Download GTU (Gujarat Technological University) MBA (Master of Business Administration) 2018 Summer 4th Sem 2840601 Investment Banking Previous Question Paper
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 4 ? EXAMINATION ? SUMMER 2018
Subject Code: 2840601 Date:01/06/2018
Subject Name: INVESTMENT BANKING
Time: 02:30 PM 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.1 (a) 6
1 No offer of buy-back shall be made within a period of ____from the date of the closure
of the preceding offer of buy-back
A 1 Year B 6 Month
C 2 Year D 1.5 Year
2 Which of the following are not the constituents of capital market?
A Issuers, Investors B Intermediaries
C Instruments, Infrastructure D None
3 A Rs100 par value bond carries a coupon rate of 12% and maturity period of 8 years.
Interest is payable semi annually. Value of bond___if required rate of return is 14%.
A 95.5 B 90.5
C 80.5 D 85.5
4 Broad statement of deal structure that investor proposes to make with the company for
given offering in response to offer made by company is known as
A Private equity B Term sheet
C Credit Rating D ESOP
5 A bank offers 8% nominal rate of interest with quarterly compounding. What is effective
rate of interest?
A 8% B 8.24%
C 9% D 9.24%
6 Business of floating and managing pools of public funds or private funds for profits from
capital market investment is known as
A Assets Management B Security Business
C AMCC D CRISIL
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1
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 4 ? EXAMINATION ? SUMMER 2018
Subject Code: 2840601 Date:01/06/2018
Subject Name: INVESTMENT BANKING
Time: 02:30 PM 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.1 (a) 6
1 No offer of buy-back shall be made within a period of ____from the date of the closure
of the preceding offer of buy-back
A 1 Year B 6 Month
C 2 Year D 1.5 Year
2 Which of the following are not the constituents of capital market?
A Issuers, Investors B Intermediaries
C Instruments, Infrastructure D None
3 A Rs100 par value bond carries a coupon rate of 12% and maturity period of 8 years.
Interest is payable semi annually. Value of bond___if required rate of return is 14%.
A 95.5 B 90.5
C 80.5 D 85.5
4 Broad statement of deal structure that investor proposes to make with the company for
given offering in response to offer made by company is known as
A Private equity B Term sheet
C Credit Rating D ESOP
5 A bank offers 8% nominal rate of interest with quarterly compounding. What is effective
rate of interest?
A 8% B 8.24%
C 9% D 9.24%
6 Business of floating and managing pools of public funds or private funds for profits from
capital market investment is known as
A Assets Management B Security Business
C AMCC D CRISIL
2
Q.1 (b) 1. Private Equity
2. Assets Reconstruction Companies. (ARC)
3. HNI
4. QIB
04
Q.1 (c) Discuss the ?Lock in of Shares? as preventive tool used by regulator 04
Q.2 (a) Discuss conditions for buyback of shares as per Companies Act,2013 07
(b) If Current EPS is 5 per share and current P.E multiple is 8, the current
market price would be Rs40. If Present return on net worth is 10%, then
compute premium can be paid at the time of buyback and also calculate
buy back price.
07
OR
(b) The following are the balance sheet of D ltd and G ltd as on 31.3.2016
Particulars D ltd G ltd
Liabilities:
Equity share capital of Rs.10 each
General Reserve
P&L a/c
Debentures
Creditors
Bills Payable
Assets:
Fixed assets
Investment
Current Assets
400000
500000
300000
350000
200000
50000
1800000
700000
500000
600000
1800000
180000
100000
80000
100000
40000
500000
300000
200000
500000
The Board of Directors D ltd approved to takeover G ltd as on 3oth Sept,
2016. Find out the ratio of exchange of shares on the basis of book
values.
07
Q.3 (a) What are the segments of security market? Difference between primary
market and secondary market.
07
(b) M co ltd is studying possible acquisition of N co ltd by way of merger.
The following data are available in respect of following companies.
Particulars M co. ltd N co. ltd
Earnings After Tax 8000000 2400000
No of equity shares 1600000 400000
Market price per share 200 160
1. If merger goes through by exchange of equity and the exchange
ratio is based on current market price what is new EPS of M co.
ltd.
2. Compute number shares to be issued by M co ltd to N co ltd if
exchange ratio is calculated based on EPS.
07
OR
Q.3 (a) Discuss the role of investment banking in primary market. 07
(b) X ltd makes an issue of 10000 shares of Rs10 each at par aggregating to
Rs100000. The issue has been underwritten fully by X and Y underwriter
to the extent of Rs50000 each. Issue has been closed and following
information is available.
Valid subscription received 76500
Received through underwriter X 27500
Received through underwriter Y 34800
07
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1
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 4 ? EXAMINATION ? SUMMER 2018
Subject Code: 2840601 Date:01/06/2018
Subject Name: INVESTMENT BANKING
Time: 02:30 PM 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.1 (a) 6
1 No offer of buy-back shall be made within a period of ____from the date of the closure
of the preceding offer of buy-back
A 1 Year B 6 Month
C 2 Year D 1.5 Year
2 Which of the following are not the constituents of capital market?
A Issuers, Investors B Intermediaries
C Instruments, Infrastructure D None
3 A Rs100 par value bond carries a coupon rate of 12% and maturity period of 8 years.
Interest is payable semi annually. Value of bond___if required rate of return is 14%.
