MBA FINANCE 3RD SEMESTER SMU SUMMER SESSION 2016 ASSIGNMENT

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ASSIGNMET DRIVE - SUMMER 2016

PROGRAM MBA (SEM 3)
SUBJECT CODE & NAME
MF0010 & SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT
BK ID B1754 CREDIT 4 MARKS 60

Q1. Financial markets bring the providers and users in direct contact without any
intermediary. Financial markets permits the businesses and governments to raise the funds
needed by sale of securities. Describe the money market/capital market features and its
composition.
(Money market- features and composition-5 marks, Capital market-features and composition-5 marks) 10
marks
Answer:
Money Market Features and Composition
The money market exists as a result of the interaction between the suppliers and demanders of short-term
funds (those having a maturity
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Q2. Risk is the likelihood that your investment will either earn money or lose money. Explain
the factors that affect risk. Mr. Rahul invests in equity shares of Wipro. Its anticipated returns
and associated probabilities are given below:

Return
Probabilit

-15

-10

10

15

20

30

0.05

0.10

0.15

0.25

0.30

0.10

0.05

You are required to calculate the expected ROR and risk in terms of standard deviation.
(Explanation of all the 4 factors that affect risk-4 marks, Calculation of expected ROR and risk in terms of
standard deviation-6 marks) 10 marks
Answer:
Factors that affect risk
Some common risk factors are:
Business risk: This is the possibility that the company holding your money will not pay the interest or
dividend due, or the principal amount, when your

Q3. Explain the business cycle and leading coincidental & lagging indicators. Analyse the
issues in fundamental analysis
(Explanation of business cycle-leading coincidental and lagging indicators-6 marks, Analysis and explanation
of the issues in fundamental analysis all the four points-4 marks)10 marks
Answer:
Business cycle and leading coincidental and lagging indicators
All economies experience recurrent periods of expansion and contraction. This recurring pattern of recession
and recovery is called the business cycle. The business cycle consists of expansionary and recessionary
periods.

Q4. Discuss the implications of EMH for security analysis and portfolio
management.

(Implications for active and passive investment-5 marks, Implications for investors and companies-5
marks)10 marks
Answer:
Implications for active and passive investment
Proponents of the efficient market hypothesis often advocate passive as opposed to active investment
strategies. Active management is the art of stock-picking and market-timing. The policy of passive investors is
to buy and hold

Q5. Explain about the interest rate risk and the two components in it.An investor is
considering the purchase of a share of XYZ Ltd. If his required rate of return is
10%, the year-end expected dividend is Rs. 5 and year-end price is expected to be
Rs. 24, Compute the value of the share.
(Introduction of interest rate risk-2 marks, Explanation of two components of interest rate risk-4 marks,
Calculation of value of the share-4 marks) 10 marks
Answer:
Interest Rate Risk: With the passage of time, interest rate changes in the market. The cash flows from a
bond (coupon payments and principal repayment) however, remain fixed. As a result, the value of a bond
fluctuates. Thus interest rate

Q6. Elucidate the risk and returns of foreign investing. Analyze international listing.
(Explanation of all the points in risks and returns from foreign investing-7 marks, Introduction of
international listing-3 marks)10 marks
Answer:
Risks and Returns from Foreign Investing
International investing provides superior returns adjusted for risk. Allocating some portion of one's portfolio
to foreign assets provides better risk adjusted reruns than a portfolio of domestic assets alone. International
equities also offer access to a broader spectrum of economies and opportunities that can provide for further
diversification

ASSIGNMENT DRIVE: SUMMER 2016

PROGRAM: MBA
SEMESTER: 3
SUBJECT CODE & NAME: MF0011 & MERGERS AND ACQUISITIONS
BK ID: B1732 CREDITS: 4 MARKS: 60

Q.1: Explain the types of mergers and acquisitions (M&A).

Explanation of types of mergers and acquisitions 10
Ans:
Mergers and acquisitions can take several forms.
Horizontal: It is a merger of two

Q.2: Explain basic steps in organizing a merger. Explain the owners decision to sell the
business
a) Explanation of basic steps in organizing a merger 7
b) Explanation of owners decision to sell the business 3
Answer:a) Explanation of basic steps in organizing a merger:
The steps in an exercise of organising an acquisition are as follows:
Step 1: Pre-acquisition review: The preeminent reason for acquisition is growth, and in this step the
company management reviews

Q.3: Explain about Operating synergy and the role of Industry Lifecycle
a) Explanation of operating synergy 5
b) The role of Industry Lifecycle 5
Answer:Operating synergy
Synergies that enable companies to raise their operating income from existing assets, increased growth or
both are referred to as operating synergies. They are of four types:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Economies of scale: It
Q.4: Write Short notes on:
1) Internalisation decision
2) Recommendation for effective Cross-border Acquisition
3) Role of government policies in international M&A 3+3+4=10
Ans:
1) Internalisation decision:The internalisation decision is similar to a make-or-buy decision. The transaction and coordination
costs of internalisation have to be compared with costs of an external relationship like a joint venture.
These costs are the potential for holdup

Q.5: Explain the types of takeovers. Explain defenses against takeover bids.

