STRATEGIC FINANCIAL MANAGEMENT
QUESTION BANK ON STRATEGIC FINANCIAL MANAGEMENT
MODULE I – STRATEGIC FINANCIAL MANAGEMENT
- Write short notes on Dividend Policy
- Briefly explain Walter’s model
- What do you understand by Residual theory of dividend ?
- How far do you agree that dividends are (i) relevant and (ii) irrelevant for the value of the firm /
- Explain with suitable examples, the Walter model, its advantages and limitations.
- Explain the assumptions of MM model. Give basic concept of MM model of dividend payment approach.
- “”Walter’s models and Gordon’s models are based upon the same assumptions. Thus, there is no basic difference between the two.” Explain
- “”Present dividends are always preferred by the shareholders against the future capital profit”. Explain with illustrations.
- Explain the arbitrage process of the MM model in support of dividend irrelevance.
- “”The underlying assumptions of the irrelevance theorem of MM model are its short comings” - Critically examine this statement.’
- “”The arguments that dividends have an impact on the share price, has been characterized as the bird in brand argument”” – Examine.
- What is stability of dividend /
- What is clientele effect ?
- Briefly explain Lintner model
- What do you understand by Dividend and cash flow ?
- Write short notes on Dividend Pay out ratio. How it is determined ?
- Explain Stable Dividend Policy. What is the significance of stability of dividend ?
- What are the types of stable dividend policies ? Why the extra dividend need not be declared on a regular basis ?
- What do you mean by optimal dividend policy ? Explain.
- “”The primary purpose for which a firm exists is the payment of dividend. Therefore, irrespective of the firm’s needs and the desires of the shareholders, a firm should follow a policy of very high dividend pay out.”” – Do you agree ? Explain.
- Discuss the factors and conditions that are relevant in evolving a dividend policy as well as those relating to issue of bonus shares.
- “”Financial Management can use dividend policy to maximize the wealth position of equity share holders.””Explain in detail the above statement with reference to the determinants of dividend policy.
- What is “”international contents”” of dividend payment ? Explain how does it affect share value /
- To what extent the firms able to establish a definite long run dividend policy ? What factors would affect these policies ? To what extent might these policies affect market value of a firm’s securities ? Explain.
- What are the effects of bonus share issue on EPS and market price of a share ?
- What do you mean by the shares repurchase ? What are the objectives of buy back of shares ?
- Why is dividend policy important for a firm ? Also discuss the various determinants of a dividend policy in a company ?
- Discuss the Walter’s model and Gordon’s model in dividend policy.
- Explain the relationship between earnings, cash flows and dividend payout.
- “”Financial Manager can use dividend policy to maximize the wealth of the equity shareholders””. Explain
- “Stability of dividend payment has a marked bearing on the market price of a share of the firm””. Explain.
- Differentiate between the cash and non-cash dividends from the point of view of paying company.
- “”The primary purpose for which a firm exists is the payment of dividend. Therefore, irrespective of the firm’s needs and the desires of shareholders, a firm should follow a policy of very high dividend pay out””. Do you agree ?
- What is hostile take over ?
- What do you mean by amalgamation in the nature of Merger ?
- What do you mean by Swap ratio /
- What do you mean by Share Exchange ratio ? What are the different ways to calculate it /
- What are the reasons and motives for merger ? Note down the defensive tactics against the merger move.
- What do you mean by business valuation ? What are the different ways of valuation of business ?
- What is tender offer ? Explain the provisions relating to tender offer given in the “”new takeover code”.
- How are the benefits of merger shared by the acquiring firm and the target firm ? Explain with the suitable examples.
- What do you mean by economic Value Added ? How is it useful in evaluation of the performance of a firm ?
- What are the different techniques of demergers ?
- What kind of synergies exist in the Horizontal, Vertical and Conglomerate mergers ?
- “”Buying out of a firm for merger is a type of investment decision.”” Do you agree ? Elucidate.
- How merger propositions can be financed ? Evaluate the implication of the methods.
- What is Spot Rate ?
- what is Cross Rates ?
- What is premium and discount ?
- Differentiate between Direct quote and indirect quote.
- Differentiate between ask price and bid price.
- Differentiate between purchasing power parity and interest rate parity.
- Explain forward rate and spot rate. How are they related ?
- What do you mean by arbitrage profit ? How does it come into existence in foreign exchange market ?
- Do the forward markets lead to spot market or the vice versa ? Explain.
- What do mean by an exchange rate ? What are the factors affecting foreign exchange rates ?
- What is the swap point in foreign exchange ? How they help in finding out the forward rates ?
