Reg. No.

B.Tech. DEGREE EXAMINATION, MAY 2016

Sixth Semester

MB 1208 - FINANCE FOR NON FINANCE DGCUTIVES

(For the candidates admitted during the academic year 201i - 2014 and 20 )4 -2015)
Note:
(i) Part - A should be answered in OMR sheet within frst 45 minutes and OMR sheet should be handed
over to hall invigilator at the end of 456 minute.
(ir) Part - B and Part - C should be answered in answer booklet.

Time: Three Hours Max. Marks: 100

PART - A (20 x 1 = 20 Marlis)

Answer ALL Questions
l. The money lent in money market for a period of 2 days to 15 days is referred to as
(A) Call money (B) Demand money
(C) Tenn load (D) Notice money

2. is not a fxed asset

(A) Livestock @) Loose tools
(C) Equipments @) Goodwill
3. Which one of the following is not a function of financial system?
(A) Risk tunction (B) Social function
(C) Liquidif tunction @) Reformatory function
4. The financial market includes the following except _
(A) Commodity market @) Money market
(C) New issue market @) Stock market
5. Capital budgeting is apart of
(A) Financing decision @) Capitat structure
(C) Investmentdecision @) Dividend decision
6. Minimum rate of return that a firm must eam in order to satisfy its investors, is also known
as:
(A) Average return on inveshrent @) Weighted average cost of capital
(C) Internal rate ofretum @) Benefit cost ratio

7. does not consider the time value of money

(A) Benefit cost ratio (B) Paybackperiod
(C) Intemal rate of retum @) Discounted payback period

8. Risk which can be reduced throrrsh diversification is _

(A) Systematic risk @) Unsystematic risk
(C) Poffolio risk @) Total risk

Page 1 of3 31I\4A6148 1208

 9. Which of the following factors does not affect the capital stucture of a company PART-B(5x4=20Marks)
(A) Cost of capital @) Size of the company AnswerANY FfV Questions
(C) Dilution of control @) Composition of current assets
21. Briefly explain the role of secondary market in Indian financial system?
10. is a method of offering securities to the public through a sponsor
(A) Bought out deal (B) Private placement Enumerate the importance of cost of capital?
(C) Public issue @) Underwriting
)? What is preference share capital? List out its pros and cons?
11. Gilt edged securities are the bonds issued by
(A) Financial institutions (B) Big corporates )A Write short notes on performance budgeting?
(C) Central govemment @) Mutual fimds
25. How risk can be evaluated using sensitivity analysis?
12. approach states that changing leverage ratio does not influence the value ofa frm
because of "Arbitrage process". What are the key decision areas in finance?
(A) Net income approach @) Net operating income approach
(C) Traditionalapproach @) Modigliani miller approach 11 Explain the Modigliani and miller hypothesis of irrelevance of capital structure?

13. A cumulative preference share Isone PART-C(5x 12=60Marks)

(A) h which all the unpaid dividends are @) Which can be converted into equity Answer ALL Questions
carried forward and payable
(C) Which can be redeemed (D) Which entitle the preference shareholders 28. a- Briefly explain the functions of Indian financial system?
the right to get surplus profit
(oR)
14. Debt furancing is a cheaper source of finance because of b. Explain in detail the Indian financial system?
(A) Time value of money @) Cheap rate of interest
(C) Tax deductibility of interest (D) Dividends not payable to lenders 29. u What,are the various techniques of capital budgeting decisions?

15. Net working capital is a measure of the company's (oR)

(A) Profitability (B) Magnitude of sales b. Explain the phases in capital budgeting decision?
(C) Estimated liquidity @) Current assets
30. a- Explain the factors determining capital structure of a fimt?
i
16. Working capital gap is
(A) Equal to current assets plus current (B) Equal to current assets minus current
liabilities including bank borrowings liabilities including bank bonowings b. Elucidate the diflerent types of financialt8r?r-"ro issued by government?
(C) Equal to cwrent assets plus current (D) Equal to current assets minus current
liabilities excluding bank bonowings liabilities excluding bank bonowings 31. a" Compare the relative merits and demerits of equity share and debentures?

17. What type of budge is desiped to take into account forecast change in cos! prices etc? (oR)
(A) Masterbudget @) Rollingbudget b. Define: working capital? What are the consequences of excess and inadequate working
(C) Flexible budget @) Functionalbudget capital?

18. Cash budget does not include 32. a What is budgetary contol? Explain its objectives?
(A) Dividend payable @) Postal expenditure
(C) Issue of capital @) Total sales figure (oR)
b. What do you mean by zero base budgeting? Explain the pros and cons of ZBB?
19. _ is usually a long term budget
(A) Fixed budget (B) Sales budget
(C) Cash budget @) Capital expendihre budget ***{r*
20. Sales budget is a
(A) Functional budget @) Expenditure budget
(C) Master budget @) Flexible budget
Pagc 2 of3 3IMA5MB1208 Pagc 3 of3 31MA6MB12OE