2011 Anna University Chennai M.B.A Finance Corporate finance Question paper Course: M.B.A M.B.

A Finance University/board: Anna University Chennai

Mba degree examination november/december 2011 corporate finance part A(10*2=20) 1.what is debenture financing? 2.how would you compute cost of equity? 3.define'net working capital' 4.what is the role of cash in working capital management? 5.what is a risk adjusted discount method? 6.what is an uneven cash flow? 7. what purpose does simulation serve? 8.what is the difference between cash inadequacy and inslovency? 9.discuss the need for corporate governance? 10.explain the salient observations of cadbury committee part B-(5*16=80 marks) 11)a) what are the basic problems of industrial finance in India? how can these be addressed? or B)when is a firm considered sick? what are the sources of finance for rehabilitating a firm? 12.a)write short notes o a)public deposits b)inter corporate investments. 0r b)how is working capital requirement assessed? what is the need for assessing working capital requirements? 13)a) i)write short notes on sensitivity analysis?

ii)A company is considered projects X and Y with the following information project XY Received NPV 60,000 2,27,000 Standard deviation 40,000 1,35,000 which projects will you recommend? will your answer change if you use coefficient of variation as a measure of risk instead of standard deviation? which is more appropriate? explain. 0r b) A business man has an option of selling a product in domestic market or in export market. The available relevant data are given below. items export market domestic market probability of selling 0.6 1.0 probability of keeping delivery schedule 0.8 0.9 penalty of not meeting delivery schedule 50,000 10,000 selling price(Rs) 9,00,000 8,00,000 cost of third party inspection(Rs) 30,000 Nil probability of collection of sale amount 0.9 0.9 if the product is not sold in export market, it can always be sold in domestic market. there are bo other implication like interest and time. i) draw the decision tree using the data given above ii)should the business man go for selling the product in the export market? justify your answer. 14)a) write short notes on: i) option pricing model ii)agency costs (8+8) 0r b)what are the practical considerations in determination of capital structure ?

15) a)explain the salient points emphasized by SEBI guidelines in the context of good corporate governance? or b) explain why ethics and professionalism are considered important for financial viability if organisation. give two examples to substantiate your answers.