- Explain the Fisher’s effect and the International Fisher Effect with reference to exchange rate determination.
- Explain and elucidate purchasing Power Parity Theorem with the help of examples.
- What do you mean by covered interest arbitrage ?
- Explain the relationship between exchange rates, interest rates and inflation rates.
- Differentiate between Future hedge and option hedge.
- Differentiate between Forward market hedge and Future hedge.
- What do mean by Foreign Exchange Risk Management ?
- What are the basic tools to manage the risk ?
- How the money market hedge can be used to cover the foreign exchange risk ?
- How the future contract and futures contract work ? Explain the mechanism.
- Firms dealing in foreign exchange are exposed to different types of risk. Explain the exposures and risk thereof.
- What do you mean by currency swaps ? How it can be used to hedge exchange risk ?
- What are the different methods of measuring the translation exposure ?
- How the economic exposure is different from transaction exposure ? Explain with the help of suitable examples.
- Differentiate between translation exposure and transaction exposure. How can these be hedged ?
- What do mean by hedging ? What is the basic principles of hedging ? What are different tools of hedge transaction exposure ?
- What is Political risk ?
- What is Leading and lagging ?
- What do you mean by International Financial Management ? what are its distinctive features ?
- How the cash flows to a multinational firm are different from that of a domestic firm ?
- What complexities are involved in multi national capital budgeting ? What are the approaches to evaluate a foreign project ?
- Differentiate between NPV and APV methods of capital budgeting. What are the different approaches to find out the NPV of a foreign market ?
- Should a foreign project be evaluated from the point of the parent firm ? If yes, how the cash flows be adjusted ?
- What is the relevance of exchange rates and changes in these rate in the international capital budgeting ?
- Explain the relationship between spot rat, forward rate and the discount rate with reference to multinational capital budgeting.
- “”Setting up of a plant overseas affects the export of the parent company””. In the light of this statement, examine the evaluation of a foreign project.
- What do you mean by international working capital management ? What are its basic objectives ?
- Explain the distinctive features of cash management in a multi national firm. What are the techniques of cash management in these firms ?
- Write short notes on Global Depository Receipts
- Who are Foreign Institutional Investors ?
- What do you mean by Euro Convertible bonds ?
- What do you mean by Foreign Capital ? What are the resources of raising foreign bonds ?
- What is Foreign Direct Investment ? What steps Government of India has taken to attract FDI ?
- What is meant by Euro Issues ? What securities are permitted under the RBI guidelines ?
- Differentiate FCCB and DR.
- Differentiate ADR and GDR.
- What do you mean by two way fungibility of ADR / GDR ? What are the provisions announced by SEBI in this respect ?
- “”External Commercial Borrowing is an important source of foreign capital.”” How is it regulated in India ?
- How FIIs have been defined by SEBI regulations ? How are their transactions regulated ?
- What are the recent Financial services ?
- What is special purpose vehicle ?
- Write short notes on NBFC and insurance sector.
- What is the structure of venture capital in India ?
- What is private equity ?
- Discuss the frame work of NBFCs under the RBI guidelines. What are the Prudential Norms applicable to NBFCs ?
- What are the regulatory provisions relating to NBFCs in India ? Give an account of deposit directions of RBi.
- How the RBI directions have ensured the interest rate and liquidity risk management by NBFCs ?
- What is a Merchant Banker ? What are the categories as given in the SEBI regulations ?
- Give an account of the code of conduct for the merchant banker.
- What do you mean by Venture Capital financing, Venture capitalist and venture capital adventuring ?
- What are the exit rates available to venture capital ?
- What are the SEBI guidelines relating to Venture capital funds ? Give the details of the tax aspects of Venture Capital.
- Define Portfolio Manager. What are his responsibilities ?
- What code of conduct has been prescribed by SEBI for the portfolio managers ?
- What do you mean by credit rating ? what are the benefits ?
- What are different agencies involved in the credit rating in India ? What are the different areas in which credit rating is done by them ?
- What do you mean by Factoring ? Given an account of the benefits and costs of factoring.
- What is Forfaiting ? Explain the mechanism of Forfaiting.
- Explain with the help of suitable example, the financial evaluation of factoring. Is it always beneficial ?
- What is securitization ? What are the parties involved in securitization ? Give the modus operandi of securitization ?
- What is the legal aspects of securitization in India ? Explain critically .
- What is meant by debt securitization ?
- What is hedge funds ? Explain its investment stragtegies. How hedge funds are different from mutual funds ?
- Explain the concept of reverse mortgage. How is it useful for senior citizens ?
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