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Examination Paper of Business Communication
IIBM Institute of Business Management
• This section consists of multiple choices and Short Notes type questions.
• Answer all the questions.
• Part one questions carry 1 mark each & Part two questions carry 5 marks each.
IIBM Institute of Business Management
Subject Code-B109
Examination Paper Business Communication
MM.100
Section A: Objective Type & Short Questions (30 marks)
Part one:
Multiple choice:
I.The most important goal of business communication is_________. (1)
a) favorable relationship between sender and receiver
b) organizational goodwill
c) receiver response
d) receiver understanding
II. Down ward communication flows from_________ to_________. (1)
e) Upper to lower
f) Lower to upper
g) Horizontal
h) Diagonal
III. Horizontal communication takes place
between_________. (1)
a. superior to subordinate
b. subordinate to superior
c. employees with same status
d. none of these
IV. The study of communication through touch is_________. (1)
a. chronemics
b. haptics
c. proxemics
d. semantic
V._____________ channel of communication is known as grapevine (1)
a. Formal
b. Informal
c. Horizontal
d. Vertical
VI. The following is (are) the most effective ways of communication. (1) a. Verbal b. Non verbal c. Written d. All of the above
Examination Paper of Business Communication
IIBM Institute of Business Management
END OF SECTION A
• This section consists of Caselets.
• Answer all the questions.
• Each Caselet carries 20marks.
• Detailed information should form the part of your answer (Word limit 150 to 200 words).
VII. The handshake that conveys confidence is (1)
a. Limp
b. Firm
c. Loose
d. Double
VIII. ________ of the letter consists of main message. (1)
a. Heading
b. Body
c. Greeting
d. Closing
IX. Body of a letter is divided into ________
parts. (1)
a. 1
b. 2
c. 3
d. 4
X. X. A persuasive message will fail if_____ (1)
a. it does not focus on what is in it for the reader
b. it only lists facts
c. it moves too slowly
d. all of the above
Part Two:
1. Brief Grapevine communication? (5)
2. List the 7 C’s of Communication? (5)
3. Describe the various barriers of communication? (5)
4. Write the negotiation process. (5)
Section B: Caselets (40 marks)
Caselet 1
Barry and Communication Barriers Effective Communication as a Motivator One common complaint employees voice about supervisors is inconsistent messages – meaning one supervisor tells them one thing and another tells them something different. Imagine you are the supervisor/manager for each of the employees described below. As you read their case, give
Examination Paper of Business Communication
IIBM Institute of Business Management
consideration to how you might help communicate with the employee to remedy the conflict. Answer the critical thinking questions at the end of the case then compare your answers to the Notes to Supplement Answers section. Barry is a 27-year old who is a foodservice manager at a casual dining restaurant. Barry is responsible for supervising and managing all employees in the back of the house. Employees working in the back of the house range in age from 16 years old to 55 years old. In addition, the employees come from diverse cultural and ethnic backgrounds. For many, English is not their primary language. Barry is Serv Safe® certified and tries his best to keep up with food safety issues in the kitchen but he admits it’s not easy. Employees receive “on the job training” about food safety basics (for example, appropriate hygiene and hand washing, time/temperature, and cleaning and sanitizing). But with high turnover of employees, training is often rushed and some new employees are put right into the job without training if it is a busy day. Eventually, most employees get some kind of food safety training. The owners of the restaurant are supportive of Barry in his food safety efforts because they know if a food safety outbreak were ever linked to their restaurant; it would likely put them out of business. Still, the owners note there are additional costs for training and making sure food is handled safely. One day Barry comes to work and is rather upset even before he steps into the restaurant. Things haven’t been going well at home and he was lucky to rummage through some of the dirty laundry and find a relatively clean outfit to wear for work. He admits he needs a haircut and a good hand scrubbing, especially after working on his car last evening. When he walks into the kitchen he notices several trays of uncooked meat sitting out in the kitchen area. It appears these have been sitting at room temperature for quite some time. Barry is frustrated and doesn’t know what to do. He feels like he is beating his head against a brick wall when it comes to getting employees to practice food safety. Barry has taken many efforts to get employees to be safe in how they handle food. He has huge signs posted all over the kitchen with these words: KEEP HOT FOOD HOT AND COLD FOOD COLD and WASH YOUR HANDS ALWAYS AND OFTEN. All employees are given a thermometer when they start so that they can temp food. Hand sinks, soap, and paper towels are available for employees so that they are encouraged to wash their hands frequently.
