IGNOU MCO-07 December 2023 Previous Year Question Paper

Q1.(a) What is financial management ? What are the objectives of financial management ?

(b) Explain different types of systematic risks involved in financial decision -making with examples. 8 [ 2 ]

Q2.(a) What is Capital Budgeting ? Discuss the importance of Capital Budgeting. 2, 8

(b) Discuss the factors influencing capital structure of a firm with suitable example.

Q3.(a) Why do firms pay dividends ? Discuss briefly. 8

(b) XYZ Ltd. has three financial plans. Find out the financial leverage of each plan and interpret it : 12 Plans A B C Equity Capital 8,000 4,000 12,000 Debt (10%) 8,000 12,000 4,000 Operating Profit (EBIT) 1,600 1,600 1,600

Q4.Explain the importance of inventory management. Discuss various inventory control techniques. 10, 10 [ 3 ]

Q5.(a) Explain the risk -return relationship using capital asset pricing model. 10

(b) Discuss the different types of formal and informal credit a rranagements for working capital.

Q6.(a) Explain the co ncept of lease financing. How is it different from hire purchase ? 10

(b) Discuss the purpose of cash budget. How is it prepared ?

Q7.(a) What do you mean by cost of capital ? What are implicit and explicit costs ? 6

(b) A company had issu ed ` 10,00,000, 8% debentures

(i) at par

(ii) at a discount of 7% and

( iii) at a premium of 10%. Calculate cost of debt in all three cases.

Q8.Explain the concept of project finance.

Q9.Distinguish between project finance and corporate finance. 4, 16 [ 4 ]

Q10.Write explanatory notes on any two of the following : 10, 10

(a) Net present value method

(b) Economic order quantity

(c) Role of stock exchanges

(d) Arbitrage pricing theory