1.

Discuss the factors to be considered by Tinep Co in choosing to raise funds via a rights
issue
Explain the difference between an interest rate swap and a foreign currency swap
2. Explain the dff between translation exposure and transaction exposure
3. Briefly explain the factors that will influence the rate of interest charged on a new
issue of bonds
4. Explain the differences among the Transaction Risk, Translation Risk and Economic Risk
5. Define capital rationing and indicate two (2) each from internal and external factors
given rise to capital rationing.
6. (5 marks)
7. (d) Define briefly the following terms:
(i)
Interest cover
(ii)
Cash flow ratio
(iii)
Gearing ratio
8. Why will a company consider issuing corporate bonds instead ofraising a Bank term
loan?
9. Explain the advantages and disadvantages of a currently unlisted company obtaining a
listing on the Stock Exchange
10. Describe the following terms:
1) A company being over-capitalised
2) A company over-trading (4 marks)
(ii)
Explain how the situation of a company being over-capitalised arises and what
are the consequences thereof
11. Explain the 3 forms of efficient market hypothesis
12. Explain the diff between business risk and financial risk
13. Uses of forward contracts in international trade
14. Explain the ff:
15. Option
16. warrant
17. rights issue
18. Briefly outline and explain the factors that influence the dividend policy of a company.
19. Outline five (5) main factors you would propose to the managing director for
consideration in choosing between equity finance and debt finance as sources of capital.
20. Outline four (4) advantages and four (4) disadvantages of preference share capital as a
source of finance
21. Explain briefly what you understand by the following terms:
(i)
Systematic risk
(ii)
Unsystematic risk
(iii)
Weak Form Efficient Market
(iv)
Securities market line

22. What are derivatives?

23. b. Explain and give an example each of what swaps, forwards, features and options are.

24. List and explain four (4) conditions that should prevail to make the operation of the Justin-Time Inventory Management system successful.
25. Briefly explain the term shareholder value maximization and provide THREE reasons
why it is considered more appropriate than profit maximization.
26. (4 marks)
27. (ii) Identify four non-financial goals that can be pursued by a company.
28. (4 marks)
29. (iii) Explain briefly why Preference shares are not popular as a source of finance for
30. Companies.
31. Explain clearly the difference between an Interest Rate Swap and Currency Swap
32. Briefly and clearly explain the various ways in which the bank can obtain a quotation for
its shares on the Ghana Stock Exchange
33. outline to him three (3) advantages and disadvantages associated with Bank Overdraft
34. Assess four (4) main reasons for the volatility of exchange rates (6 marks)
35. (ii) Compare the use of spot and forward exchange rates in the management of currencies
by organizations in a supply chain
36. Explain the following terms
i.
Financial intermediation (2 marks)
ii.
Financial disintermediation
37. Identify the three types of working capital policies of an organization
38. Explain the following types of contracts
i.
Mudaraba contract (2 marks)
ii.
Musharaka contract (2 marks)
iii.
Murabaha contract
39. Explain why how accounting profits may not be the best measure of a companys
achievements
40. Explain what is meant by the risk/return trade-off and its relevance
41. A bank is an example of a financial intermediary. Explain the role of financial
intermediaries and their
42. usefulness to the private investor.
43. Suggest four methods of reducing the length of the cash operating cycle.
44. Discuss:
(i)
The significance of trade payables in a firm's working capital cycle; and (4
marks)
(ii)
The dangers of over-reliance on trade credit as a source of finance. (4 marks)
45. (d) Explain the general problems associated with inflation
46. Suggest the benefits PS Co might expect to derive from a JIT agreement in addition to the
benefits specified
47. in the question.
48. discuss the limitations of the Economic Order Quantity model as a way of managing
inventory
49. Discuss the advantages and disadvantages of using just-in-time inventory management
methods.
50. Identify and explain the key elements of a receivables management system suitable for
PNP Co