Questions
1. What are the communication challenges and barriers Barry faces? (10)
2. What solutions might Barry consider in addressing each of these challenges and barriers? (10)
Caselet 2
Mr. Dutta, newly appointed president of century Airlines, knew the company’s survival depended on customer service, which in turn depended on motivated employees. So he created the Century Spirit program to build team spirit by encouraging employee participation, individual initiative, and open communication. Among the program’s early successes was newspaper started by a group of flight attendants. The plane truth published information about benefits and work conditions as well as feature stories and humorous articles. It quickly became popular not only with flight attendant but with pilot, machinists, and baggage handlers.
As time went on, though, the plane truth began to run articles critical of the company. When management cut back worker’s hours, the, newspaper questioned what sacrifices the executive were making. When the technical services department releases figures showing long turnaround times, the paper questioned the machinist’s work ethic. Worried that customer might see the newspaper; Mr. Dutta wanted to cancel it. The president of the flight attendants union also wanted to see it was stirring up trouble with the machinists.
Examination Paper of Business Communication
IIBM Institute of Business Management
• This section consists of Applied Theory Questions.
• Answer all the questions.
• Each question carries 15marks.
• Detailed information should form the part of your answer (Word limit 200 to 250 words).
END OF SECTION C
Ms. Rachel, Century’s human resource director, was asked to stop the publication. But she hesitated. She knew the employee morale was on the brink, but she did not know whether the newspaper was venting worker’s frustrations and reinforcing team spirit or stirring up old animosities and bringing the whole company down. Was it creating more tension than unity or vice-versa?
Questions
1. What Communication issues are involved at Century Airlines? (10)
2. What Communication Channels are being Utilized (10)
Section C: Applied Theory (30 marks)
1. Explain the various non verbal communications with an example in business
Scenario? (15)
2. Delineate the types of parts of business report writing? (15)
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Examination Paper of Banking & Financial Services Management
1
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Principles & Practices of Banking
Section A: Objective Type & Short Questions (30 Marks)
This section consists of Multiple Choice & Short Note type questions.
Answer all the questions.
Part One carries 1 mark each & Part Two carries 4 marks each.
Part One:
Multiple Choices:
1. Frequency of First Tranche Returns is:
a. Weekly
b. Monthly
c. Monthly/quarterly
d. Monthly/quarterly/half-yearly
2. An order for winding up a banking company can be issued by___________
a. The High Court
b. The RBI
c. The Central Government
d. The Supreme court
3. Who shall be natural guardian in case of married minor girl?
a. Father
b. Brother in law
c. Father-in-law
d. Husband
4. X a partner in the firm XYZ Co. wants to open a Bank account in the firm‟s name. It will require
signatures of:
a. All partners
b. Any one of the partner
c. Managing partner only
d. Sleeping partner not required
5. Public limited companies should have minimum shareholders, before Opening Bank account.
a. 11
b. 7
c. 5
d. 15
6. If the beneficiary is government then the Expiry of guarantee is governed by the „law of
limitation‟ ranging from 3 years to
a. 15 years
b. 30 years
Examination Paper of Banking & Financial Services Management
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IIBM Institute of Business Management
c. 20 years
d. 10 years
7. Charge created on LIC Policy is
a. Lien
b. Hypothecation
c. Pledge
d. Assignment
8. The device that combines the parallel input data into single serial output data is known as
a. Switcher
b. Multiplexer
c. Encoder
d. Front end processor
9. In market skimming pricing strategy:
a. Initially price is lower and then it is increased
b. Initial price is high and is maintained high
c. Initial price is low and is maintained low
d. Initially price is higher and then it is reduced
10. The marketing personnel need information _________intervals.
a. At yearly
b. At quarterly
c. At monthly
d. On a continuous basis and regular
Part Two:
1. Discuss the role of RBI in Indian Banking sector.
2. Write short notes on:
a. Repo Rate
b. Reverse Repo Rate.
