has an exercise price of Rs 25 a share. What is the exercise value of the call option?
Ans: Rs 5.
What is the annual percentage cost of trade credit (based a 360-day basis) under the credit terms of 2/10, net 40? Ans: 24.49%.

Group B: Descriptive Answer Questions

Attempt any FIVE questions.
[5×10=50]

12. List out basic responsibilities of financial managers and briefly explain any two of them.

13. Discuss the position of irrelevance and relevance approaches on the issue of optimal capital structure.

14. Suppose, a vacationing American tourist, Mr Ralph flies from New York to London, then to Paris, then on to Munich, and finally back to New York. When he arrives at London, he knew the exchange rate of U.S. dollar is $ 1.5944 per pound from the foreign exchange listing. He exchanges $ 20,000 for pound and spends 754.339 British pounds while there in London. Then he went to France and exchanged his remaining British pound for French francs. He observed indirect quotation between francs and dollars in FF 4.9675.

a. What is the cross rate between pounds and francs? How much he would receive in francs for $ 500?
b. After completing his visit in France, he arrives in Germany. Now, he needs German marks. The dollar basis quotes are FF 4.9675 per dollar and DM 1.4033 per dollar. What is the cross rate between marks and francs? If he had FF 2,000 remaining, how much marks he would receive?
. Finally, he returns to New York after vacation ends. If he holds 50 marks and need dollar, what is the indirect quote rate of dollar per mark? What amount of dollar he would receive? Ans: (a) FF 2483.75 (b) Marks 585 (c) $35.63.