IGNOU MCO-07 June 2022 Previous Year Question Paper

Q1.(a) Critically evaluate the goals of Financial Management. 10

(b) Discuss the challenges faced by financ ial managers.

Q2.Explain the various approaches used to value equity shares with examples. 20 [ 2 ]

Q3.Discuss capital asset pricing mo del. How is it used for pricing of securities ? Discuss with examples. 10,

Q4.What are the functions of financial market ?

Q5.Describe the risk s faced by investors in this market. 10,

Q6.(a) Explain the meaning, types and importance of cost of capital. 12

(b) A firm issued 100, 10% of debentures each of ` 100 at 5% discount. The debentures are to be redeemed at the end of 10th year. Tax rate is 50%. Calculate the cost of debt.

Q7.(a) Why do we use cash flow analysis instead of profit analysis i n a capital budgeting decision ? What are the general principles of cash flow estimation ? 12

(b) A company is considering an investment proposal of ` 1,00,000. The expected cash flows are : Year 1 : ` 20,000; Year 2 : ` 30,000; Year 3 : ` 30,000; Year 4 : ` 40,000 and Year 5 : ` 40,000. Calculate the payback period.

Q8.What is Project Finance ? Distinguish between project finance and corporate finance.

Q9.(a) Describe the factors which determine dividend payout ratio. 10

(b) Explain the rationale of buyback of shares. [ 4 ]

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

(a) Time value of money

(b) Net present value method

(c) Lease financing

(d) Techniques of inventory management