Types of takeovers. (5 Marks)

Defenses against takeover bids. (5 Marks)

Answer:
Types of takeovers:
Takeovers are of different types.
1. Bailout takeovers
Q.6: Explain the factors in Post-merger integration and Five rules of Integration Process.
a) Explanation of factors in Post-merger integration. 5
b) Explanation of Five rules of Integration Process. 5
Answer:a) Explanation of factors in Post-merger integration:Some important

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ASSIGNMENT DRIVE SUMMER 2016

PROGRAM MBA (SEM 3)
SUBJECT CODE & NAME - MF0012 & TAXATION MANAGEMENT
BK ID B1760 CREDITS 4 MARKS 60
QNO1. Explain the objectives of tax planning. Discuss the factors to be considered in tax
planning.

SMU

Objectives of tax planning

Factors in tax planning 5+5=10

ANS
Objectives of Tax Planning
The prime objectives of tax planning are:
Multi-dimensional investment decisions: In a democratic welfare state like India the government
requires substantial investment in infrastructure

QNO2. Explain the categories in Capital assets. Mr. C acquired a plot of land on 15th June,
1993 for Rs.10,00,000 and sold it on 5th January, 2010 for Rs.41,00,000. The expenses of
transfer were Rs.1,00,000. Mr. C made the following investments on 4th February, 2010 from
the proceeds of the plot. a) Bonds of Rural Electrification Corporation redeemable after a
period of three years, Rs.12,00,000 b) Deposits under Capital Gain Scheme for purchase of a
residential house Rs.8,00,000 (he does not own any house) Compute the capital gain
chargeable to tax for the AY2010-11.

Explanation of categories of capital assets

Calculation of indexed cost of acquisition
Calculation of long term capital gain
Calculation of taxable long term capital gain

4
2
2
2

ANS
Categories of capital assets
For taxation purposes, the capital assets have been, divided into (a) shortterm capital assets and (b) long-term
capital assets.
(a) Short-term capital assets: According to
QNO3 Explain major considerations in capital structure planning. Write about the dividend
policy and factors affecting dividend decisions. 10

Explanation of factors of capital structure planning 6

Explanation of dividend policy 2
Factors affecting dividend decisions 2

ANS
Major considerations in capital structure planning:-

Broadly, the following factors would be worth considering, while planning the capital structure.
1. Risk of two kinds, that is, financial risk and business risk: In the context of capital structure
planning, financial risk is more
QNO4.

Answer:Option 1: Slump sale

(in lakhs)
Computation of net worth of Unit C
Land (book value)
30
Goodwill (book value)
10
QNO5. Explain the Service Tax Law in India and concept of negative list. Write about the
exemptions and rebates in Service Tax Law.

Explanation of Service Tax Law in India

5
Explanation of concept of negative list
2
Explanation of exemptions and rebates in Service Tax Law

ANSWER
Service Tax Law in India
Service tax was introduced in India in 1994 by Chapter V of the Finance Act, 1994. It was imposed on an initial
set of three services

ANS
Meaning and explanation of customs duty
Customs duty is the duty imposed

ASSIGNMENT DRIVE SUMMER 2016

PROGRAM MBA (SEM 3)
SUBJECT CODE & NAME MF0013 & INTERNAL AUDIT & CONTROL

BK ID B1733 CREDIT 4 MARKS 60

Q1. Define and explain the term auditing. Personal qualities of an auditor are important for
the successful conduct of audit. Comment

Definition of auditing,
2
Explanation of auditing, 3
Qualities of an auditor
5

Answer:
Definition of auditing
Auditing in its modern concept, is

Q2. Write the key objectives of a good internal audit system. Narrate the points of
dissimilarities between external audit and internal audit.
(Key objectives of a good internal audit system,

Dissimilarities between external audit and internal audit) 5

Answer:
Briefly, the objects of internal audit may be described as follows:
1. Evaluation of business control system: Internal audit is concerned with ensuring effective and
efficient system of accounting control, standard cost control, budgetary control and other functional control.

Q3. Give the role of internal auditor in the Companys Management. List down the duties of
auditor Under Section 581ZG.
(Role of internal auditor in the companys management, 7
Duties of auditor u/s 581ZG)
Answer:
Role of Internal Auditor as a Part of Management

Management is an art and science of conducting the affairs of an organization in such a manner that its goals
and objectives are achieved through optimum utilization of available resources. For optimum utilization of
available resources, management

Q4.The effectiveness of the internal control system can be ensured if the important aspects of
the companys operations are kept in mind.
Explain the characteristics of an effective internal control system. Write the elements of
internal control.

Characteristics of an effective internal control system,

Elements of internal control

Answer:
Characteristics of Effective Internal Control System
Following are the special characteristics of an effective internal control system which are
discussedbelow:
1. Plan of organization: A proper
Q5. Describe general EDP controls. Explain the appraisal of accounting system and related
internal control.

General EDP controls

Appraisal of accounting system and related internal control.

Answer:
General Electronic Data Process Control
a) Organizational and operational controls
relate to plan of the organization and operation of

Q6. Explain the internal control systems in insurance companies. Write down about the
reporting internal control weaknesses.

Internal control systems in insurance companies

Reporting internal control weaknesses

Answer:
Internal control system in insurance

Insurance companies paid

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