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CORPORATE FINANCE MANAGEMENT
Total Marks: 80
N.B.: 1) Attempt any Twenty Questions 2)
All questions carries equal marks.
Q.1) Give A brief On Optimizing the Corporate Finance Function, The External
Business Environment and Corporate Financial Strategy. The Strategic Logic of High Growth?
Q.2) Explain what is Shareholder Value Maximization?
a) Corporate Valuation
b) Valuation Models: Public Company
c) Valuation Models: Closely held Company
d) Corporate Performance Measurement: Economic Value Added (EVA)
Q.3) Explain Financial Policy with the help of the following points?
a) Capital Structure
b) Operating Leverage
c) Dividend Policy
d) Pricing Strategy
e) Tax Planning
f) Optimal Capital Budgeting with real Options
g) Mergers and Acquisitions
h) Asset-Liability Management: Optimizing the Balance Sheet
Q.4) Give an introduction to Risk Management include the following?
a) Identifying and Estimating Risk Exposure
b) Off-Balance Sheet (OBS) Risks
c) Operational Risk Management
d) Enterprise Wide Risk Management (EWRM)
e) Risk Hedging Strategies
Q.5) what is Financial Reporting, Planning and Control
a) Financial Reporting: GAAP Convergence
b) Business and Financial Planning
c) Treasury Management
d) Financial Control and Audit
e) Optimize amid Changing Operating Conditions
Q.6) Corporate Performance Management: The Balancing act?
a) The Execution Problem
b) The Balanced Scorecard
c) Real-time Financial Systems: Corporate Performance Management (CPM)
d) Integrated Financial Management
Q.7) How do we create and measure shareholder value
creation? Q.8) How do we manage financial risk?
Q.9) In what projects are we going to invest our shareholders money (capex)?
Q.10) Why Profit maximization is not the same as shareholder wealth
maximization? Q.11) What investments should we make?
Q.12) How do you know whether an investment generates value for
shareholders? Q.13) Described Traditional appraisal techniques?
What businesses actually
use Payback
Accounting rate of return
Why internal rate of return is still popular
Q.14) Explain The managerial art of investment selection
o Strategy
o Social context
o Expense
o Stifling the entrepreneurial spirit
o Intangible benefits
Q.15) Explain The stages of investment decisions ?
o Generation of ideas
o Development and classification
o Screening
o Appraisal
o Report and authorization
o Implementation
o Post completion audit
Q.16) Explain Allowing for risk
What is risk?
Adjusting for risk through the discount
rate Sensitivity analysis
Scenario analysis
Probability analysis
Standard deviation
What risk techniques do managers actually
Q.17) Explain Value managed companies versus earnings managed companies
The pervasiveness of the value approach
Case studies: FT100 companies creating value and
destroying value Why shareholder value?
Earnings-based management’s failings:
o Dicey accounting o
Throwing money in
o Ignoring the time value of money
o Ignoring risk
ROCE has limitations
Focusing on earnings is not the same as
value How a business creates value
The five actions to create value
Q.18 ) Explain Strategic position
Strategic business unit management
Do we have any strong business
franchises? Industry attractiveness
The strength of our resources
The TRRACK system
The life cycle of value
potential Strategic choice
What use is the head office?
Q.19) Explain Value creation within strategic business units
Using cash flow to measure
value Shareholder value analysis
Economic profit
Economic value added (EVA)
Q.20) What is the companies cost of capital?
The required rate of return
The cost of equity capital
o The capital asset pricing model
o Gordon growth model
o The cost of retained
earnings Debt capital
Preference shares
The weighted average cost of capital,
WACC What the WACC tells you
Applying WACC to strategic business units and
projects What do managers actually do?
Implementation issues
o How large is the equity premium?
o Which risk free rate?
o How reliable are the CAPM and
beta? Fundamental beta
Q.21) explain the below Mergers: impulse, regret and success
The merger decision
You say merger, I say
acquisition Types of merger
Merger statistics
What drives firms to merge?
o Synergy
o Market power
o Economies of scale
o Internalisation of transactions
o Entering new markets and industries
o Tax
o Risk diversification
o Bargain buying
o Inefficient management
o Managerial benefits
o Hubris
o Survival
o Free cash flow
o Third party motives
Q.22) Do the shareholders of acquiring firms gain from mergers?
Q.23) What pay-outs should we make to shareholders?
The other extreme
Some muddying factors
Clientele
effects Taxation
Information conveyance
Agency effects
Scrip dividends
Share buy-backs and special dividends
A round up of the arguments
o Entering new markets and industries
o Tax
o Risk diversification
o Bargain buying
o Inefficient management
o Managerial benefits
o Hubris
o Survival
o Free cash flow
o Third party motives
Q.22) Do the shareholders of acquiring firms gain from mergers?
Q.23) What pay-outs should we make to shareholders?