51. Discuss the factors to be considered by Thorne Co when planning ways to invest any cash
surplus forecast
52. by its cash budgets. (5 marks)
53. (c) Discuss the advantages and disadvantages to Thorne Co of using overdraft finance to
fund any cash
54. shortages forecast by its cash budgets. (5 marks)
55. (d) Explain how the Baumol model can be employed to reduce the costs of cash
management and discuss
56. whether the Baumol cash management model may be of assistance to Thorne Co for this
purpose
57. Discuss the relative merits of short-term and long-term debt sources for the financing of
working capital.
58. (6 marks)
59. (c) Discuss the different policies that may be adopted by a company towards the
financing of working capital
60. needs and indicate which policy has been adopted by Velm Co. (7 marks)
61. (d) Outline the advantages to a company of taking steps to improve its working capital
management, giving
62. examples of steps that might be taken.
63. Discuss the key factors to be considered when formulating a working capital funding
policy.
64. Identify the objectives of working capital management and discuss the conflict that may
arise between them.
65. Discuss ways in which PKA Co could improve the management of domestic accounts
receivable.
66. 'Despite the theoretical limitations of the payback method of investment appraisal, it is
the method most
67. used in practice.'
68. Discuss this statement briefly
69. Discuss the reasons why the net present value investment appraisal method is preferred to
other investment
70. appraisal methods such as payback, return on capital employed and internal rate of return
71. Discuss the strengths and weaknesses of internal rate of return in appraising capital
investments
72. Explain why risk and uncertainty should be considered in the investment appraisal
process
73. Explain the difference between risk and uncertainty in the context of investment
appraisal, and describe how
74. sensitivity analysis and probability analysis can be used to incorporate risk into the
investment appraisal
75. process.
76. Discuss how the net present value method of investment appraisal contributes towards the
objective of
77. maximising the wealth of shareholders
78. Identify and explain the key stages in the capital investment decision-making process,
and the role of

79. investment appraisal in this process

80. Identify the limitations of net present value techniques when applied generally to
investment appraisal
81. Discuss the meaning of the term 'relevant cash flows' in the context of investment
appraisal, giving
82. examples to illustrate your discussion
83. Briefly explain what is meant by a deep-discounted rights issue, identifying the main
reasons why a
84. company might raise finance by this method
85. Explain the term conversion premium
86. Identify the advantages to PG Co of issuing convertible loan notes instead of the rights
issue to raise
87. the necessary finance. (5 marks)
88. (iii) Explain why the market value of convertible loan notes is likely to be affected by the
dividend policy
89. of the issuing company.
90. Discuss what financial policies Newsam Co might adopt:
(i)
in order to lower its capital gearing; and
(ii)
to improve its interest cover. (9 marks)
91. (e) Explain what strategy a company might be pursuing when raising capital in the form
of convertible debt as
92. distinct from raising straight debt or straight equity
93. Describe four circumstances in which a business might seek venture capital finance.
94. Discuss the appropriateness of using the after tax cost of debt or the weighted average
cost of capital to
95. evaluate XYZ Co's investment in grinding machines.
96. Discuss the reasons why D Co may have issued loan notes rather than preference shares
to raise the
97. required finance
98. Explain and distinguish
(i)
A bank loan
(ii)
Loan notes
99. Explain why WEB might decide to raise capital in the form of a convertible debt issue
rather than straight
100.
equity or debt.
101.
identify and explain the factors that may change CAP Co's equity beta during
102.
the year ending 30 September 20X3. (5 marks)
103.
(d) Explain the limitations of the capital asset pricing model.
104.
Discuss the problems that may be encountered in applying this discount rate to the
proposed investment.
105.
(8 marks)
106.
(d) Explain briefly what is meant by pecking order theory. (5
107.
Discuss the circumstances under which the weighted average cost of capital can
be used in investment
108.
appraisal. (6 marks)

109.
(c) Discuss whether the dividend growth model or the capital asset pricing model
offers the better estimate of
110.
the cost of equity of a company.
111.
Distinguish between weak form, semi-strong form and strong form stock market
efficiency, and discuss the
112.
significance to a listed company if the stock market on which its shares are traded
is shown to be semistrong
113.
form efficient.
114.
Discuss the factors that THP Co should consider, in its circumstances, in choosing
between equity finance
115.
and debt finance as a source of finance from which to make a cash offer for CRX
Co.
116.
Discuss the factors that THP Co should consider, in its circumstances, in choosing
between equity finance and debt finance as a source of finance from which to make a
cash offer for CRX Co.
117.
Discuss the relationship between capital structure and weighted average cost of
capital, and comment on the suggestion that debt could be used to finance a cash offer for
NGN.
118.
Explain the factors the company should consider before deciding to hedge the risk
using the foreign currency markets, and identify any alternative actions available to
minimise risk. (5 marks)
119.
Discuss the causes of exchange rate fluctuations
120.
Discuss the differences between transaction risk, translation risk and economic
risk.
121.
Explain how inflation rates can be used to forecast exchange rates.
122.
Briefly explain the reasons why a company may choose to finance a new
investment by an issue of debt finance.
123.
Describe other methods, including derivatives, that Boluje Co could use to hedge
against exchange rate risk
124.
Describe and discuss different types of interest rate risk.
125.
(b) Explain the meaning and use of financial derivatives, in general terms, and the
advantages and disadvantages of their use for companies such as QW.
126.
(c) Describe the characteristics and benefits of interest rate swaps compared with
other forms of interest-rate risk management, such as forward rate agreements and
interest rate futures