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STRATEGIC FINANCIAL MANAGEMENT
QUESTION BANK ON STRATEGIC FINANCIAL MANAGEMENT Theory Questions Write short notes on Dividend Policy Briefly explain Walter¶s model What do you understand by Residual theory of dividend? How far do you agree that dividends are (i) relevant and (ii) irrelevant for the value of the firm / 5. Explain with suitable examples, the Walter model, its advantages and limitations. 6. Explain the assumptions of MM model. Give basic concept of MM model of dividend payment approach. 7. ³´Walter¶s models and Gordon¶s models are based upon the same assumptions. Thus, there is no basic difference between the two.´ Explain 8. ³´Present dividends are always preferred by the shareholders against the future capital profit´. Explain with illustrations. 9. Explain the arbitrage process of the MM model in support of dividend irrelevance. 10. ³´The underlying assumptions of the irrelevance theorem of MM model are its short comings´ - Critically examine this statement.¶ 11. ³´The arguments that dividends have an impact on the share price, has been characterized as the bird in brand argument´´ ± Examine. 12. What is stability of dividend / 13. What is clientele effect ? 14. Briefly explain Lintner model 15. What do you understand by Dividend and cash flow ? 16. Write short notes on Dividend Pay out ratio. How it is determined ? 17. Explain Stable Dividend Policy. What is the significance of stability of dividend ? 18. What are the types of stable dividend policies ? Why the extra dividend need not be declared on a regular basis ? 19. What do you mean by optimal dividend policy ? Explain. 20. ³´The primary purpose for which a firm exists is the payment of dividend. Therefore, irrespective of the firm¶s needs and the desires of the shareholders, a firm should follow a policy of very high dividend pay out.´´ ± Do you agree ? Explain. 21. Discuss the factors and conditions that are relevant in evolving a dividend policy as well as those relating to issue of bonus shares. 22. ³´Financial Management can use dividend policy to maximize the wealth position of equity share holders.´´Explain in detail the above statement with reference to the determinants of dividend policy. 23. What is ³´international contents´´ of dividend payment ? Explain how does it affect share value / 1. 2. 3. 4.
³´Buying out of a firm for merger is a type of investment decision. What do you mean by Share Exchange ratio ? What are the different ways to calculate it / 38. 25. How are the benefits of merger shared by the acquiring firm and the target firm ? Explain with the suitable examples. ³Stability of dividend payment has a marked bearing on the market price of a share of the firm´´. What are the effects of bonus share issue on EPS and market price of a share ? 26. 39. Explain.´´ Do you agree ? Elucidate. 51. What do you mean by the shares repurchase ? What are the objectives of buy back of shares ? 27. What are the different techniques of demergers ? 44. what is Cross Rates ? 49. What is hostile take over ? 35. 46. What do you mean by Swap ratio / 37. What do you mean by amalgamation in the nature of Merger ? 36. . How merger propositions can be financed ? Evaluate the implication of the methods. What is tender offer ? Explain the provisions relating to tender offer given in the ³´new takeover code´. What is Spot Rate ? 48. To what extent the firms able to establish a definite long run dividend policy ? What factors would affect these policies ? To what extent might these policies affect market value of a firm¶s securities ? Explain. What do you mean by business valuation ? What are the different ways of valuation of business ? 40. Discuss the Walter¶s model and Gordon¶s model in dividend policy. 42. Vertical and Conglomerate mergers ? 45. 33. What are the reasons and motives for merger ? Note down the defensive tactics against the merger move. Why is dividend policy important for a firm ? Also discuss the various determinants of a dividend policy in a company ? 28. cash flows and dividend payout. What do you mean by economic Value Added ? How is it useful in evaluation of the performance of a firm ? 43. Differentiate between ask price and bid price. Do you agree ? 34. What kind of synergies exist in the Horizontal. Therefore. 47. Differentiate between Direct quote and indirect quote. What is premium and discount ? 50. Explain the relationship between earnings. 30. ³´The primary purpose for which a firm exists is the payment of dividend.S. 29. Differentiate between the cash and non-cash dividends from the point of view of paying company. irrespective of the firm¶s needs and the desires of shareholders. Explain 31.Prof V. 41. 32. Chandrashekara 24. ³´Financial Manager can use dividend policy to maximize the wealth of the equity shareholders´´. a firm should follow a policy of very high dividend pay out´´.