3. Write short notes on:
a. Bank Lien
b. Right of set off
4. What is cash credit means?
Section B: Caselets (40 marks)
This section consists of Caselets.
Answer all the questions.
Each caselet carries 20 marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
END OF SECTION A
Examination Paper of Banking & Financial Services Management
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IIBM Institute of Business Management
Caselet 1
There is a lacuna in the present T-Bill auction system of RBI. The dealers (investors) are subject to
what is called the „Winners Curse‟. The value of a T-Bill to a dealer is the price it can fetch in the
secondary market. This is an unobserved random value, which is likely to be common to all dealers.
It is quite unlike the works of art which the Sotheby‟s would place at an auction. The price of Mona
Lisa, say, to an avid collector of Da Vinci‟s paintings, would be more than what a Picasso collector
would value it. In sharp contrast, market participants are likely to agree on the price of a T-Bill in the
secondary market. Now winning an auction in a discriminatory price method may not be profitable.
For, it would mean that the winner has overestimated the T-Bill value.
Questions:
1. How does the winner in such an auction become the loser due to the „winner curse‟?
2. Explain the role of primary dealers in the money market.
Caselet 2
In a bid to familiarize banks, exporters and other financial bodies with „Forfeiting‟, the State Bank of
India (SBI) will soon be setting up a three-man cell at its international division in Mumbai for
advisory purposes. According to Mr. D. Ian Guild, Senior Advisor, Forfeiting & Syndications
Group, Standard Bank, the cell was being set up after a series of meetings with the bank, and is
essentially aimed at spreading the message of Forfeiting as an effective trade financing mechanism
to increase exports. Suggesting that forfeiting was the ideal springboard for effecting a quantum
jump in exports in the medium-term, Mr. Guild said he was confident of aggregating forfeiting
business of $100 millions in 1998 and $250 millions in 1999 in the country. Since its introduction in
1992, Exim Bank had facilitated 69 forfeiting transactions valued at around $75 millions, with credit
periods ranging between 90 days and seven years, and covering the export of goods ranging from
textiles to plant and machinery. The RBI has now permitted all commercial banks to act as
facilitators for forfeiting transactions. Mr. Guild pointed out that forfeiting has not really taken off in
India because exporters and commercial banks lacked the knowledge of the mechanics of the
scheme. In India, the real challenge would be to motivate small and medium exporters to use the
forfeiting route for exports to countries which may not be able to buy on cash terms. Mr. S.
Bhattacharya, deputy general manager, Exim Bank, Calcutta, said: “Payment defaults by overseas
buyers were an integral part of cross-border business and export credit insurance has not been a
comprehensive answer to this problem”. Forfeiting offered an alternative solution, especially to
exporters wishing to penetrate difficult markets for the first time, he pointed out. Some of the top
international forfeiters in the world have stopped accepting forfeiting documents involving Pakistan
and Russia, according to Mr. Amitabh Mehta, Trader and Originator, Forfeiting and Syndications
group, Standard Bank London Ltd. (SBLL). According to Mr. Mehta, forfeiting transactions
involving Pakistan could not be carried out due to poor performance of the banks there. In addition,
the financial status of Pakistan following the nuclear blasts has made it impossible to carry out the
transactions. Similarly, transactions with Russia are being totally rejected by forfeiting due to the
current economic turmoil. Joining the list with Pakistan and Russia are Iraq, Sudan and Nigeria, he
added. Commenting on the Indian situation, Mr. Mehta said, “With its sound banking system, the
country is well placed in the international scene. In fact, there is tremendous potential for forfeiting
in the years to come,” he said. According to him, even after the nuclear tests conducted by India, the
top forfeiters were not worried and continued to accept forfeiting papers to be transacted with India.