The other extreme
Some muddying factors
Clientele
effects Taxation
Information conveyance
Agency effects
Scrip dividends
Share buy-backs and special dividends
A round up of the arguments

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Corporate finance

  • 1. CORPORATE FINANCE MANAGEMENT Total Marks: 80 N.B.: 1) Attempt any Twenty Questions 2) All questions carries equal marks. Q.1) Give A brief On Optimizing the Corporate Finance Function, The External Business Environment and Corporate Financial Strategy. The Strategic Logic of High Growth? Q.2) Explain what is Shareholder Value Maximization? a) Corporate Valuation b) Valuation Models: Public Company c) Valuation Models: Closely held Company d) Corporate Performance Measurement: Economic Value Added (EVA) Q.3) Explain Financial Policy with the help of the following points? a) Capital Structure b) Operating Leverage c) Dividend Policy d) Pricing Strategy e) Tax Planning f) Optimal Capital Budgeting with real Options g) Mergers and Acquisitions h) Asset-Liability Management: Optimizing the Balance Sheet
  • 2. Q.4) Give an introduction to Risk Management include the following? a) Identifying and Estimating Risk Exposure b) Off-Balance Sheet (OBS) Risks c) Operational Risk Management d) Enterprise Wide Risk Management (EWRM) e) Risk Hedging Strategies Q.5) what is Financial Reporting, Planning and Control a) Financial Reporting: GAAP Convergence b) Business and Financial Planning c) Treasury Management d) Financial Control and Audit e) Optimize amid Changing Operating Conditions Q.6) Corporate Performance Management: The Balancing act? a) The Execution Problem b) The Balanced Scorecard c) Real-time Financial Systems: Corporate Performance Management (CPM) d) Integrated Financial Management Q.7) How do we create and measure shareholder value creation? Q.8) How do we manage financial risk? Q.9) In what projects are we going to invest our shareholders money (capex)? Q.10) Why Profit maximization is not the same as shareholder wealth maximization? Q.11) What investments should we make? Q.12) How do you know whether an investment generates value for shareholders? Q.13) Described Traditional appraisal techniques? What businesses actually use Payback Accounting rate of return Why internal rate of return is still popular
  • 3. Q.14) Explain The managerial art of investment selection o Strategy o Social context o Expense o Stifling the entrepreneurial spirit o Intangible benefits Q.15) Explain The stages of investment decisions ? o Generation of ideas o Development and classification o Screening o Appraisal o Report and authorization o Implementation o Post completion audit Q.16) Explain Allowing for risk What is risk? Adjusting for risk through the discount rate Sensitivity analysis Scenario analysis Probability analysis Standard deviation What risk techniques do managers actually Q.17) Explain Value managed companies versus earnings managed companies The pervasiveness of the value approach Case studies: FT100 companies creating value and destroying value Why shareholder value? Earnings-based management’s failings: o Dicey accounting o Throwing money in o Ignoring the time value of money o Ignoring risk ROCE has limitations Focusing on earnings is not the same as value How a business creates value The five actions to create value
  • 4. Q.18 ) Explain Strategic position Strategic business unit management Do we have any strong business franchises? Industry attractiveness The strength of our resources The TRRACK system The life cycle of value potential Strategic choice What use is the head office? Q.19) Explain Value creation within strategic business units Using cash flow to measure value Shareholder value analysis Economic profit Economic value added (EVA) Q.20) What is the companies cost of capital? The required rate of return The cost of equity capital o The capital asset pricing model o Gordon growth model o The cost of retained earnings Debt capital Preference shares The weighted average cost of capital, WACC What the WACC tells you Applying WACC to strategic business units and projects What do managers actually do? Implementation issues o How large is the equity premium? o Which risk free rate? o How reliable are the CAPM and beta? Fundamental beta Q.21) explain the below Mergers: impulse, regret and success The merger decision You say merger, I say acquisition Types of merger Merger statistics What drives firms to merge? o Synergy o Market power o Economies of scale o Internalisation of transactions
  • 5. o Entering new markets and industries o Tax o Risk diversification o Bargain buying o Inefficient management o Managerial benefits o Hubris o Survival o Free cash flow o Third party motives Q.22) Do the shareholders of acquiring firms gain from mergers? Q.23) What pay-outs should we make to shareholders? The other extreme Some muddying factors Clientele effects Taxation Information conveyance Agency effects Scrip dividends Share buy-backs and special dividends A round up of the arguments
  • 6. o Entering new markets and industries o Tax o Risk diversification o Bargain buying o Inefficient management o Managerial benefits o Hubris o Survival o Free cash flow o Third party motives Q.22) Do the shareholders of acquiring firms gain from mergers? Q.23) What pay-outs should we make to shareholders? The other extreme Some muddying factors Clientele effects Taxation Information conveyance Agency effects Scrip dividends Share buy-backs and special dividends A round up of the arguments