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    Question Bank - 1

    Uploaded by

    Titus Clement
    This document contains a question bank with multiple choice, short answer, and essay questions related to finance functions and financial management. Section A contains short answer questions defining key terms. Section B contains paragraph questions on topics like approaches to finance functions and time value of money. Section C contains longer essay questions exploring concepts such as objectives of financial management, types of decisions, and responsibilities of finance managers. Sample problems at the end calculate interest earned over time.

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    Question Bank - 1

    Uploaded by

    Titus Clement
    909 views3 pages
    This document contains a question bank with multiple choice, short answer, and essay questions related to finance functions and financial management. Section A contains short answer questions defining key terms. Section B contains paragraph questions on topics like approaches to finance functions and time value of money. Section C contains longer essay questions exploring concepts such as objectives of financial management, types of decisions, and responsibilities of finance managers. Sample problems at the end calculate interest earned over time.

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    Financial decisions

    Original Title

    QUESTION BANK_1

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    This document contains a question bank with multiple choice, short answer, and essay questions related to finance functions and financial management. Section A contains short answer questions defining key terms. Section B contains paragraph questions on topics like approaches to finance functions and time value of money. Section C contains longer essay questions exploring concepts such as objectives of financial management, types of decisions, and responsibilities of finance managers. Sample problems at the end calculate interest earned over time.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    909 views3 pages

    Question Bank - 1

    Uploaded by

    Titus Clement
    This document contains a question bank with multiple choice, short answer, and essay questions related to finance functions and financial management. Section A contains short answer questions defining key terms. Section B contains paragraph questions on topics like approaches to finance functions and time value of money. Section C contains longer essay questions exploring concepts such as objectives of financial management, types of decisions, and responsibilities of finance managers. Sample problems at the end calculate interest earned over time.

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    QUESTION BANK

    A. Short Answer Type (1 mark each) (Answer in a word or a sentence)


    1. Define finance function.
    2. State the traditional concept of finance function.
    3. State the modern concept of finance function.
    4. Define financial management.
    5. Distinguish between finance function and accounting function of a business.
    6. What is the goal of profit maximisation?
    7. What is the goal of wealth maximisation?
    8. What is time value of money?
    9. What is compounding technique?
    10. What is discounting technique?
    11. What is annuity?
    12. Define effective rate of interest.
    13. What is sinking fund?
    14. What is deferred payment?
    15. What is present value of an annuity due?
    16. What is systematic risk?
    17. What is unsystematic risk?
    B. Paragraph type (2 marks each) (Answer in a short paragraph consisting of
    about 50 word.
    1. Write a note on approaches to finance function.
    2. Name the areas of finance function.
    3. Wealth maximization is superior criteria than profit maximization”. Do you
    agree?
    4. Why is maximizing wealth a better goal than maximizing profit?
    5. Write a note on the concept of time value of money.
    C. Short essay Type. (4 marks each) (Answer in a paragraph consisting of
    about 100 words or 4 or 5 points with explanation)
    1. What is finance function. Explain its importance in overall process of
    management.
    2. Define financial management. What are its main functions?
    3. Describe the objectives of the financial management.
    4. What are the responsibilities of a financial management?
    5. What are the major types of financial management decisions that business firms
    take?
    6. Contrast profit maximisation and wealth maximization as criteria for financial
    management decisions in practice.
    7. “Profit maximization approach is not operationally feasible”. Discuss.
    8. Why is inappropriate to seek profit maximization as the goal of financial
    decision-making? How do you justify the present value maximization as an apt
    substitute for it?
    9. Discuss the scope of financial management.
    10. Outline the organization of financial management for effective financial control.
    11. What are the functions of a finance manager?
    12. Discuss the role of a finance manager in a modern business enterprise.
    13. What is meant by ‘present value of a future amount’?
    14. Individuals do have a time preference for money’ – State the reasons for such
    preference.
    15. What is the relevance of time value of money in financial decision making?
    16. Cash flow is occurring at different points of time are not comparable’. Explain
    the reason and how can they be made comparable?
    17. Incorporation of time value of money helps in taking better decisions.
    18. What are the practical applications of the concept of TVM?
    19. ‘A bird in hand is more preferable than two birds in the bush’ Explain.
    Problems
    1. A deposited Rs. 10,000 at the rate of 10% compounded on quarterly basis for 2
    years. What would be the amount at the time of maturity.
    (Rs. 12184)
    2. An investor deposits a sum of Rs. 1,00,000 in a bank account on which interest
    is credited @ 10% p.a How much amount can be withdrawn annually for a
    period of 15 years?
    (Rs. 13,148 for 15b years)
    MODULE II
    COST OF CAPITAL
    Services Rs. After Tax Weights Weighted
    Cost Cost
    Equity share capital 40,00,000 30% .40 .120

    8% Preference share capital 10,00,000 6% 10 .006


    8% Debentures 30,00,000 4% .30 .012
    10% Debuntures 20,00,000 .20 .010
    Weighted Average cost of ccapital (Ko) .148
    Or 14.80%

    Cost of equity shares is Ke = + .10 = .20 + .10 = .30 or 30%

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