Fin622 Midterm Current Paper VU Fall 2011 (www.vusolutions.com)
MCQS =59 * 1 =59
QSTN OF 3 NO =4 * 3 =12
QSTN OF 5 NO =4 * 5 =20
TOTAL QUIZ = 67 MARKS =91
MOST OF MCQZ FROM PAST PAPERZZ.:
some long qstn
1) Diffrence B/W growth stock and income stock (3 marks)
2) Described the steps in credit management (3 marks)
3)s teps involved in merger and acquision (5 marks)
4) How a hedge could be astablished with currency option (5 marks)
Another Paper:
Mostly MCQ from Past Papers. Some were New
4 Question 3 Numbers
1-Describe EAR
2-Short Term Interest Rate is Priced
4 question 5 Numbers
1-Call option & Put Option
2-Numerical calculate years from FV formula
3-EOQ describe
Another Paper:
1. What are the costs and benefits of holding inventories? 3 Marks
2. How it is decided to exercise an Option Contract or allowed it to lapse? Briefly explain. 3
3. Enlist the anti-takeover measures to be taken by a Target company to resist a takeover bid of the predator company. 3
4. What is the payoff to buyers and sellers of call and put options? 5
5. The Inventory Manager of a firm has given the following data: 5
Consumption per Period = S = 4000 Units
Economic Order Quantity = EOQ = 80 Units
Lead Time = L = 1 Month
Stock out Acceptance Factor = F = 1.10
Requirement:
Determine the Economic Order Point for the firm.
Solution
EOP = SL + F *sqrt(S x EOQ x L)
Where
S= Consumption per Period
L= Lead Time
F= Stock out Acceptance Factor
EOQ = Economic Order Quantity
EOP = 4000 x 1+ 1.10 * sqrt(4000 x 80 x 1)
EOP = 4000 + 1.10 * sqrt(320,000)
EOP = 4000 + 1.10 (565.68)
EOP = 4000 + 622.25
EOP = 4622.2.
6. How much should you pay for a bond with Rs.1,000 face value, a 14 percent coupon rate, and five years to maturity if your appropriate discount rate is 10 percent and interest is paid semiannually? 5
Face Value = 1000
Coupon Rate = 14%
Years to Maturity = 5 years
ROR = 10%
Present Value = 140/(1+10%/2)^2 + 140/(1+10%/2)^4 + 140/(1+10%/2)^6 + 140/(1+10%/2)^8 + 140/(1+10%/2)^10 + 1000/(1+10%/2)^10
= 126.98 + 115.178 + 104.47 + 94.76 + 85.95 + 613.91 = 1141.25
7. Enlist the share valuation methods for Mergers & Acquisition. 5
How Short-Term Interest rate future are Priced? Explain With help of Some Examples? (3 Marks)
Enlist the Anti-Takeover Measure to be taken by a Target Company to resist a Takeover Bid of the Predator Company.(3 Marks)
Acquiring Companies often prefer Purchase Mergers to Consolidation Merger. Why?(3 Marks)
How Forward Rates are Determined in foreign Currency Market? Explain Briefly.(5 Marks)
How a Multinational Firm could reduce Political Risk?(5 Marks)
Differentiate Between the Following Variable of a Credit Policy: (5 Marks)
1) Credit Period
2) Credit Standard
3) Collection Policy
4) Discounts
Suppose You Invest Rs 400,000 in Treasury bill and Rs 600,000 in Marketable Portfolio. What is the Return on your Portfolio, If bills yield 6% and the Expected Return on Market is 14%. What does return on this Portfolio imply for Expected Return on Individual Stock with Beta of 0.6? (5 Marks)
Q: Type of merger and how companies reduce risk in merger (3 marks )
Q: Difference between the following : (5 marks )
Credit period
Credit standard
Collection period
Discount
Q: Method of valuation of share in merger & acquisition (5 marks)
Q: Suppose a firm is planning to borrow some amount in a short-term period. How this firm can create a hedge against rising
interest rates? (5 marks)
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