Download GTU (Gujarat Technological University) MBA 2019 Winter 4th Sem 3549283 Investment Banking Previous Question Paper
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER IV ? EXAMINATION ? WINTER 2019
Subject Code: 3549283 Date:29/11/2019
Subject Name: Investment Banking
Time: 02.30PM TO 05.30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q. No. Marks
Q.1 Explain the following terms:
(a) PIPE
(b) Subprime Mortgages
(c) Credit Default Swap
(d) Underwriting services
(e) Venture Capital
(f) Municipal Bond
(g) Dutch Auction
14
Q.2 (a) Distinguish between Merchant banking & investment banking. Explain
the function of investment banking.
07
(b) Define an investment bank and explain the evolution of investment banks
in India.
07
OR
(b) Discuss the emergence of Investment Banks in the US and India. 07
Q.3 (a) Discuss the cash flow based valuation models in detail. 07
(b) Briefly define the role of investment banks in structuring M&A
transactions.
07
OR
Q.3 (a) Explain the concept of bond, types and its valuation with hypothetical
example.
07
(b) What is due diligence? Explain any three areas of due diligence. 07
Q.4 (a) State the difference between private equity and venture capital. Discuss
the investment banking perspective in Private equity
07
(b) ABC Ltd. make an issues of 10,000 shares of Rs.10 each at par
aggregating to Rs.1,00,000. The issue has been underwritten fully by two
underwriters X and Y to the extent of Rs. 50,000 each. The issue has been
closed and the following is the information available on the
subscriptions.
Particulars Amount(Rs.)
Valid subscriptions received 76,500
Received through underwriter X 27,500
Received through underwriter Y 34,800
Direct subscriptions received 14,200
Examine the underwriters? development.
07
OR
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Page 1 of 2
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER IV ? EXAMINATION ? WINTER 2019
Subject Code: 3549283 Date:29/11/2019
Subject Name: Investment Banking
Time: 02.30PM TO 05.30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q. No. Marks
Q.1 Explain the following terms:
(a) PIPE
(b) Subprime Mortgages
(c) Credit Default Swap
(d) Underwriting services
(e) Venture Capital
(f) Municipal Bond
(g) Dutch Auction
14
Q.2 (a) Distinguish between Merchant banking & investment banking. Explain
the function of investment banking.
07
(b) Define an investment bank and explain the evolution of investment banks
in India.
07
OR
(b) Discuss the emergence of Investment Banks in the US and India. 07
Q.3 (a) Discuss the cash flow based valuation models in detail. 07
(b) Briefly define the role of investment banks in structuring M&A
transactions.
07
OR
Q.3 (a) Explain the concept of bond, types and its valuation with hypothetical
example.
07
(b) What is due diligence? Explain any three areas of due diligence. 07
Q.4 (a) State the difference between private equity and venture capital. Discuss
the investment banking perspective in Private equity
07
(b) ABC Ltd. make an issues of 10,000 shares of Rs.10 each at par
aggregating to Rs.1,00,000. The issue has been underwritten fully by two
underwriters X and Y to the extent of Rs. 50,000 each. The issue has been
closed and the following is the information available on the
subscriptions.
Particulars Amount(Rs.)
Valid subscriptions received 76,500
Received through underwriter X 27,500
Received through underwriter Y 34,800
Direct subscriptions received 14,200
Examine the underwriters? development.
07
OR
Page 2 of 2
Q.4 (a) What is Venture Capital? What are the factors considered by Venture
capital firms before they finance a venture?
07
(b) What do you understand by Corporate Debt Restructuring (CDR)?
Explain the process and importance of CDR for companies in Distress
07
Q.5
CASE STUDY:
Novelty Ltd., a consumer durable manufacturer, reported earnings per
share of Rs. 3.20 in 2010 and paid dividends per share of Rs. 1.70 in that
year. The firm reported depreciation of Rs. 350 lakh in 2010 and capital
expenditure of Rs. 475 lakh. There were 160 lakh outstanding shares
traded at Rs. 51 per share. The ratio of capital expenditure to depreciation
is expected to be maintained in the long term. The working capital needs
are negligible. Novelty had a debt outstanding of Rs. 1600 lakh and
intends to maintain its current financing mix of debt and equity to finance
future investment needs. The firm in the steady state, and earnings are
expected to grow at 7% per year. The stock had a Beta of 1.05, the
Treasury bill rate is 6.25% and the market premium is 5.5%.
(a) Estimate the value per share using dividend discount model. 07
(b) How would you explain the difference between Dividend yield method
and Dividend discount model to estimate value of equity and business?
07
OR
Q.5 (a) Estimate the value per share, using the FCFE model (Free Cash Flow to
Equity)
07
(b)
How would you explain the difference between the two models, and
which one would you use as a benchmark to compare with the market
price?
07
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This post was last modified on 19 February 2020