Download JNTUH MBA 4th Sem 2018 May Strategic Investment and Financing Decision Question Paper

Download JNTUH (Jawaharlal Nehru Technological University Hyderabad) MBA Fourth Year (4th Semester) 2018 May Strategic Investment and Financing Decision Question Paper.

HallTicketNo QuestionPaperCode:CMB419
.
.
MBAIVSemesterEndExaminations(Regular)-May/June,2018
Regulation: .?R16
StrategicInvestmentandFinancingDecision
(MBA)
Time:3Hours (Elective:Finance) MaxMarks: 70
AnswerONEQuestionfromeachUnit
AllQuestionsCarryEqualMarks
Allpartsofthequestionmustbeansweredinoneplaceonly
UNIT?I
1. (a) Whatisrisk?Explaindi?erenttypesofrisksassociatedwithequityinvestment. [7M]
(b) M/s. KhanandCo.,aMumbaibasedcompanyissuesapurediscountbondofRs.1000/-face
valueforRs.520/-foraperiodof?veyears.Asainvestor,computetheinterestrateofthebond
andsuggestwhetheritisanattractiveinvestmentforaninvestorwhoisseeking15%return.
[7M]
2. (a) Di?erentiatedisclosedandundisclosedordersandExplainaboutstoplossorders [7M]
(b) Mr.NaveenisevaluatingtwostocksshowninTable1: [7M]
Table1
StockA StockB
Return Probability Return Probability
-30 20 -10 10
0 40 0 25
30 30 10 40
70 10 20 25
AdviceMr.Naveenbasedonriskofthestock.
UNIT?II
3. (a) De?necapitalbudgeting.Explaintheadvantagesofnetpresentvalueandpaybackperiod
methods. [7M]
(b) Mr.Vijayaninvestor,hasfurnishedfollowinginformationaboutthetwoinvestmentalternatives
showninTable2.Evaluatebasedon [7M]
i. Expectedreturn
ii. Standarddeviation
iii. Standarddeviationandexpectedreturn.
Page1of3
FirstRanker.com - FirstRanker's Choice
HallTicketNo QuestionPaperCode:CMB419
.
.
MBAIVSemesterEndExaminations(Regular)-May/June,2018
Regulation: .?R16
StrategicInvestmentandFinancingDecision
(MBA)
Time:3Hours (Elective:Finance) MaxMarks: 70
AnswerONEQuestionfromeachUnit
AllQuestionsCarryEqualMarks
Allpartsofthequestionmustbeansweredinoneplaceonly
UNIT?I
1. (a) Whatisrisk?Explaindi?erenttypesofrisksassociatedwithequityinvestment. [7M]
(b) M/s. KhanandCo.,aMumbaibasedcompanyissuesapurediscountbondofRs.1000/-face
valueforRs.520/-foraperiodof?veyears.Asainvestor,computetheinterestrateofthebond
andsuggestwhetheritisanattractiveinvestmentforaninvestorwhoisseeking15%return.
[7M]
2. (a) Di?erentiatedisclosedandundisclosedordersandExplainaboutstoplossorders [7M]
(b) Mr.NaveenisevaluatingtwostocksshowninTable1: [7M]
Table1
StockA StockB
Return Probability Return Probability
-30 20 -10 10
0 40 0 25
30 30 10 40
70 10 20 25
AdviceMr.Naveenbasedonriskofthestock.
UNIT?II
3. (a) De?necapitalbudgeting.Explaintheadvantagesofnetpresentvalueandpaybackperiod
methods. [7M]
(b) Mr.Vijayaninvestor,hasfurnishedfollowinginformationaboutthetwoinvestmentalternatives
showninTable2.Evaluatebasedon [7M]
i. Expectedreturn
ii. Standarddeviation
iii. Standarddeviationandexpectedreturn.
Page1of3
Table2
Probability Return
Security?A? Security?B?
0.5 4 0
0.4 2 3
0.1 0 3
Suggestwhichoneisgoodforinvestment.
4. (a) TheearningspershareofacompanyisRs.10/-IthasanIRRof15%andcapitalizationrateof
itsriskclassis12.5%.IfWaltersModelisused
i. Whatwouldbetheoptimumpayoutratioofthe?rm?
ii. Whatwouldbethepriceoftheshareatthispayout?
[7M]
(b) Aninvestorholdssharesof?XYZ?companyboughtatRs.335/-andpresentpriceisRs.421/-.
Thedividendpaidis35%. Computethedividendyieldandholdingperiodreturn,iffacevalue
oftheshareisRs.10/-. [7M]
UNIT?III
5. (a) Whataregovernmentbonds?Explainany?vefeaturesofgovernmentbonds. [7M]
(b) AperpetualbondRs.100/-iscurrentlysellingforRs.95/-.Thecouponrateofinterestis13.5%
andappropriatediscountrateis15%. Calculatethevalueofthebond. Shoulditbebought?
Whatisitsyieldtomaturity?
[7M]
6. (a) ExplainMaculay?sbonddurationconceptwithanexample. [7M]
(b) Mr.Amitasafeinvestordecidestoinvestinabond.Heisevaluatingabond,Bond?A?with7%
couponhavingmaturityperiodoffouryears. ThefacevalueisRs.1000/-. Thebondcurrently
yields10%.EvaluateandadviceMr.AmitbasedonMaculay?sDuration. [7M]
UNIT?IV
7. (a) DiscussWalterstherelevancetheoryofdividendwhichsupportstheargumentthatdividend
decisionhasanimpactshareholdersvalueandvalueofthe?rm. [7M]
(b) AcompanyexpectstopayadividendofRs.7/-persharenextyearthatisexpectedtogrowat
6%.Itretains30%ofearning.Assumeacapitalizationrateof10%,youarerequiredtocalculate
i. Expectedearningspershare.
ii. Returnonequity.
