FIN622 - Corporate Finance Subjective Questions from Final Exam 2012
Re-organize of capital structure. (3 marks)
How firms analyze their credit policies? Explain briefly. (3 marks
How Short-Term Interest rate future are Priced? Explain With help of Some Examples? (3 Marks)
Differentiate between the Forward Contract and Currency Future. 5 mark
Analyze credit policies and explain these
1. Policy collection
2. Credit period
3. Discount
4. Credit standardization .(5 marks)
A borrower borrows an amount of 100,000 and a expected rate of inflation is 5%.
a. Calculate the real rate of return of the borrower.
b. If the inflation rate increases to 8% then who suffer borrower or lender ? 5 marks
An investor buys 5 options on shares at a price of Rs 50 per share. Each option consists of 100 shares and premium paid is Rs. 2 per share. What would be the net gain, total cost of option and total gain for investor if the share price is Rs. 55 at the expiry of option? (5 marks)
Sol:
Total share is 5 *100 =500
Total cost of option is 500*52=26,000
Total Sale Value = 500 * 55 = 27500
Net Gain = 27500 – 26000= 1500
How firms analyze their credit policies? Explain briefly. (3 marks
How Short-Term Interest rate future are Priced? Explain With help of Some Examples? (3 Marks)
Differentiate between the Forward Contract and Currency Future. 5 mark
Analyze credit policies and explain these
1. Policy collection
2. Credit period
3. Discount
4. Credit standardization .(5 marks)
A borrower borrows an amount of 100,000 and a expected rate of inflation is 5%.
a. Calculate the real rate of return of the borrower.
b. If the inflation rate increases to 8% then who suffer borrower or lender ? 5 marks
An investor buys 5 options on shares at a price of Rs 50 per share. Each option consists of 100 shares and premium paid is Rs. 2 per share. What would be the net gain, total cost of option and total gain for investor if the share price is Rs. 55 at the expiry of option? (5 marks)
Sol:
Total share is 5 *100 =500
Total cost of option is 500*52=26,000
Total Sale Value = 500 * 55 = 27500
Net Gain = 27500 – 26000= 1500
