II Semester – BA7202 Financial Management
Question Bank
UNIT – I - 2 MARKS
1. Define Financial Management.
2. What is time value of money?
3. Define and explain financial assets?
4. What is present value?
5. What is meant by Yield to Maturity (YTM)?
6. What is effective rate of interest?
7. What is financial management?
8. What are the basic financial decisions?
9. What do you mean by tine value of money?
10. What is the scope of financial management?
11. Explain compound value concept?
12. Define option
13. Define warrant
14. Distinguish between call option and put option?
15. What is meant by yield?
16. What is meant by capital gain?
16 MARKS
1. Define financial management. Discuss the limitations of profit maximization as the objective of
financial management?
2. In what ways is the wealth maximisation objective superior to the profit maximisation objective?
Explain.
3. Explain the concept of time value of money, discuss its techniques.
4. Discuss in detail the functions of financial management and the role of financial manager.
5. Explain the concept and significance of risk and return in a portfolio.
Or Distinguish between the risk and return of a single asset and that of a portfolio.
6. Explain in details the goals of financial management?
7. What are the general principles of valuation of shares? Explain.
8. Explain the various concepts of value. State the formula for bond valuation. What is the
relationship between coupon rate, required yield and price?
9. What happens to the value of perpetuity when interest rates increase? What happens when interest
rate decrease?
10. Define an option and explain briefly the Black Scholes option model.
Prepared By: Mrs.S.Vimala, Assistant Professor, KVIMIS
Page 1
UNIT – II – 2 MARKS
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What is meant by capital rationing? State the principles of capital rationing.
What are the components of a capital expenditure management programme?
Which evaluation technique is best under capital rationing?
Define capital budgeting.
What are the objectives of capital budgeting?
State the merits of profitability Index?
What do you meant by the term “Required rate of return”?
What is meant by opportunity cost of capital?
16 MARKS
1. List out the different techniques of capital budgeting? OR What are the various methods of
evaluating capital budgeting proposals?
2. Explain the various factors influencing capital expenditure decisions.
3. Write down the factors that determine the cost of capital of a firm.
4. Capital expenditure decisions are by far the most important decisions in the field of management –
Illustrate.
5. What is the overall cost of capital? How is the overall cost of capital determined? What weights
should be used in its calculations?
6. What is Modigilani – Miller approach to the problem of cost of capital structure? Under what
assumptions do their conclusion hold good?
7. Briefly explain the theories of capital structure?
UNIT – III – 2 MARKS
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Explain operating risk and financial risk?
What should be the objective of dividend policy?
What is an arbitrage? Give an example.
What is stock split? Why?
Define reverse split.
List out the different forms of dividend
What is operating and financial leverage?
What do you mean composite leverage?
Explain the concept of scrap dividend?
16 MARKS
1. What factors should be considered in determining the capital structure of a company? Explain.
2. Distinguish between operating and financial leverage. Explain the scope of operating and financial
leverage analysis for a financial executive in corporate profit and financial structure.
3. Define the term capital structure. Explain the EBIT –EPS analysis and Indifference level of EBIT
4. Discuss the factors which determine the dividend policy?
5. Briefly explain the theories of dividend policy?
6. What are the essentials of Walter’s dividend model? Explain the short comings.
7. Explain the effects of bonus shares and share splits on the EPS and Market price of share.
Prepared By: Mrs.S.Vimala, Assistant Professor, KVIMIS
Page 2
UNIT – IV - 2 MARKS
1. Define and explain commercial paper as a form of financing?
2. What is factoring? What are the costs associated with it?
3. What are the significance of factoring?
4. What are the principles of holding cash?
5. What are the types of working capital?
6. Define the term fixed working capital and temporary working capital.
7. What is commercial paper?
8. Why is working capital needed?
9. What are the various sources of short term finance?
10. What are the types of working capital?
11. What is the significance of factoring?
12. What is the need for cash in business?
13. What is cash budget?
16 MARKS
1. What is the importance of working capital? Briefly explain the factors that determine the
working capital? OR Discuss the principles, needs and determinants of working capital to a
manufacturing firm.
2. What are the different methods of forecasting working capital requirement of a business?
Explain.
3. What are the objectives of cash management and various basic problems in the cash management?
Explain.
4. Explain in detail the cash management models proposed by Baumol and Miller with their merits
and demerits.
5. Write a note on commercial paper and bank finance.
UNIT – V – 2 MARKS
1. Define Equity shares, Preference shares and debentures.
2. Explain the concept of private equity, preferential allotment?
3. What do you mean by venture capital?
4. Explain the role of Indian Capital Market?
5. What are the merits of Leasing?
6. Define hire purchasing
7. What are the sources of internal financing?
8. What are the key functions of venture capital?
9. What are lease rentals?
10. Distinguish between redeemable and irredeemable debentures.
Prepared By: Mrs.S.Vimala, Assistant Professor, KVIMIS
Page 3
NIT – V, 16 MARKS
1. Briefly explain the functions performed by different players in the new issue market.
2. Discuss briefly the early and later stages of venture capital financing.
3. List out the various methods of issuing shares to the public in the New Issue Market or Primary
Market?
4. What are the functions of Indian capital and stock market? Explain briefly.
5. Explain the sources from which a large sized industrial enterprise can raise capital for its various
requirements.
6. Explain the various sources of long term finance.
7. Describe briefly the SEBI regulations as to venture capital finance.
8. Discuss leasing as a best source of finance to manufacturing industries.
9. Briefly explain the steps in involved IPO Process
10. Write short notes on
a. Hire Purchase
b. Leasing
c. Long term sources of finance
Prepared By: Mrs.S.Vimala, Assistant Professor, KVIMIS
Page 4