IGNOU MCO-07 June 2016 Previous Year Question Paper

Q1.(a) Explain the factors that influence Working 10 Capital needs.

(b) Explain in brief Arbitrage Pricing Theory 10 and the assumptions involved therein.

Q2.Explain the concept of capital budgeting and its importance. Also describe various types of capital budgeting. 10,

Q3.(a) What do you mean by share buy back ? State its rationale.

(b) Cobra Ltd. has 1,00,000 equity shares outstanding. The market value of these shares is Z 25,00,000 i.e.@ Z 25 per share. The expected NOI is Z 5,00,000 and EPS =Z 5. Calculate Cobra Ltd's Cost of equity capital by E/P Ratio method and state the limitations of this method.

Q4.(a) Discuss the challenges faced by the financial 10 managers in India.

(b) Explain "Time Value of Money". What is the role of interest rate therein ?

Q6.(a) Define 'Economic Order Quantity' and 10 explain the process of its calculation with an example.

(b) How is the cost of debt capital ascertained ? 10 Give examples.

Q7.(a) What is 'Accounting Rate of Return (ARR) 10 and how is it calculated ?

(b) Distinguish between NPV and Profitability 10 Index. Which of these you consider better and why ? Illustrate EBIT-EPS Analysis. The following details are available : Existing equity capital 10,000 shares of Z 10 each. Proposal to raise additional ! 1,00,000 with following alternatives :

(i) Debt at 10% p.a.

(ii) Equity capital @ ! 10 per share

(iii) Pref. share of ! 10 each @ 12% dividend EBIT ! 80,000 Tax Rate 50% Advise which of the above methods of financing would be optimal and why ?

Q8.Explain briefly the sources of long term finance and state which one you consider best and why ?

Q9.Write short note on any two of the following : 10, 10

(a) Primary market Vs Secondary market.

(b) Lease Financing

(c) Capital Structure

(d) Forex market MCO-07 2 IRTI.M.A.-o 7 ciii ■Thrti trilich Tit 'MTN (M.Com ) t011.0 TRIA-TT

Q11.(a) 31TIFTWaT 'Pe -4U Intl' 10 arrrgErrW---A7 I

(b) 3ta7471i WYgiff ffftriTuT ftiZtff (Arbitrage 10 Pricing Theory) 7A? 4;1' 1:1,4V1T4TT311. (assumptions) "WF qui-f SAT I

Q12.ATrtri * 4-1,4 wfTWIT Tr A7I faf mchit X11A-4 -trr ilfi41-1,31114 Tr 1-11' 10, 10 qui"WA7i

Q13.(a) 'ec171 (sit (buy back) 14 3371 Vf WIT 12 t? 74* 3i ttr-4M ociltNIWWR

(b) et) fR. 1,00,000 fffere It *I 4, 4 Tff T eimik itrti t C 25,00,000, 3107 25 q'lq TWA' Piaci cbi4kno 3317 (NOI)

Q14.00,000 teTt'Srfff * 417 371r5ti ct.).R( frf. -4`f-orel 01411 374/ ch-1 4-1cf 3971U E/P Ratio feffeT Trff ferftz *Trat z -Mz1 wri77

Q16.(a) 43-1INW 31t7 (EOQ) tiftillisIT w1.177, 10 MU 7130 +lull' 74 3ffffiziT dqwui Tirgff

(b) WIT "& 0' civil *14 Vrff \lid t? dql(ul 10 TriP'0,- ntqfl

Q18.(a) EBIT-EPS qui dcWu( Itga' ti+i ii4t I 10

(b) -14-1 tsicf fq-o-raT 37 -0-alt : .ed.rtri zre .4;311 10,000 144,k (z 10 .5rrd k tit) 10 r 1,00,000 atafTWI m'-ota rAt-i *I-07 ffiFfIWFT* :

(i) WIT- 10% mrciati cc441,31 7 1:R "fa atT -®r10 A.O. teit 'gru 3rre-4:m. tzrt- @ 12% isrags r 10 tER 11-Fr EBIT 80,000 WC 017 50% W*4 A91:11 M.T e.14-1 taffT AO?

Q19.q cmci "WWII Tlf77 7 9-TT 74-6 20 . 4-d7.7fwpM14347rf* --474-41-ffqiii-rafa-fRT4'f?

Q20.-14-1 rt tgcf 14 641 trT TifvEr rdwruigi f-417(7 : 10, 10

(a) 3110 041 ■31It -ffeif fgtzfWWWT

(b) tKdf (Lease) facia

(c) "it (Capital Structure)

(d) fart Fa (Forex) iiiit