[7M]
Page2of3
FirstRanker.com - FirstRanker's Choice
HallTicketNo QuestionPaperCode:CMB419
.
.
MBAIVSemesterEndExaminations(Regular)-May/June,2018
Regulation: .?R16
StrategicInvestmentandFinancingDecision
(MBA)
Time:3Hours (Elective:Finance) MaxMarks: 70
AnswerONEQuestionfromeachUnit
AllQuestionsCarryEqualMarks
Allpartsofthequestionmustbeansweredinoneplaceonly
UNIT?I
1. (a) Whatisrisk?Explaindi?erenttypesofrisksassociatedwithequityinvestment. [7M]
(b) M/s. KhanandCo.,aMumbaibasedcompanyissuesapurediscountbondofRs.1000/-face
valueforRs.520/-foraperiodof?veyears.Asainvestor,computetheinterestrateofthebond
andsuggestwhetheritisanattractiveinvestmentforaninvestorwhoisseeking15%return.
[7M]
2. (a) Di?erentiatedisclosedandundisclosedordersandExplainaboutstoplossorders [7M]
(b) Mr.NaveenisevaluatingtwostocksshowninTable1: [7M]
Table1
StockA StockB
Return Probability Return Probability
-30 20 -10 10
0 40 0 25
30 30 10 40
70 10 20 25
AdviceMr.Naveenbasedonriskofthestock.
UNIT?II
3. (a) De?necapitalbudgeting.Explaintheadvantagesofnetpresentvalueandpaybackperiod
methods. [7M]
(b) Mr.Vijayaninvestor,hasfurnishedfollowinginformationaboutthetwoinvestmentalternatives
showninTable2.Evaluatebasedon [7M]
i. Expectedreturn
ii. Standarddeviation
iii. Standarddeviationandexpectedreturn.
Page1of3
Table2
Probability Return
Security?A? Security?B?
0.5 4 0
0.4 2 3
0.1 0 3
Suggestwhichoneisgoodforinvestment.
4. (a) TheearningspershareofacompanyisRs.10/-IthasanIRRof15%andcapitalizationrateof
itsriskclassis12.5%.IfWaltersModelisused
i. Whatwouldbetheoptimumpayoutratioofthe?rm?
ii. Whatwouldbethepriceoftheshareatthispayout?
[7M]
(b) Aninvestorholdssharesof?XYZ?companyboughtatRs.335/-andpresentpriceisRs.421/-.
Thedividendpaidis35%. Computethedividendyieldandholdingperiodreturn,iffacevalue
oftheshareisRs.10/-. [7M]
UNIT?III
5. (a) Whataregovernmentbonds?Explainany?vefeaturesofgovernmentbonds. [7M]
(b) AperpetualbondRs.100/-iscurrentlysellingforRs.95/-.Thecouponrateofinterestis13.5%
andappropriatediscountrateis15%. Calculatethevalueofthebond. Shoulditbebought?
Whatisitsyieldtomaturity?
[7M]
6. (a) ExplainMaculay?sbonddurationconceptwithanexample. [7M]
(b) Mr.Amitasafeinvestordecidestoinvestinabond.Heisevaluatingabond,Bond?A?with7%
couponhavingmaturityperiodoffouryears. ThefacevalueisRs.1000/-. Thebondcurrently
yields10%.EvaluateandadviceMr.AmitbasedonMaculay?sDuration. [7M]
UNIT?IV
7. (a) DiscussWalterstherelevancetheoryofdividendwhichsupportstheargumentthatdividend
decisionhasanimpactshareholdersvalueandvalueofthe?rm. [7M]
(b) AcompanyexpectstopayadividendofRs.7/-persharenextyearthatisexpectedtogrowat
6%.Itretains30%ofearning.Assumeacapitalizationrateof10%,youarerequiredtocalculate
i. Expectedearningspershare.
ii. Returnonequity.
[7M]
Page2of3
8. (a) Explaindividendmodelandstateitsassumptions. [7M]
(b) ThereturnofABCCompanyatpresentis21%.Thisisassumedtocontinuefornextfouryears
afterthatitisassumedtohaveagrowthrateof10%inde?nitely. Thedividendpaidforthe
recentyearis32%. Therequiredrateofreturnis20%andpresentpriceisRs.60/-. Compute
theestimatedpriceassumingtwostagemodel. [7M]
UNIT?V
9. (a) De?neportfoliomanagement.Explaintheobjectivesofportfoliomanagement. [7M]
(b) InformationshowninTable3isavailableregardingperformanceofthreemutualfundsnamely
A,BandCrespectively.RankthemwithSharpe?sandTreynor?sIndex. [7M]
Table3
Funds Rp Sd Beta
A 25.38 4 0.23
B 25.11 9.01 0.56
C 25.01 3.55 0.59
10. (a) Explainthecapitalassetpricingmodeltheory.Stateitsunderlyingassumptions. [7M]
(b) Mr.KiranishavingunitsinmutualfundforthepastthreeyearsasshowninTable4.Advice
himtoevaluatethefund?sperformancebycomparingittomarketusingTreynorsIndex.[7M]
Table4
Particulars Fund Market
Return(%) 70.66 41.40
StandardDeviation 41.31 19.44
Riskfreerate(%) 12 12
Beta 1.12 -
? ? ? ? ? ? ?
Page3of3
FirstRanker.com - FirstRanker's Choice