Examination Paper of Banking & Financial Services Management
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IIBM Institute of Business Management
Questions:
1. Discuss the mechanism of forfeiting and the role played by banks in forfeiting transactions.
2. How does forfeiting differ from factoring?
Section C: Applied Theory (30 marks)
This section consists Long Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
1. What are the various approaches to capital adequacy? Explain Basel II norms and minimum
capital requirements in Basel II norms.
2. What do you mean by non Performing Assets (NPA)? How have NPAs affected financial health
of Indian commercial banks?
END OF SECTION B
END OF SECTION C
Examination Paper of Banking & Financial Services Management
5
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Financial Services
Section A: Objective Type & Short Questions (30 Marks)
This section consists of Multiple Choice & Short Note type questions.
Answer all the questions.
Part One carries 1 mark each & Part Two carries 5 marks each.
Part One:
Multiple Choices:
1. NBFS stands for ___________
2. ALCO is a decision making unit responsible for balance sheet planning from risk return
perspective. (T/F)
3. A contract of „Indemnity‟ is one whereby:
a. A person tries to use the other‟s property
b. A person promises to save the other‟s property from loss caused.
c. A person tries to trick the property of other for some other person.
d. None
4. The transaction between the lessor and the lessee being a demand sale is called__________
a. First sale
b. Second sale
c. Third sale
d. Fourth sale
5. Which of the following is comes under mutual funds?
Open-end funds
Closed-end funds
Both (a) & (b)
None
6. Concept of leasing involves:
a. Lessor
b. Lessee
c. None
d. All
7. CRISIL stands for____________
8. ____________are issued by the government for period ranging from 14 days to 364 days
through regular auctions.
a. Treasury Bills
b. Commercial Papers
Examination Paper of Banking & Financial Services Management
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IIBM Institute of Business Management
c. Call Money Market
d. None
9. The practice of discounting accommodation bills is known as _____________
10. HUDCO stands for _____________
Part Two:
1. Explain about SEBI guidelines to merchant bankers.
2. List the different types of Factoring.
3. Write a short note on venture capital in India.
4. Write a short note on Depositories.
Section B: Caselets (40 marks)
This section consists of Caselets.
Answer all the questions.
Each caselet carries 20 marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
Caselet 1
Sunlight Industries Ltd manages its accounts receivables internally by its sales and credit
department. The cost of sales ledger administration stands at Rs 9 crore annually. It supplies
chemicals to heavy industries. These chemicals are used as raw material for further use of are
directly sold to industrial units for consumption. There is good demand for both the types of uses.
For the direct consumers, the company has a credit policy of 2/10, net 30. Past experience of the
company has been that on average 40 per cent of the customers avail of the discount while the
balance of the receivables are collected on average 75 days after the invoice date. Sunlight Industries
also has small dealer networks that sell the chemicals. Bad debts of the company are currently 1.5
per cent of total sales.
Sunlight Industries finances its investment in debtors through a mix of bank credit and own longterm
funds in the ratio of 60:40. The current cost of bank credit and long-term funds are 12 per cent
and 15 per cent respectively.
There has been a consistent rise in the sales of the company due to its proactive measures in cost
reduction and maintaining good relations with dealers and customers. The projected sales for the
next year are Rs 800 crore, up 15 per cent from last year. Gross profiles have been maintained at a
healthy 22 per cent over the years and are expected to continue in future.
With escalating cost associated with the in-house management of debtors coupled with the need
to unburden the management with the task so as to focus on sales promotion, the CEO of Sunlight
Industries is examining the possibility of outsourcing its factoring service for managing its
END OF SECTION A
Examination Paper of Banking & Financial Services Management
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IIBM Institute of Business Management
receivables. He assigns the responsibility of Anita Guha, the CFO of Sunlight. Two proposals, the
details of which are given below, are available for Anita‟s consideration.
