Department of Finance

.lagannath University
MBA (6th Batch) 2nd Semester Final Exam -2}tl
Course Code: FIN-5206; Course Title: Corporate Governance and Restructuring
Full Marks: 60, Time: 3 Hours

[Answer 4 (Four) questions, 02 (two) questions from each Part A and Part B. Different sections of each
question have to be answered in cluster form]

Part-A (Answer any 02 Questions from Part- A)

1. a) How does the green movement create pressure on corporate governance? Does
company really bother for this pressure?
b) "The main activities of PIRC are to provide information to the shareholders on
governance issue". Explain.
c) Management accountability is major concern for corporate governance in a co-operative
society." Do you agree? Why or why not?

,"2' a) "Comprehensive strategic management process should have certain implication over the
corporate governance" - Briefly explain the chart of corporate governance and strategic
management proces,s
b) What are the reasons do you think behind the collapse of Polly Peck? Also identify the
stakeholders who were most disadvantaged from that collapse.
c) What are the main lessons that can be drawn from the failure of Maxell's business
empire?

3 a) 'A non-performing board can cripple a company just as surely as a non-performing

bus!ness area'. Justify the statement considering different scam in the financial market
^---r-:--L

b) Briefly the outcorie of the Greenbury Committee investigation about the huge
salaries"roL,n
of some senior executives.
c) Corporate governance is attaining increasing importance in Bangladesh. Do you agree?
Provide your justification to support your answer.

Part- B (Answer any 02 Questions from Part- B)

a) Define Corporate restructuring. Explain the reasons for corporate restructuring. Describe
the different forms of Corporate Restructuring,
b) Why is synslgy important for corporation? Explain the process of realizing synergic gains. 5
c) The coniparative financial condition of Trapati Corporation and Sussman Company has 5
been given belorv-

Particulars Trapati Corporation Sussman Company

Present Earnings Tk.10,000,000 Tk.2,000,000

Sha re Outsta nd 1,000,000 4,00,000
EPS Tk.10 Tk5
Stock Price Tk.30 Tk.10
e lnvestment Banker of Trapati Corporatjon evaluates Sussman companvmpany to acqu
acouire a
the outstandlng shares, Therefore find out the followings in case of offering 35%
premium and 55% premium over the market price of Sussman -

L What is the exchange ratio?

il Horv much shares Trapati Corporation need to offerto complete a bid for 100%
of Sussman Company.
lll !t/hat is the post-merger EPS of Traoati Corporation?
l\' Whether the lnvestment Banker's suggestion for Trapati Corporation is profitable

Page 1 of 2
 or not? Explain why or why not.

5. a) What is tender offer? who are the tender

offer team members? Describe tender
eight-factor test. offer
b) Differentiate between LBO and MBO.
Explain the LBO process,
c) 5
r"#.1:?:*l*::::l^1:1"I., me cru cia " r" ;_;
.il;so
wifl not suarantee a company,s independence.
5
:ffiiy be
:::":::ji::nses
preventive and active defenses.
co r r", ffi ,J,r, ;", ffi ;:ff
/. a)
change in its capitar structure in an
#:,ffi:X:iol[,l?l:fl:],llill:,.1,:,:
Exprain the main *.y", ;;;;;;;;
attempt to
b) ;,:1,:^"T,::::lil" l,lo",.,_
rl e
c+i,, ,,;,ffi"'
c) 3"i,:_1 ::': :.^l ::'_
o
tl : l
n h rea s n s of vo t u n ta ry r o
n tl f
in r o i r-n d i ve s t it u re
s,
ly.::":::::,:Jil: ":'"1"'19lleacquisition
.t
;it:;;r;;;ffi;;:;;ffiiliffi:s 5

I,i:ff:::':,:1,:T"[::^":'.:!.":.'l: o.;i;; ;;;;' ?

