Department of Management Studies

PSN College of Engineering and Technology

Course material

5/3/2010
Financial Management

Unit - I
1. Define Financial Management
2. What is time value of money
3. What is risk free rate of return?
4. What is Compounding?
5. What is discounting?
6. What is simple interest?
7. What is Compound interest?
8. Define sinking fund
9. What is annuity?
10. What is annuity due?
11. Define Net present value
12. Define Bond
13. What is pure discount bond or zero coupon bonds?
14. What is perpetual bond?
15. What is current yield?
16. What is preference share?
17. Define portfolio
18. Differentiate systematic risk and unsystematic risk
19. What is an option?
20. Differentiate European option and American option
21. What is in the money, at the money and out of money?
22. What is call option and put option?
23. If you deposited Rs.55000in a bank, which was paying a 15% interest on a tenyear time deposit, how much would the deposit grow at the end of ten years?
24. Suppose that a firm deposits Rs.5000 at the end of each year for four years at 6%
interest. How much this annuity accumulates at the end of fourth year?
25. Find out the present value of Rs.50000 to be received after 15 years, if the interest
rate is 9%
16 Marks Questions
1. Discuss about the functions of financial managers
2. What are the objectives of financial management?
3. Explain the various approaches to valuation of shares

Unit II
2 Mark Questions

1.

What is capital budgeting?

2. List out the methods of capital budgeting

3. What is capital rationing?
4. What is cost of capital?
16 Mark Questions
1. Discuss about the methods of capital budgeting
2. Describe on cost of capital
3. Explain the capital structure theories
4. Explain the factors affecting capital structure
Unit III
2 Marks Questions
1. Define capital structure
2. What is Leverage?
3. Differentiate financial leverage and operating leverage
4. What is dividend policy?
5. What are the assumptions of MM Approach?
6. What do you mean by sources of finance?
7. What is right share?
8. What do you mean by debenture?
9. List out the types of debenture
16 Mark Questions
1.
2.
3.
4.

Explain the factors affecting dividend policy

Explain the sources of long term finance
Discuss about the leasing and its types
Elaborate on project financing

Unit IV
2 Marks Questions
1. What is restrictive covenant?
2. Define leasing
3. Differentiate leasing and hire-purchasing
4. List out the types of lease

5. What is instalment sale?

6. Define project financing
16 Mark Questions
1.
2.
3.
4.

Explain in detail Venture capital financing

What are the divestment methods available for a venture capitalist?
Explain working capital management and factors affecting working capital
What are the ingredients of operating cycle?

Unit V
2 Mark Questions
1. Define venture capital financing
2. What is conditional loan?
3. Define working capital
4. What is operating cycle?
5. What is factoring?
6. What are the objectives of inventory management?
7. What is trade credit?
16 Marks Questions
1. Discuss about factoring and its types
2. Explain the inventory management techniques
3. What are the motives behind holding cash?
4. Explain the sources of working capital finance