Proposal from Canbank Factors Ltd: The main elements of the proposal are: (i) Guaranteed
payment within 30 days (i) Advance, 88 per cent and 84 per cent for the resource and non-recourse
arrangements respectively (iii) discount charge in advance, 21 per cent for with resource and 22 per
cent without resource (iv) Commission, 4.5 per cent without resources 2.5 per cent and with
resource.
Proposal from Indbank Factors: (i) Guaranteed payment within 30 days (ii) Advance, 84 per cent
with resource and 80 per cent without resource (iii) Discount charge upfront, without resource 21 per
cent and with resource, 20 per cent and (iv) Commission upfront, without resource 3.6 per cent and
with resource 1.8 per cent.
The opinion of the Chief Marketing Manager is that in the context of the factoring arrangement,
his staff would be able to exclusively focus on sales promotion which would result in additional
sales of Rs 75 crore.
Required The CFO of Sunlight Industries seeks your advice as a financial consultants on the
alternative proposals. What advice would you give? Why? Calculations can be upto one digit only.
Caselet 2
Following are the financial statements for A Ltd and T Ltd for the current financial year. Both firms
operate in the same industry.
BALANCE SHEETS
Particulars Firm A Firm B
Total current assets Rs 14,00,000 Rs 10,00,000
Total fixed assets (net) 10,00,000 5,00,000
_____________ __________
Total assets 24,00,000 15,00,000
_____________ ___________
Equity capital (of Rs 10 each) 10,00,000 8,00,000
Retained earnings 2,00,000 _
14% Long-term debt 5,00,000 3,00,000
Total current liabilities 7,00,000 4,00,000
_____________ ___________
24,00,000 15,00,000
INCOME STATEMENTS
Net sales Rs 34,50,000 Rs 17,00,000
Cost of goods sold 27,60,000 13,60,000
__________ ___________
Gross profit 6,90,000 3,40,000
Operating expenses 2,96,923 1,45,692
Interest 70,000 42,000
__________ ___________
Earnings before taxes (EBT) 3,23,077 1,52,308
Taxes (0.35) 1,13,077 53,308
Earnings after taxes (EAT) 2,10,000 99,000
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IIBM Institute of Business Management
Additional information: __________________________________
Number of equity shares 1,00,000 80,000
Dividend payment (D/P) ratio 0.40 0.60
Market price per share (MPS) Rs 40 Rs 15
__________________________________
Assume that the two firms are in the process of negotiating a merger through an exchange of equity
shares. You have been asked to assist in establishing equitable exchange terms, and are required to:
(i) Decompose the share prices of both the companies into EPS and P/E components, and also segregate
their EPS figures into return on equity (ROE) and book value of intrinsic value per share (BVPS)
components.
(ii) Estimate future EPS growth rates for each firm.
(iii) Based on expected operating synergies, A Ltd estimates that the intrinsic value of T‟s equity share
would be Rs 20 per share on its acquisition. You are required to develop a range of justifiable equity
share exchange ratios that can be offered by A Ltd‟s shareholders. Based on your analysis in parts (i)
and (ii), would you expect the negotiated terms to be closer to the upper, or the lower exchange ratio
limits? Why?
(iv) Calculate the post-merger EPS based on an exchange ratio of 0.4 : 1 being offered by A Ltd. Indicate
the immediate EPS accretion or dilution, if any, that will occur for each group of shareholders.
(v) Based on a 0.4 :1 exchange ratio, and assuming that A‟s pre-merger P/E ratio will continue after the
merger, estimate the post-merger market price. Show the resulting accretion or dilution in pre-merger
market prices.
