BBA Notes

Business Finance Old Question Paper Year 2017

Group “A”

Brief answer questions:       [10*1=10]

Indicate whether the following statements are “True’ or ‘False’. Support your answer with reason. 

1. Wealth maximization goal is superior to profit maximization.
2. Present value of Rs.1,000 due in four year, at 10 percent discount rate isRs.683.
3. If the equity multiplier is 2.0, the debt ratio must be 04.
4. Value of short-term bond changes more than the value of long-term bond for a given change in discount rate.
5. Return on equity (ROE) is the product of net profit margin and total asset turnover.
6. Value of Rs.100, 12 percent preferred stock at 10 percent required rate will be Rs.83.33
7. When IRR equals to cost of capital, NPV equals to zero.
8. Higher day’s sales outstanding (DSO) is desirable.
9. If we combine positively correlated assets, we can eliminate the significant portion of risk.
10. A firm’s current asset and fixed assets are Rs.100,000 and Rs.200,000respectively. If firm’s current liabilities is Rs.70,000 amount of net working capital will be Rs.30,000 

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Business Finance Old Question Paper Year 2016

Group “A”

Brief answer questions:       [10*1=10]

1. The investment decision of a firm is concerned with deciding on which financing sources are to be used to finance an investment.
2. Net cash flow differs from firm’s net income because of depreciation and other non-cash expenses and income
3. There is an inverse relationship between the value of a bond and its required rate of return.
4. The constant growth dividend model does not hold true when growth rate is greater or equal to investor’s required rate 
5. If we combine perfectly negatively correlated assets, we can eliminate the risk using minimum variance weight.
6. Depreciation is non-cash operating expenses. It is deducted only for tax reporting purposes but it is added back to the net income of the project to determine net cash flow.
7. Presently a firm is selling at the term 3/15, net 45. Its sales will increase if it sells at the term 3/15, net 30.
8. If National bank offers 12 percent interest and applies monthly compounding; the effective interest rate of National bank is 12.68 percent.
9. Depreciation is a major component of cash budget.
10. Net working capital can be defined as the difference between total assets and current liabilities.

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