Financial Management
Course: Executive Master Program in Business Administration.
Duration: 1 Year
Semester I – Financial Management
Section A
Part One
Multiple choices:
Q1. a. Ignored non-corporate enterprise
Q2. c. Redeemable preference shares
Q3. b. Domestic risk
Q4. a. Future cost
Q5. c. Designing optimal corporate structure
Q6. d. Cost of capital
Q7. d. Agency cost
Q8. a. Legal requirement
Q9. b. Default risk
Q10. a. Beta
Part Two
Q1. Annuity is fixed sum of money paid every year in at any other fixed interval shorter than a year. This annuity may be way of return of some principal plus interest payment of against money invested or by way of payment of other dues such as pensions after retirement. In any case it represents out flow of cash from one account to in flow of cash to another account. In this way all annuities involve movements of cash or funds. Therefore all annuities are cash flows that can be suitable represented in cash flow statements. An annuity will be represented as inflow of cash in the cash flow statement for the recipient of annuity and out flow of cash in the cash flow statement of the person or firm paying out the annuity.
Q2. Portfolio risk refers to the combined risk attached to all of the securities within the investment portfolio of an individual. This risk is generally unavoidable because there is a modicum of risk involved in any type of investment, even if it is extremely small. Investors often try to minimize portfolio risk through diversification, which involves purchasing many securities with different characteristics in terms of potential risk and reward. There are some risks which cannot be solved through diversification, and these risks, known as market risks, can only be lessened by hedging with contrasting investments. Many people who haven’t actually begun to invest their capital only foresee the positives and potential gains that come with putting one’s money onto a specific
Duration: 1 Year
Semester I – Financial Management
Section A
Part One
Multiple choices:
Q1. a. Ignored non-corporate enterprise
Q2. c. Redeemable preference shares
Q3. b. Domestic risk
Q4. a. Future cost
Q5. c. Designing optimal corporate structure
Q6. d. Cost of capital
Q7. d. Agency cost
Q8. a. Legal requirement
Q9. b. Default risk
Q10. a. Beta
Part Two
Q1. Annuity is fixed sum of money paid every year in at any other fixed interval shorter than a year. This annuity may be way of return of some principal plus interest payment of against money invested or by way of payment of other dues such as pensions after retirement. In any case it represents out flow of cash from one account to in flow of cash to another account. In this way all annuities involve movements of cash or funds. Therefore all annuities are cash flows that can be suitable represented in cash flow statements. An annuity will be represented as inflow of cash in the cash flow statement for the recipient of annuity and out flow of cash in the cash flow statement of the person or firm paying out the annuity.
Q2. Portfolio risk refers to the combined risk attached to all of the securities within the investment portfolio of an individual. This risk is generally unavoidable because there is a modicum of risk involved in any type of investment, even if it is extremely small. Investors often try to minimize portfolio risk through diversification, which involves purchasing many securities with different characteristics in terms of potential risk and reward. There are some risks which cannot be solved through diversification, and these risks, known as market risks, can only be lessened by hedging with contrasting investments. Many people who haven’t actually begun to invest their capital only foresee the positives and potential gains that come with putting one’s money onto a specific