Section C: Applied Theory (30 marks)
This section consists of Long Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
1. What do you mean by money market? Discuss money market instruments in detail.
2. What is leasing? Explain about the advantages and disadvantages of lease finance.
S-2-300813
END OF SECTION B
END OF SECTION C
Examination Paper of Finance Management
1
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
International Finance
Section A: Objective Type & Short Questions (30 Marks)
This section consists of Multiple choice & Short Note type questions.
Answer all the questions.
Part One carries 1 mark each & Part Two carries 5 marks each.
Part One:
Multiple choices:
1. Foreign exchange market in India is relatively very ________.
a. Big
b. Small
c. Medium
d. None of the above
2. Balance of payment is a systematic record of all _______ during a given period of time.
a. Political transactions
b. Social transactions
c. Economic transactions
d. None of the above
3. Merchandise trade balance, services balance & balance on unilateral transfer are the part of
________ account.
a. Current account
b. Capital account
c. Official account
d. None of the above
4. Interest rate swaps can be explained as an agreement between _________ parties.
a. One
b. Two
c. Three
d. None of the above
5. Capital account convertibility in India evolved in August
a. 1996
b. 1995
c. 1994
d. None of the above
6. Interest rate parity is an economic concept, expressed as a basic algebraic identity that
relates.
a. Capital rate & interest rate
b. Interest rate & exchange rate
Examination Paper of Finance Management
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IIBM Institute of Business Management
c. Currency rate & exchange rate
d. None of the above
7. The two kind of swap in the forward market are_________
a. Forward & reverse swap
b. Reverse swap & option swap
c. Forward & option less swap
d. Forward swap & option swap
8. FEMA stands for_________
a. Forward exchange market
b. Future exchange market
c. Foreign exchange management act
d. None of the above
9. Exchange rate quotation methods are________
a. Direct and direct
b. Indirect and indirect
c. Direct and indirect
d. None of the above
10. International Fisher effect or generalized version of the Fisher effect is a combination
of_______
a. PPP theory and Fisher‟s open proposition
b. Fisher‟s open and closed proposition
c. PPP theory and Fisher‟s closed proposition
d. None of the above
Part Two:
1. Write a short note on „Interest Rate Parity System‟ for exchange rates.
2. What are Direct & Indirect Quotes of exchange rates?
3. What is „International Mutual Fund‟?
4. Briefly describe „swaps in foreign exchanges markets‟.
END OF SECTION A
Section B: Case lets (40 marks)
This section consists of Case lets.
Answer all the questions.
Each Case let carries 20 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
Case let 1
Examination Paper of Finance Management
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IIBM Institute of Business Management
Managing Exchange Rate Risk
Mahindra International (India) imported spares of an engine from a US manufacturer for $ 5,000 per
annum at a price of $ 2.5 per piece. The average exchange rate during 2001-02 was Rs. 47.70/$. The
Indian company imported the spares also from a British manufacturer. In fact, it had diversified its
import in view of reducing the risk associated with the supply. The import from the USA was
competitive in view of the fact the same spares imported from the UK was slightly costlier. The
American spares cost Rs. 119.25 per piece, while the British spares cost Rs. 120.00 per piece. In
2002-03, US dollar appreciated to Rs. 48.40 with the result that the cost of American spares turned
higher than the British spares. In the sequel of the appreciation of US dollar, the Indian importer cut
its demand from 2,000 pieces to 500 pieces. The loss to the US exporter was colossal. But at the same
time, the Indian Importer suffered a lot. It had to pay a higher price for the US spares in terms of
rupee. And also, it had to divert its import from the USA to the UK insofar as the pound sterling did
not appreciate during this period. All this happened in the wake of the exchange rate changes.
Questions:
1. Mention the loss borne by the US exporter in the sequel of appreciation of dollar.
2. What strategy the Indian importer needs to follow to hedge the exchange rate risk?
Case let 2
ABN Amro Bank and Correspondent Banking in India
ABN AMRO bank has emerged as a major correspondent bank owing to a large network. In
India, it operates in six major cities, viz. Baroda, Chennai, Kolkata, Mumbai, New Delhi and
Pune. Being a correspondence bank, its product offerings are found primarily in the area of
trade and clearing. It is doing well in these owing to strong tie-up with local Indian banks
reaching 350 centres across the country. As a result, payments are effected speedily and
effectively.