- ;J ;;;;;;, in
.'"Ji;,l'Jl;T::l:.T,]';
shown 5

*""1 ili -,T lr'il]!l

Namgless Grorrn ha< a r.- tncc ^---. r^.-
ff :;l::,fj:'j" ::'":^::l l::'j1'v
t" **a' ilH ;,,; ",.
;:; l' ;:';#J l.' 3l jJ; H",
for.rk.2.1-mi,ion. rt"i can se,,n",rr",]r",.;;:#Ti,;T
il,j::1.:"1:i:]:':.:l::-p
shown in tho
shown the f^ll^,,,;h-.-Lr^
followi table (in,: -, r
rk)
;ffi.,H:,I[:J;
Year t 2 3 4 5
EBT 5,00,000 5,40,000 4.00 000 L ni nnn
The expected earni
allowed for apprication_oj_the tax ross is legally
carry foruuard resurting from the proposed
The discount rate is 7r.75%. Movement merger.
Group is in the 40% taxbracket. Find
followings: out the
l' calcurate the firm's tax payments and
earnings after taxes for each of the
years without next 5
the merger.
ll' Glcurate the firm's tax payments and
earnings after taxes for each of the
years with the merger. next 5
lll. What are the total benefits associated
with the merger?
lV. Discuss whether you would recommend
the proposJd merger.

Page 2 of 2
 Department of Finance
Jagannath UniversitY
MBA 6tt' Batch 2nd Semester Final Examination, 2017
Course Title: Financial Engineering and Derivatives; Course Code: FIN-5207
Total Marks: 50, Time: 3.00 hours

Answer ony 4 (four) from the fottowing questions. You hove to onswer all parts of each question sequentially.

(5+5+5)
Question#1
a) 'Daily settlement reduces the default risk of future contract relative to forward contract.' Discuss with
an example.
A trader enters into a short cotton futures contract when the future price is 50 cents
per pound. The
b)
contract is for the delivery of 50,000 pounds. How much does the trader gain or loss if the cotton
price at the end ofthe contract is (a) 48.20 cents per pound and (b) 51.30 cents per pound?
c) An investor enters into one long July future contracts on orange juice' Each contract is for the
per
delivery of 1,500 litres. The current future price is S35 per litre, the initial margin is $10,000
contract, and the maintenance margin is 58,000. What price change would lead to a margin call?
Under what circumstances SZOOO could be withdrawn from the margin account?

(s+s+s)
Question#2
a) Differentiate between forward and futures contracts'
b) Suppose that 5-month, 12-month, 18-month, 24-month, and 3o-month zero rates are respectively
4.2yo,4.4yo,4.6%,4.8%& 5.0% per annum with continuous compounding. lf the face value of the
bond is Tk.100 which will mature in 3o-months and pays a coupon of 4.25% per annum semi-
annually, then calculate the price of the bond.
: S:rcw :ne deriyation of continuous compounding interest rate (Rc) from m compoundeci equivalent
interest rate (Rm).

(5+s+5)
Question#3
a) What is short selling? How an arbitrager can gain over short selling and doing a forward contract?
Give an examPle.
b) Consider a 6-month long forward contract on a stock when the stock price is Tk.60. We assume
that
the risk free rate of interest compounded continuously is 8% per annum. We also assume that
dividends of Tk.5 are expected after 3-months. lf the delivery price of the contract is Tk.50 then
calculate the value of the forward contrast'
c) The 2-month interest rate in USA and Bangladesh are respectively 3% and 6% per annum with
continuous compounding. The spot price of the USD is Tk. 81.50 and the 2-month forward rate is
TK.

81.90. What arbitrage opportunity does this create?

(5+5+5)
Questions4
a) Briefly discuss the six factors that affect stock option prices'
b) you expect the stock market to rise over the next 3-months. What are the advantages and

disadvantages of buying a call bull spread?

c) A bank raises fund at LIBOR in the interbank market and on-lends the funds in fixed interest
mortgages. What are the risks involved and how might you hedge the risk?
 2dexion*s (s+5+5)
I q a) what is swAp? Describethe mechanism of swAp with an example.
b) Suppose that a financial institution has agreed to pay 6-month LIBoR and receives 6% per annum
with semiOannual compounding on a notional principal of Tk. 90 crore. The Swap has a remaining life
of 2 years. The LIBOR rate with continuous compounding for 6-month, L2-month, 1g-month and 24-
month maturities are 7.5Yo,8% 8.5% and 9% respectively. The 6-month LIBOR rate at the last
payment date was 8.3%. Calculate the value of the SWAp,
c) Consider the following information of two company:

Company Rupees Dollars

C-Company 8.6% 6.0%
D-Company t}.t% 6.4%
Now, design a swap that will net a bank 50 basis points per annum, And also make
the swap equally
attractive for both the company.

