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ASSIGNMENT
DRIVE WINTER 2014
PROGRAM
BBA
SEMESTER
V
SUBJECT
CODE & NAME BBA502 & FINANCIAL MANAGEMENT
BK ID B1850 CREDITS 4 MARKS
60
Q.No.1
Explain profit maximization. Write the objectives of profit maximization.
Explanation
of profit maximization
Objectives
of profit maximization 4+6=10
Answer:
Profit
Maximization
The firm’s
investment and financing decisions are continuous. In order to make them
rational the firm must have a goal. It is generally agreed in theory that the
financial goal of the firm should be shareholders’ wealth maximization (SWM),
as reflected in the market value of the firm’s shares. Firms, producing goods
and services,
2
Explain the concept of Time value of Money. Explain with an example the
compounding method.
Explanation
of concept of time value of money
Explanation
of compounding method with an example 4+6=10
Answer:
Explanation
of concept of time value of money:-
If an
individual behaves rationally, he or she would not value the opportunity to
receive a specific amount of money now, equally with the opportunity to have
the same amount at some future date. Most individuals value the opportunity to
receive money now higher than waiting for one or more periods to receive the
same amount.
3
What do you understand by financial leverage? Explain Earning Per Share (EPS)
and Return on Equity (ROE).
Introduction
of financial leverage
Explanation
of EPS
Explanation
of ROE 2+4+4=10
Answer:
Introduction
of financial leverage:
The
financial leverage employed by a company is intended to earn more return on the
fixed-charge funds than their costs. The surplus (or deficit) will increase (or
decrease) the return on the owners’ equity. The rate of
4
Explain the Capital Investment Planning and Control phases. Write short notes
on:
a)
Net Present Value (NPV)
b)
Internal Rate of Return (IRR)
ü
Explanation of capital investment
planning and control phases
ü
Net Present Value (NPV)-
Calculations-Acceptance Rule-merits and demerits
ü
IRR-)- Calculations-Acceptance
Rule-merits and demerits 2 + 4+4=10
Answer:
Capital
Investment Planning and Control
There are
five phases of capital expenditure planning and control, which are:
1.
Identification (or origination) of investment opportunities
5
Explain the modes of security which a bank may require. Write the features of
ordinary shares.
Explanation
of modes of security which a bank may require
Features
of ordinary shares 4+6=10
Answer:
The
following are the modes of security which a bank may require.
• Hypothecation:
Under hypothecation, the borrower is provided with working capital
finance by the bank against the security of movable property, generally
inventories. The borrower does not transfer the property to
6
Explain the three motives for holding cash. Write the facets of cash
management.
Explanation
of three motives for holding cash
Explanation
of facets of cash management 3+7=10
Answer:
Motives
for Holding Cash:-
(i)
Transaction motive: The
transactions motive requires a firm to hold cash to conduct its business in the
ordinary course. The firm needs cash primarily to make payments for purchases,
wages and salaries, other operating expenses, taxes, dividends etc. The need to
hold cash would not arise if there were perfect
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on 08791490301, 08273413412