Cash Management
The customized products in the area of cash management include cheques payable at par at all its
branches across the country, apart from traditional collection services, such as collection of
outstation/upcountry cheques drawn on other banks. ABN AMRO is a member of all major clearing
centers in the major financial centers. It has an electronic delivery system and structures multilateral
netting of cash.
Trade Services
Under trade services, the Bank offers a comprehensive range of products, such as:
1. LC reimbursement
2. Indian rupee trade payments
3. Handling documentary bills for collection
4. Bills negotiation
5. Letter of credit advising
6. Letter of credit confirmation
7. Guarantees
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IIBM Institute of Business Management
Treasury Services
Treasury services at ABN AMRO Bank (India) are available round-the-clock. Rupee funding at its
treasury desk is provided at competitive rates along with advice on market trends and rates. It
provides also advisory services on the request of financial institutions and corporate in the area of
regulatory, economic and financial matters including depository services.
Questions:
1. Describe the network of ABN AMRO Bank in India.
2. What role does it play for global cash management?
END OF SECTION B
Section C: Applied Theory (30 marks)
This section consists of Applied Theory Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. Discuss the factors that affect foreign exchange market. Explain the different types of foreign
exchange quotations.
2. What do you mean by balance of payment? What are the key components of balance of
payment
END OF SECTION C
Examination Paper of Finance Management
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IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Security Analysis and Portfolio Management
Section A: Objective Type & Short Questions (30 Marks)
This section consists of Multiple choice & Short Note type questions.
Answer all the questions.
Part One carries 1 mark each & Part Two carries 5 marks each.
Part One:
Multiple choices:
1. Beta is useful for comparing the relative _____________ of different stocks.
a. Business risk
b. Systematic risk
c. Liquidity risk
d. Country risk
2. The price prevailing in market is called________
a. Market security
b. Market value
c. Market price
d. None of the above
3. Line charts, Bar charts, Candles tic charts are the parts of__________
a. Fundamental analysis
b. Technical analysis
c. Company analysis
d. None of the above
4. A market portfolio is a portfolio consisting of a weighted __________ in the market.
a. Sum of every equity
b. Sum of every liabilities
c. Sum of every assets
d. None of the above
5. The date on the option contract is called the ___________
a. Expiration date
b. Date of maturity
c. Both a) & b)
d. None of the above
6. A forward contract is an agreement made today between a ___________ to exchange the
commodity.
a. Buyer & buyer
b. Buyer & seller
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IIBM Institute of Business Management
c. Seller & seller
d. None of the above
7. Portfolio means a collection or combination of financial assets such as?
a. Shares
b. Debentures
c. Government securities
d. All of the above
8. CAPM is the abbreviation of_________
a. Capital Asset Pricing Measure
b. Capital Average Pricing Model
c. Capital Asset Pricing Model
d. None of the above
9. In India the secondary market for shares is regulated by_______
a. RBI
b. SEBI
c. Company law board
d. There is no regulatory authority
10. The risk of the whole market as measured by „Beta‟ is________
a. 1
b. 0
c. -1
d. None of the above
Part Two:
1. What does „β‟ (Beta) mean in risk management?
2. Write a note on „options‟ & „future‟ derivatives.
3. Define Capital market theory.
4. Write a short note on CAPM.
END OF SECTION A
Section B: Case lets (40 marks)
This section consists of Case lets.
Answer all the questions.