Question#6 (5+5+5)
a) What is an option? Describe different types of options.
b) An investor buys a European put on a share for $3. The stock price is $42 and the strike price is $40.
Under what circumstances does the investor make a profit? Under what circumstances
will the
option be exercised? show graphically the profit pay-off of this option.
c) An investor sells a European call option on a share for $to. The stock price is $rzo and the strike
price is St2+. Under what circumstances does the investor make a profit? Under
what circumstances
will the option be exercised? show graphically the profit pay-off of this option.

f",i.,
ts- --'l
I
Y-
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 !-

Department of Finance
Jagannath UniversitY, Dhal<a
MBA Final Examination 20tl
Course Tiile: Portfolio Management
Course Code: FIN 5209
Time:3'0 Hours
Full Marks: 60
lnstructions: [Answer any 4 (Four) questions;figure
each questionsl
sequence of answer of all parts of Marks
7
l.I.Describetheirnportanceoftheporrlotioperspectivearrdtlreelementsoftheportfolio
q,.
policv statemerlt help to
b. [$ti:T.eiX':ffi:] rrarket.expectarions. and the investment
decision'
influence the strategic asset allocation 4
c.Assume}o[lcanlendarrduo,,o,"arl0o/oandhave$l0000inincomeirreachoftrvo
set?
periods. it'hat is your opportuniry
5
2.a'..Aninlestorcaninterpretaportfolio,sutilityvalueascertairrtyecluivalerrtr.ateoftlre
,^"#:i;;r::ootillnu=". funcl, bod fund, a,d r- 10
b. is considering threg mutlal funds: stock
is as
mu-tual rr,.la. piouability distribution of these three funds
ir1"
bill mone.v n]orr..,
follo*'s:
Expected Return Standard Deviation
20 30
Stock fund (S)
12 i5
Bond fund (B)
8 0
nd's retttrtl is 0'10'
T1'," ..'."=l"

ard deviatior-i of the risky porlfolio

between

bond fund that rvill generate the

coefficient is A:4' Calculate the expected
.ot"pf",. portfolio between risky flind and
ligfi.u possible utility' Calculate reward-
to-r ariabiliry ratio of this portfolio' (iii)
ratio calcr'rlated in (ii) a'd
ir. Co.rpare ,irL,"r"rra-,o-variability
M)' State the assumPtions of CAPM
L)'and Capital Market Line (CML)'
If
b. *o.itet [ine, what is the return of
te?
"urity
 What the efficierrt
Assume that the data belorv
apply to two efficient Portfolios'
Assutne short sales are not allowed'
fr"^ii.r:
Portfolio E(RJ o
10 6
4 4 cri= 2o
R 8

(ii)
singre-inclex Mode1, and (iii) constant
*,r;J short notes o, (i) Markowitz Modet
'/ 'Iake
Correlation !lodet'
index is 10
b. Given th. f"ii;;i;g data: the variance i[ the market
UnsYstematic Risk
Securih Code Exnected Return Beta
1.0 30
i t5
il t2 l5 70
20 40
III 11
08 t0
IV 8
9 1.0 20
V
\II 14 r.5 i0
les if Rr :6%2
\\'hat is th
and its
including its underlying assumptions

model and Fundamental factor rnodel'

for
t managers, each of lvhom is responsible
that thJ pension fund has a rvell-diveisified
is given below:

sen's alPha' AnalYze Your results

S.

es like the SharPe ratio and when

ll
dolr,eusebetariskperformancemeasuresliketheTleynorratioarrdJensen,s

managers, perforla'9e. according

to your answer i, (i). which
iii. ilXll'the
tllarlager performed the best? Explain'
spirit of fr-rndamental
.,The econom1,,- industry. and company analysis constitute the rnain
6. a.
rate affects the p'ices of
?i;_Jl5r,?il'11'ln.,oo and fiscal poticy ancl foreign exchange
b.
stock in the stock market?
c. Discussporter,scorrrpetitiveforcesasatooltoatldyzeirrdr-rstrycorr-rpetition.