What do mean by Foreign Exchange Risk Management ? 65. What do mean by an exchange rate ? What are the factors affecting foreign exchange rates ? 57. Explain the Fisher¶s effect and the International Fisher Effect with reference to exchange rate determination. Explain the exposures and risk thereof. 60. Explain the relationship between exchange rates. 63. What are the different approaches to find out the NPV of a foreign market ? 80. 56. 72. how the cash flows be adjusted ? 81. Differentiate between purchasing power parity and interest rate parity. How the economic exposure is different from transaction exposure ? Explain with the help of suitable examples. What is Leading and lagging ? 76. Firms dealing in foreign exchange are exposed to different types of risk. How the future contract and futures contract work ? Explain the mechanism. 64. How can these be hedged ? 73. interest rates and inflation rates. Differentiate between translation exposure and transaction exposure. What do mean by hedging ? What is the basic principles of hedging ? What are different tools of hedge transaction exposure ? 74. What is the relevance of exchange rates and changes in these rate in the international capital budgeting ? . 69. Should a foreign project be evaluated from the point of the parent firm ? If yes. What do you mean by International Financial Management ? what are its distinctive features ? 77. Differentiate between Future hedge and option hedge. Do the forward markets lead to spot market or the vice versa ? Explain. Explain and elucidate purchasing Power Parity Theorem with the help of examples.Prof V. What is Political risk ? 75. How the money market hedge can be used to cover the foreign exchange risk ? 67. What do you mean by arbitrage profit ? How does it come into existence in foreign exchange market ? 55. 68. Chandrashekara 52.S. What do you mean by currency swaps ? How it can be used to hedge exchange risk ? 70. How are they related ? 54. What are the different methods of measuring the translation exposure ? 71. What do you mean by covered interest arbitrage ? 61. 62. Explain forward rate and spot rate. What are the basic tools to manage the risk ? 66. What is the swap point in foreign exchange ? How they help in finding out the forward rates ? 58. Differentiate between Forward market hedge and Future hedge. 59. How the cash flows to a multinational firm are different from that of a domestic firm ? 78. What complexities are involved in multi national capital budgeting ? What are the approaches to evaluate a foreign project ? 79. 53. Differentiate between NPV and APV methods of capital budgeting.
Venture capitalist and venture capital adventuring ? 108. What are the regulatory provisions relating to NBFCs in India ? Give an account of deposit directions of RBi. What are the exit rates available to venture capital ? 109. What are his responsibilities ? .´´ How is it regulated in India ? 96. 107. What is the structure of venture capital in India ? 101. examine the evaluation of a foreign project. What are the techniques of cash management in these firms ? 86. What do you mean by international working capital management ? What are its basic objectives ? 85. What is special purpose vehicle ? 99. What do you mean by Foreign Capital ? What are the resources of raising foreign bonds ? 90. What are the recent Financial services ? 98. Write short notes on NBFC and insurance sector. Write short notes on Global Depository Receipts 87. Discuss the frame work of NBFCs under the RBI guidelines. 83. How the RBI directions have ensured the interest rate and liquidity risk management by NBFCs ? 105. Explain the distinctive features of cash management in a multi national firm. forward rate and the discount rate with reference to multinational capital budgeting. What is a Merchant Banker ? What are the categories as given in the SEBI regulations ? 106. 100. What do you mean by Euro Convertible bonds ? 89. What are the SEBI guidelines relating to Venture capital funds ? Give the details of the tax aspects of Venture Capital. What is meant by Euro Issues ? What securities are permitted under the RBI guidelines ? 92. Give an account of the code of conduct for the merchant banker. 104. Explain the relationship between spot rat. Define Portfolio Manager. 93. What do you mean by Venture Capital financing. 94. What do you mean by two way fungibility of ADR / GDR ? What are the provisions announced by SEBI in this respect ? 95. In the light of this statement. What are the Prudential Norms applicable to NBFCs ? 103.S. Who are Foreign Institutional Investors ? 88. 84. Chandrashekara 82. Differentiate ADR and GDR. ³´Setting up of a plant overseas affects the export of the parent company´´.Prof V. ³´External Commercial Borrowing is an important source of foreign capital. What is private equity ? 102. Differentiate FCCB and DR. How FIIs have been defined by SEBI regulations ? How are their transactions regulated ? 97. What is Foreign Direct Investment ? What steps Government of India has taken to attract FDI ? 91. 110.
Explain with the help of suitable example. What is securitization ? What are the parties involved in securitization ? Give the modus operandi of securitization ? 118. What do you mean by Factoring ? Given an account of the benefits and costs of factoring.Prof V.S. What is the legal aspects of securitization in India ? Explain critically . What are different agencies involved in the credit rating in India ? What are the different areas in which credit rating is done by them ? 114. 119. 115. What is hedge funds ? Explain its investment stragtegies. Chandrashekara 111. What is meant by debt securitization ? 120. What is Forfaiting ? Explain the mechanism of Forfaiting. 116. Explain the concept of reverse mortgage. the financial evaluation of factoring. What do you mean by credit rating ? what are the benefits ? 113. How is it useful for senior citizens ? . How hedge funds are different from mutual funds ? 121. What code of conduct has been prescribed by SEBI for the portfolio managers ? 112. Is it always beneficial ? 117.
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