A 95.5 B 90.5
C 80.5 D 85.5
4 Broad statement of deal structure that investor proposes to make with the company for
given offering in response to offer made by company is known as
A Private equity B Term sheet
C Credit Rating D ESOP
5 A bank offers 8% nominal rate of interest with quarterly compounding. What is effective
rate of interest?
A 8% B 8.24%
C 9% D 9.24%
6 Business of floating and managing pools of public funds or private funds for profits from
capital market investment is known as
A Assets Management B Security Business
C AMCC D CRISIL
2
Q.1 (b) 1. Private Equity
2. Assets Reconstruction Companies. (ARC)
3. HNI
4. QIB
04
Q.1 (c) Discuss the ?Lock in of Shares? as preventive tool used by regulator 04
Q.2 (a) Discuss conditions for buyback of shares as per Companies Act,2013 07
(b) If Current EPS is 5 per share and current P.E multiple is 8, the current
market price would be Rs40. If Present return on net worth is 10%, then
compute premium can be paid at the time of buyback and also calculate
buy back price.
07
OR
(b) The following are the balance sheet of D ltd and G ltd as on 31.3.2016
Particulars D ltd G ltd
Liabilities:
Equity share capital of Rs.10 each
General Reserve
P&L a/c
Debentures
Creditors
Bills Payable
Assets:
Fixed assets
Investment
Current Assets
400000
500000
300000
350000
200000
50000
1800000
700000
500000
600000
1800000
180000
100000
80000
100000
40000
500000
300000
200000
500000
The Board of Directors D ltd approved to takeover G ltd as on 3oth Sept,
2016. Find out the ratio of exchange of shares on the basis of book
values.
07
Q.3 (a) What are the segments of security market? Difference between primary
market and secondary market.
07
(b) M co ltd is studying possible acquisition of N co ltd by way of merger.
The following data are available in respect of following companies.
Particulars M co. ltd N co. ltd
Earnings After Tax 8000000 2400000
No of equity shares 1600000 400000
Market price per share 200 160
1. If merger goes through by exchange of equity and the exchange
ratio is based on current market price what is new EPS of M co.
ltd.
2. Compute number shares to be issued by M co ltd to N co ltd if
exchange ratio is calculated based on EPS.
07
OR
Q.3 (a) Discuss the role of investment banking in primary market. 07
(b) X ltd makes an issue of 10000 shares of Rs10 each at par aggregating to
Rs100000. The issue has been underwritten fully by X and Y underwriter
to the extent of Rs50000 each. Issue has been closed and following
information is available.
Valid subscription received 76500
Received through underwriter X 27500
Received through underwriter Y 34800
07
3
Direct subscription received 14200
Examine underwriters devolvement.
Q.4 (a) Discuss delisting types, process and requirements. 07
(b) If the Free Cash Flow to Firm of 8
th
Year cash flow projection is Rs525
lakh, which is expected to maintain 5% constant growth thereafter and
subject to weighted average cost of capital is 12.5%. What is terminal
value of Free Cash Flow to Firm.
07
OR
Q.4 (a) As Government of India has initiated scheme ?Start Up India?, ?Make In
India?, ?Digital India?. Discuss how private placement and venture
capital can play role for these schemes.
07
(b) Justin ltd agrees to acquire Bibers ltd. Based on capitalization of last 3
years profit of Bibbers ltd at an earnings yield of 21%. Calculate value of
business on earning yield basis.
Profit for the year Rs.in lakhs
2008
2009
2010
75
89
82
07
Q.5 Peperboard ltd is targeting Newsborad ltd. Following details are here.
Particulars Peperboard ltd Newsboard ltd
No of shares 32000 16000
Current Market Price Rs140 Rs120
Market Capitalization 4480000 1920000
You are required to compute Cost of Merger and Net gain if Peperboard
ltd is ready to pay cash of Rs125 per share to Newsboard ltd assuming
zero synergy gain.
14
OR
Q.5 Bapa ltd wants to acquire Aapa ltd and has offered swap ratio of 1:2 (0.5
shares for every one share of Aapa ltd). Bapa ltd has profit available to
shareholder would be Rs1800000 having six lakh shares outstanding.
Bapa ltd somehow managed to yield price earning multiple 10 time in
very cut throat competition in the market. While on the other hand, Aapa
ltd, who is suffering from financial crisis and liquidity crunch and having
over burden of interest payment and with high trading on equity co., had
earning available to shareholder would only just Rs360000 having one
lakh eighty thousand shares outstanding. Because of its non reputation in
the market, Aapa ltd incurred price earnings multiple of just 7 times
which is not considered as per industry standard. After considering
various avenues for corporate reorganization, Bapa ltd decided to acquire
Aapa ltd and restructure entire company and establish itself from
saturation point to Introduction-Growth stage of Company life cycle.
Required:
1. The number shares to be issued by Bapa ltd to Aapa ltd for such
acquisition.
2. Earnings available to Bapa ltd after acquisition. Has Bapa took right
decision for acquiring Aapa ltd.
3. Determine equivalent EPS of Aapa ltd.
4. Determine market capitalization after acquisition.(i.e. Merged Co.)
14
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This post was last modified on 19 February 2020