Each Case let carries 20 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
Case let 1
Examination Paper of Finance Management
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IIBM Institute of Business Management
TOUAX is a French company and is currently Europe‟s no. 1 in shipping containers and river
barges, and no. 2 in modular building and freight railcars. The group provides operating leases to
customers around the world, both on its own account and for third-party investors. On June 24, 2009,
TOUAX announced that its capital increased by waiving preferential subscription rights but with
priority for existing shareholders, launched on 18 June 2009 for a total of E17, 851,519.76 (gross)
through the issue of 936,596 new shares which were subscribed in the entirely. Following partial
application of the extension clause, 952,747 shares were placed or 101.72% of the issue; total
proceeds were E18, 159,357.82.
This rights issue has enabled the Group to strengthen its financial structure, to position itself with
advantage for possible acquisitions of tangible stock, and to grasp opportunities thrown up by the
crisis (purchase of shipping containers, modular buildings, river barges and railcars, for hiring out on
mainly long-term leases). 370,062 new shares allotted under absolute entitlement were subscribed or
39.51% of the total number of new shares issue. Another 555,685 shares were applied for subject to
cutting back in the event of over subscription, and orders for these were all filled. Another 27,000
shares had been applied for by the general public, and following partial application of the extension
clause it proved possible to fill orders for all of these.
All the result of the right issue, TOUAX is well placed to respond to the boom in corporate
outsourcing of non-core assets, and every day provides over 5,000 customers with quick and flexible
leasing solutions. TOUAX is now listed on Euronext in Paris – NYSE Euronext Compartment C
(ISIN Code FR0000033003), and features in the SBF 250 Index.
Questions:
1. After analyzing the case, do you think all the companies that can afford, should opt for right
issue to improve their financial status?
2. What do you analyze as the two main advantages of the right issue?
Case let 2
In mid-February 1994, the British paper, the Sunday times ran on article that alleged that a 1 billion
sterling ($ 750 M) sale of equipment by British companies to Malaysia was secured only after bribes had
been paid to Malaysian government officials and after the British overseas development administration
(ODA) had agreed to approve a 234 million sterling grant to the Malaysian government for a
hydroelectric dam of (according to the Sunday times) dubious economic value. The clear implication was
that UK officials, in their enthusiasm to see British companies win a large defence contract, had yield to
pressures from “corrupt” Malaysian officials for bribes – both personal and in the form of the 234 million
sterling development grants.
What happened next took everyone by surprise. The Malaysian government promptly announced a an on
the impact of all British goods and services into Malaysia and demanded an apology from British
Government. Officially the ban applied only to government orders for British goods and services; the
private sector was free to busy as it chose. However, British companies with experience in the region
were nervous that the private sector would follow the government‟s lead in shunning British products. At
stake was as much as 4 billion sterling in British exports and construction activities in Malaysia and a
presence in one of the world‟s fastest growing developing economies (Malaysia‟s economic growth has
averaged 8% per annum since 1989). In announcing the ban, Malaysia‟s Prime Minister, Dr Mahathir
Mohammad, noted that the British media portrays Malaysians as corrupt because “ They are not British
Examination Paper of Finance Management
8
IIBM Institute of Business Management
and not white”…And “we believe the foreign media must learn the fact that developing countries,
including a country led by brown Moslem, have the ability to manage their own affairs successfully”.
The British government responded by stating, it could not tell the British press what and what not to
publish, to which Dr Mahathir replied there would be “no contracts for British press freedom to tell lies”.
At the same time, the British government came under attack from members of parliament in Britain, who
suspected the government acted unethically and approved the ODA hydroelectric grant to help British
companies win orders in Malaysia.
Questions:
1. If you are the CEO of a British company that now faces the loss of a lucrative contract in
Malaysia because of the dispute. What action should you take?
2. How do you think British government should respond to the Malaysian action?
END OF SECTION B
Section C: Applied Theory (30 marks)
This section consists of Applied Theory Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. What do you mean by risk management? Elaborate the various kinds of systematic and nonsystematic
risks.
2. What do you mean by Portfolio management? What are the methods of calculating portfolio
performance evaluation?
END OF SECTION C
S-2-300813
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